That’s what we, here at BigStocks.io, set out to answer. We were quite strict with our criteria, but the results were very promising…
In this post, we will show you best company to invest in stocks and 4 cheap stocks issued by big profitable companies with long-term growth prospects and great financial health. Some of them are market leaders as well!
Ready? Let’s have a look!
1. D.R. Horton Inc (NYSE: DHI)
D.R. Horton, founded in 1978 and headquartered in Arlington, Texas, is a leading US homebuilder, operating in 98 markets across 31 states.
The company derives most of its revenue (90% of home sales) from building single-family detached homes. Its customer base includes entry-level, move-up, luxury buyers, and active adults.
It also provides homebuyers with mortgage financing and title agency services via its financial services segment.
Based on the 17 analysts’ 12-month median price target of $96 and the stock’s trading price, DHI now has a 58.9% upside. The highest price target is $140 which represents a 131.7% upside and the lowest is $73 which represents a 20.8% upside.
The median price target seems reasonable, considering the current valuation and the company’s recent performance. The highest is unlikely to be reached within 12 months and the lowest is a conservative estimate.
D.R. Horton is our #1 pick for multiple reasons.
First of all, its performance was spectacular for its size and status; especially seen through the lens of the stock’s trading price.
Last year, it generated a 27% return on its equity and grew its revenue and EPS by 36% and 78%, respectively. The stock’s price is currently 5.3 times its EPS and 1.5 times its book value. Clearly, DHI is well under the radar right now.
And if you’re looking to buy and hold for the long term, this is your kind of stock too…
D.R. Horton is very liquid right now, with current assets 5.8 times its current liabilities and no interest expenses at all. On top of that, it has a very conservative capital structure (D/E: 0.6x)
Source: DHI Annual Report
2. Steel Dynamics Inc (NASDAQ: STLD)
Steel Dynamics, founded in 1993 and headquartered in Fort Wayne, Indiana, is a US steel producer.
The company primarily manufactures steel products that are intended to serve the automotive, construction, transportation, and manufacturing end markets. It does so through its scrap-based steel minimills which output ~13 million tons of steel every year.
Further, Steel Dynamics processes and sells recycled ferrous and non-ferrous metals. It also operates a steel fabrication business that creates products for the non-residential construction industry.
Based on the 10 analysts’ 12-month median price target of $94.5 and the stock’s trading price, STLD now has a 32.5% upside. The highest price target is $116 which represents a 62.7% upside and the lowest is $65 which represents an 8.8% downside.
The median price target is very likely to be reached if the company maintains its good performance. The highest price target is also likely to be realized, based on the company’s strong fundamentals. The lowest price suggests a downside which is unlikely in our opinion.
Steel Dynamics made it to this list with flying colors. Let’s see why…
It grew revenue by 91% on a YoY basis; EPS by 500%! It also generated a 53% return on its equity last year.
Let’s look at the price now. It is currently trading at 4.6 times its EPS and 2.4 times its book value. For the outstanding performance, it’s obviously overwhelmingly undervalued right now.
Steel Dynamics also has very strong liquidity. Its current ratio is 3x and its earnings before interest was last reported as 75 times its interest expense. On top of that, the company is not overleveraged; far from it actually (D/E: 1x).
Source: STLD Annual Report
3. Westlake Chemical (NYSE: WLK)
Westlake Chemical, founded in 1986 and headquartered in Houston, Texas, is a chemicals, polymers, and building products manufacturer and global supplier.
Through its Performance & Essential Materials segment, the company offers a wide range of building blocks. These, in turn, are used in making everyday living products, such as olefins, polyethylene, vinyl chemicals, and epoxies.
Also, its Housing & Infrastructure Products segment produces finished goods used for pipe & fittings, building products, and global compounds businesses.
Based on the 15 analysts’ 12-month median price target of $149 and the stock’s trading price, STLD now has a 52.9% upside. The highest price target is $170 which represents a 74.4% upside and the lowest is $117 which represents a 20% upside.
The median price target seems quite reasonable with the data we currently have. The highest price target is also reasonable, while the lowest leans on the conservative side.
Yet another diamond that should be in every growth portfolio right now. Westlake Chemical had a great run last year. It generated a 24% return on its equity and grew revenue and EPS by 56% and 508%, respectively.
An amazing performance needs to be accompanied by an amazing price to become spectacular. To this end, WLK’s trading price works; it’s at 6.2 times the EPS and 1.5 times the book value.
And if you want to hold for the years to come, the company is in good condition. Its current assets were last reported as 2.2 times its current liabilities. Interest coverage was 15.9x and it has a D/E ratio of 1.1x.
Source: WLK Annual Report
4. Mosaic Co (NYSE: MOS)
Mosaic is a leading producer of primary crop nutrients phosphate and potash. It was formed in 2004 by the combination of IMC Global Inc. and Cargill, Incorporated and is headquartered in Tampa, Florida.
The company operates phosphate rock mines in Florida, Louisiana, Brazil, and Peru. As for its potash mines, they are located in New Mexico, Brazil, and Saskatchewan.
Based on the 19 analysts’ 12-month median price target of $76 and the stock’s trading price, STLD now has a 53.1% upside. The highest price target is $95 which represents a 91.4% upside and the lowest is $59 which represents an 18.9% upside.
The median price target is likely to be reached but not within 12 months. The highest is too optimistic right now and the lowest is too conservative.
Mosaic is one of those large-cap stocks that for some reason remain hidden by the market. That’s a shame because the company’s recent performance is very promising. But that’s perhaps where the contrarian investor’s opportunity lies.
Specifically, Mosaic generated a 15% return on its equity and grew its revenue and EPS by 42% and 144%, respectively.
With a price trading at only 11.6 times its EPS and 1.8 times its book value, something isn’t right here. But most of the time, when something isn’t right regarding the stock market, there is money to be made.
Maybe long-term profits are possible here too. The company looks stable enough to encourage it. Its current assets were last reported as 1.1 times its current liabilities and its interest coverage was 14.6 times. Also, D/E is 1x; not bad at all.
Source: MOS Annual Report
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