Today, May 19, 2022, Dow Jones is trading at ~29,800, the S&P 500 at ~3,700, and Nasdaq at ~10,800. When the US market keeps flirting with bear territory, there’s only one question you should ask: what are the best shares to buy now in the USA?
Answering this question requires defining “best” first. And for us, the best shares are those issued by undervalued companies with strong balance sheets and impressive income statements.
So we searched and we came up with 4 cheap but very good stocks that are given a higher than 15% upside by Wall Street.
Interested? Let’s take a look…
1. Huntsman Corp (NYSE: HUN)
Huntsman Corp, founded in 1970 and The Woodlands, Texas, is an American multinational manufacturer of chemical products. Its geographical segments are the “United States & Canada”, “Asia- Pacific”, “Europe”, and the “Rest of the world”.
Included in the company’s product portfolio are Methyl diphenyl diisocyanate (MDI), Maleic anhydride, Surfactants, Amines, Epoxy-based polymer formulations, Dyes, and Textile chemicals. Such products are used in aerospace, adhesives, construction products, automotive, etc.
Its operating segments are Performance Products, Textile Effects, Advanced Materials, and Polyurethanes.
The company derives most of its revenue from the Polyurethanes segment. This segment includes MDI, thermoplastic polyurethane, polyols, and other products related to polyurethane.
Based on the 18 analysts’ 12-month median price target of $43.5 and the stock’s trading price, HUN now has a 53.7% upside. The highest price target is $67 which represents a 136.7% upside and the lowest is $34 which represents a 20.1% upside.
The upside suggested by the median price target seems like a reasonable prediction, considering the company’s recent performance and valuation. The highest is not likely to be reached within 12 months and the lowest is a bit conservative.
First things first. Huntsman Corp is trading exceptionally low for both absolute general standards and for its outstanding performance. Its shares are currently at 6 times its earnings per share and 1.3 times its book value.
With such a great price, you’d think that this is an unprofitable company with no growth prospects. But quite the contrary. Last year, it generated a 24% return on its equity and grew revenue and EPS by 40% and 303%, respectively!
Huntsman is a great pick for long-term investing too. Its current assets were last reported as 1.9 times its current liabilities. Further, its interest coverage was last observed as 11.9x.
At last, the company doesn’t look overleveraged with a D/E ratio of 1x.
Source: HUN Annual Report
2. MKS Instruments Inc (NASDAQ: MKSI)
MKS Instruments Inc, founded in 1961 and headquartered in Andover, Massachusetts, is an American process control instrumentation company. It’s focused on providing subsystems, instruments, and process control systems that are used to measure, monitor, deliver, and control the parameters of manufacturing processes.
The company’s product portfolio consists of components, instruments, and systems required in the manufacturing of products like medical devices, flat panel displays, and electronic materials which are in turn used in semiconductor, life and health sciences, industrial technologies, and research and defense markets.
MKS Instruments has three business segments: vacuum and analysis, light and motion, and equipment and solutions.
The vacuum and analysis segment generates approximately half of the company’s revenue and most of it is earned in the US.
Based on the 10 analysts’ 12-month median price target of $180 and the stock’s trading price, MKSI now has a 79.3% upside. The highest price target is $242 which represents a 141% upside and the lowest is $125 which represents a 24.5% upside.
We think that both the median and the highest price target are too optimistic. The lowest one seems like a better prediction, albeit a little conservative.
MKS had an exceptional performance last year. First, it grew revenue and EPS by 26.6% and 56.4%, respectively. It also generated a 19% return on its equity.
This profitable company’s shares are currently trading at 10.1 times its EPS and 1.9 times its equity. Interestingly enough, this stock has been ignored by the market. We can’t say for how long this will last, of course.
If you’re looking for more than the median upside, then you’ll be glad to know that this company is highly liquid and conservatively structured in terms of capital. Its current ratio was last observed as 4.6x, interest coverage as 27x, and D/E as 0.6x.
Source: MKS Annual Report
3. Vishay Intertechnology Inc (NYSE: VSH)
Vishay Intertechnology Inc, founded in 1962 and headquartered in Malvern, Pennsylvania, is an American manufacturer of discrete semiconductors and passive electronic components.
Such products are found in computing, automotive, industrial, telecommunications, consumer, power supplies, aerospace, military, and medical markets and serve customers worldwide.
The company’s product segments consist of two classes: semiconductors and passive components. Further, Vishay’s operating segment includes metal diodes, optoelectronic components, oxide semiconductor field-effect transistors, resistors, capacitors, and inductors.
The company generates most of its revenue through the manufacturing of resistors.
Based on the 3 analysts’ 12-month median price target of $21 and the stock’s trading price, VSH now has an 18% upside. The highest price target is $24 which represents a 34.9% upside and the lowest is $20 which represents a 12.4%.
Both the median and the lowest price targets are too conservative if you consider the fundamentals of this company. The highest price target is a far more reasonable prediction.
Vishay had a good run last year. It grew revenue and EPS by 29.5% and 141.2% on a YoY basis, respectively. It also generated a 17.1% return on its equity.
This may be a great time to buy this stock because of the current price. It is trading at 8.7 times its earnings per share and 1.5 times its book value. Obviously, Vishay is unreasonably undervalued.
If you’re looking for long-term growth, this may be a good stock for your portfolio too. Its current assets were last reported as 2.9 times its current liabilities. It also reported its earnings before interest as 26.7 times its interest expense.
Source: VSH Annual Report
4. Schneider National Inc (NYSE: SNDR)
Schneider National, founded in 1935 and headquartered in Green Bay, Wisconsin, is one of the largest US providers of truckload, intermodal, and logistics services. Though it’s been operating for more than 80 years, it completed its initial public offering in April 2017.
The company operates in the United States, Canada, and Mexico.
Based on the 14 analysts’ 12-month price target of $28 and the stock’s trading price, SNDR now has a 29.3% upside. The highest price target is $39 which represents an 80% upside and the lowest is $20 which represents a 7.6% downside.
The median price target is the most reasonable prediction here. The company’s fundamentals and current valuation make the highest price target too optimistic and the lowest one unreasonably bearish.
SNDR is one of those stocks that deserve to be in every growth investor’s portfolio. First, let’s look at its performance.
It generated a 16.7% return on its equity its last fiscal year and on a YoY basis, it grew revenue and EPS by 23.2% and 91.6%, respectively.
Now, let’s talk value. Its price is now trading at 9.5 times its EPS and 1.6 times its book value. It looks like the market hasn’t yet appreciated the opportunity for growth here.
And if it’s long-term profits that interest you, this is a stable company to stay invested in. Its current ratio was last observed as 1.8x and interest coverage as 42x. It’s also conservatively financed, considering its D/E ratio of 0.6x.
Source: SNDR Annual Report
More Growth Stock Ideas
With such great prices and strong fundamentals, you cannot go wrong with any of the above picks. Even if you are looking for long-term holding, all of the companies we mentioned here have strong liquidity and are conservatively financed.
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