July 21, 2022, Ford Motor Company (NYSE:F) and MetLife, Inc. (NYSE:MET)

An undervalued automotive giant and an insurance staple leveraged to rising rates could be the best stocks to buy now.

Stocks gained for the second consecutive day on Wednesday (July 20, 2022). The Dow Jones closed rose marginally 0.15%, while the S&P gained 0.59%, and the Nasdaq led the way with a 1.58% increase. The reality on the ground is not perfect; however, sentiment appears to be cautiously shifting. In this evolving environment, Ford Motor Company (NYSE:F) and MetLife, Inc. (NYSE:MET) could be two of the best stocks to buy now. 

Ford, first and foremost, could be one of the best stocks to buy now for several reasons. It remains a favorite for deep-value investors and still sits at an attractive level at more than half its all-time high. The stock has also caught fire since its July 5 session low of $10.61 and shows signs that it may have bottomed. It continues to show remarkable resiliency and promise with rock-solid fundamentals and a high shareholder yield. Analysts, after all, see over 33.50% of upside.

With worldwide central banks hiking rates in droves, keep a close eye on MetLife over the next few quarters. If you believe interest rates will continue to climb, look no further than this insurance behemoth as another of the best stocks to buy now. As one of the world’s largest providers of insurance, annuities, and employee benefit programs, rising rates benefit this Company because it helps its premiums or ‘float’ increase. This, in turn, results in improved margins. Perhaps that’s why this stock is rated a STRONG BUY with over 23.50% of upside.  

So let’s jump in and explore why these two firms may be the best stocks to buy now.

Ford Motor Company (NYSE:F)

This blue-chip automaker remains undervalued but may have bottomed- don’t wait around on its 33.54% upside. 

Ford has been a prominent player in the automobile industry and a pioneer since its inception in 1903. It has been through two World Wars, a Great Depression, the inflation of the 1970s, the financial crisis, and COVID, and came out just fine. 

Notably, during the 2008 financial crisis, when all the major U.S. automakers begged for bailouts, Ford was the only one not to go bankrupt.  

Amid supply chain woes and inflation, we’re seeing similar trends today. 

The fact that it is the world’s number 4-ranked automaker in revenue and the Top Automaker in 2022’s JUST 100 rankings doesn’t hurt its case either.

Positioned at the Center of an Imminent EV Boom

With climate change looking more and more like an emergency and geopolitical squabbles forcing countries to fast-track plans to wean off fossil fuels, the global EV market could be set to soar. Forget about the fact that this industry could be a $46 trillion colossus by 2050. Catalysts in the near term are mounting. Europe, for one, could ban the sale of new combustion engine cars by 2035. 12 U.S. governors also support a ban on selling these vehicles by 2035 as well. 

Meanwhile, in the here and now, despite the recent dip in gas prices, electric vehicle demand in the U.S. continues to rise. The U.S. Postal Service, after all, just announced plans to double its delivery vehicle purchases.

Roughly a year ago, Ford announced plans to invest $22 billion in EVs with the goal that half of its vehicles will be electric by 2030.

In March of this year, Ford announced it would increase this figure to $50 billion and spread it over the next five years. Then, last month, Ford unveiled plans to invest $3.7 billion in new facilities in Michigan, Ohio, and Missouri, to focus on EVs while creating an estimated 74,000 jobs.

This week, Ford excited investors with a series of even more aggressive plans to accelerate its EV push. 

  • Ford announced plans to cut 4,000 salaried jobs. The goal is to trim costs to refocus the Company’s long-term transition to electric vehicles. The goal is to eliminate $3 billion in annual costs by 2026.
  • Following deals with Chinese battery maker CATL and Australian mining giant Rio Tinto, Ford announced it has more than enough supply deals to reach its goals. It proclaimed it could produce ​​600,000 EVs annually by late 2023 and more than 2 million by the end of 2026.  

Ford also now expects the CAGR for EVs to top 90% through 2026. That more than doubles industry forecasts. 

With Q2 Earnings Coming Out Next Week, Consider Ford’s Deep Value and Strong Fundamentals 

Ford’s earnings are projected to grow by 6.32% in the coming year. With Q2 earnings coming out next week, we will see what happens. However, what can’t be denied is that Ford boasts strong fundamentals while offering investors incredibly deep value.

In other words, no matter what happens, Ford has the backbone to be considered one of the best stocks to buy now. 

First and foremost, the stock has seen a significant uptrend since touching its 2022 lows on July 5. Yet, despite this, it remains more than 50% below its all-time highs and has many multiples suggesting that the stock remains deeply undervalued. 

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Ford currently trades with a: 

 

Its valuation also implies a solid 7.8% free cash flow yield.  

However, we can’t add further context to its deep value without discussing its fundamentals and dividends. Ford, after all, scored an 8 out of 9 on its Piotroski Score, which indicates healthy Liquid Balance Sheets, Profitability, and Operating Efficiency.

Ford’s 29.3% ROCE also indicates that it generates a healthy return on its common equity’s book value. Its 11.4% gross margin is nothing to scoff at either.  

Ford’s 3.18% dividend yield is also higher than the bottom 25% of all dividend-paying stocks.

Analysts See Over 33.50% of Upside

TipRanks notes that based on 17 Wall Street analysts offering 12-month price targets in the last 3 months, Ford’s average price target is $17.00. This considers its street-high price target of $25.00 and its low forecast of $10.00. The average price target represents a 33.54% upside from July 20, 2022’s closing price of $12.73.

 

F’s year-to-date low and high are $10.61 and $25.57, respectively. 

MetLife, Inc. (NYSE:MET)

This STRONG BUY insurance giant is tailor-made for rising rates with a 23.5+% upside.  

 

Rate hikes in the U.S. make a strong enough case for MetLife being one of the best stocks to buy now. As mentioned in the intro, when rates rise, rates on MetLife’s premium premiums or ‘float’ increase, which results in improved margins.

 

But this is not just a U.S. thing. MetLife is in 60 countries and serves over 90 million worldwide clients. It could be hedged to the upside of global rate hikes too. Consider what the Bank of Canada and the European Central Bank (ECB) did this week, for instance. Canada did the unthinkable and hiked rates by an entire percentage point. The ECB delivered its first rate hike in 11 years, hiked rates at half a percentage point, and signaled that this was only the beginning. 

 

As one of the largest global providers of insurance, annuities, and employee benefit programs, Metlife likely cheered this news with dollar signs in its eyes. Keep an eye on its next few quarters as global central bank tightening presumably intensifies.   

 

This is only a macro-level tailwind, though. Do a deeper dive into all the Metlife stock has to offer, and it undoubtedly looks like one of the best stocks to buy now. 

Strong Earnings, Strong Growth Prospects

MetLife reported a strong Q1 and will likely report a solid Q2 on August 3, 2022. In the previous quarter, MetLife beat bottom-line estimates with EPS coming in at $2.08, or $0.43 better than the forecasted $1.65. 

 

Net income also notably came in at $606 million, which more than doubled its $290 million from Q1 2021.  

 

Based on Q1 and the rising rate environment, MetLife could have even more considerable growth prospects and a likelihood to continue crushing estimates and beating year-over-year figures. 

 

Earnings for MetLife, after all, are expected to grow by 18.68% in the coming year.

MetLife Offers Deep Value With Solid Fundamentals and Outstanding Dividends  

The MetLife stock is down over 15% from its 2022 highs. 

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While it’s seen a mild uptrend over the last week or so, it still trades significantly below its enterprise value and with mouth-watering multiples. Consider the following, which make a very substantial deep value case:

 

Many of MetLife’s margins aren’t astronomical. However, its 29.5% gross margin is very good, and its 13.3% operating margin and 11.1% ROCE are solid. Moreover, its 7 out of 9 Piotroski Score indicates healthy Liquid Balance Sheets, Profitability, and Operating Efficiency.

 

Yet the dividend alone is why MetLife is one of the best stocks to buy now. It currently provides a dividend yield of 3.29%, which is very solid in this uncertain environment. It also increased its dividend for 5 years and could continue to do so based on its 25.91% payout ratio and projected 24.21% payout ratio next year. Finbox also estimates its dividend will grow 8.7% at a 3.7% 5-year CAGR.  

A 100% STRONG BUY With a 23.50%+ Average Upside

Out of 11 Wall Street analysts who offered 12-month price targets for MET in the last 3 months, 100% rated it a BUY. As in, nobody even considered giving it a HOLD or SELL rating. Needless to say, that’s a recipe for a STRONG BUY. Currently, MetLife has a street-high price target of $80.00, a low of $70.00, and an average of $75.73. Its average price target represents a 23.58% upside from July 20, 2022’s closing price of $61.28.

 

MET’s year-to-date low and high are $57.41 and $72.64, respectively.