June 10, 2022- Micron Technology, Inc. (NASDAQ:MU) and Owens Corning (NYSE:OC)
Despite being in opposite sectors, these two stocks offer profound value.
Rising rates and inflationary conditions have many investors seeing value plays as the best stocks to buy now. As the major indices continue treading water after a brutal first half of 2022, value stocks have managed to hold up while growth stocks have been slammed.
Depicting that is the performance of the Vanguard Value ETF vs. the Vanguard Growth ETF, ever since the growth ETF peaked in late 2021. The Value ETF, while somewhat down, outperformed the Growth ETF by 20+%.
When rates rise, the cost of borrowing rises. We saw this theme last year when the 10-year yield began increasing, and we’re seeing it again as the Fed hikes rates.
The indices sharply sold off on Thursday (June 9, 2022) as investors braced for the latest CPI inflation data. May’s CPI figure was 0.3% hotter than expected at 8.6%- its highest increase since 1981. The Dow Jones plummeted 640 points or 1.9%, while the S&P 500 dipped 2.4%, and the Nasdaq plunged 2.8.%.
In this environment, finding value should be paramount. Two stocks currently offer deep value based on their strong growth prospects and low P/E ratios.
They are also staples in their respective fields and could be positioned to rally once market conditions clear up.
Micron Technology, Inc. (NASDAQ:MU) and Owens Corning (NYSE:OC) are those stocks.
You can’t get more opposite than these two stocks. One stock is a tech stock that sells memory and storage products. The other manufactures and markets insulation, roofing, and fiberglass.
But what these two stocks share as the best stocks to buy now is their deep value.
Both stocks have trailing and forward P/E ratios under 10x, something that would’ve recently been unheard of.
Additionally, while Owens Corning’s stock is remarkably positive for the year, Micron sits nearly 33% below its highs with potentially 64+% of analyst upside.
You can’t go wrong with either of these companies. Here is why they’ve been selected as June 10, 2022’s best stocks to buy now.
Micron Technology, Inc. (NASDAQ:MU)
The world’s largest memory company trades well below its historical value and has a 64.09% analyst upside.
Micron Technology is an old-school, blue-blood tech play. It is one of the world’s largest semiconductor manufacturers, and it designs, manufactures, and sells memory and storage products worldwide.
That part of its description regarding memory doesn’t do Micron justice, though. It is the only U.S.-based memory manufacturer and the world’s largest memory company. It supplies more memory products than better-known names like Samsung and Hynix.
Its latest earnings indicate it could blunt the force of supply chain woes.
Judging from Micron’s Q2 earnings report, the Company is more than capable of withstanding the headwinds of inflation, supply chain logjams, and the chip shortage. It has planned ahead, stayed ahead of the curve, and thought outside the box by securing new supply sources and inking long-term agreements.
Perhaps it knew what was coming when it invested $150B in global manufacturing and R&D in October 2021.
Its Q2 earnings report from March 29, 2022, revealed that Micron continued to see strong demand, especially from data customers. It also continued to see solid pricing across all of its business segments.
Micron significantly beat earnings estimates by 10.81%. EPS came in at $2.05 compared to consensus estimates of $1.85. It also boasted over $1 billion in free cash flow and strong profitability. Revenue also came in at $7.79 billion and marked a quarterly increase from $7.69 billion and a year-over-year increase from $6.24.
Management also upgraded its current-quarter revenue guidance to $8.7 billion, which implies a 20% year-over-year increase.
With the Company expected to report earnings on June 30, 2022, after market close, keep your eyes on the stock over the next three weeks.
Micron’s supposedly a growth stock- but its margins indicate deep value.
Logic would tell you that Micron is supposed to be a growth stock. It’s a tech company at its core that’s seen its stock move over 4000% since the financial crisis.
Additionally, financial research site Finbox projects revenue to see a 17.4% 5-year CAGR and net income to grow 87.1% and average 20.1% over the next five fiscal years.
With potential growth like that, calling this stock dirt cheap is an understatement. Consider its following multiples:
Micron at this level is certainly one of the best stocks to buy now.
The margins paint an even prettier picture.
Its impressive margins make Micron’s deep discount look even more mouth-watering. These figures include its
Micron also has an 8 out of 9 Piotroski Score. This score rates a company based on the Liquidity of its Balance Sheets, Profitability, and Operating Efficiency.
Analysts are very high on MU’s upside as well.
Data from Tipranks reveals immense analyst upside. Over the last 3 months, 17 Wall Street analysts gave Micron strong 12-month price targets. Micron has an average price target of $108.33. Its high forecast is also $165.00 while its low is $70.00. Its average price target represents a 64.09% upside from June 9, 2022’s $66.02 closing price.
MU’s year-to-date low and high are also $65.86 and $98.45, respectively.
Owens Corning (NYSE:OC)
The construction material giant’s stock is positive year-to-date and remains deeply undervalued with an 8.5x trailing P/E and 8.1x forward P/E.
Since 1938, Owens Corning has been a prominent building product industry player. It manufactures and markets insulation, roofing, and fiberglass composite materials worldwide.
Although OC’s stock has been up and down in 2022 and relatively choppy, it is still net positive year-to-date. This is a significant accomplishment with the Nasdaq in a bear market and the Dow and S&P firmly in correction territory.
Enough about the chart- we’re here for the value.
What makes Owens Corning one of the best stocks to buy now is its deep value. Currently, the stock is trading with an 8.5x trailing P/E, 8.1x forward P/E, 0.16 PEG, and 1.0x forward and trailing price-to-sales.
This is a significantly discounted valuation. Especially when you consider that the Company reported 59% profit growth during the first quarter.
With housing and building demand expected to remain robust, management expressed confidence in the U.S. housing market’s resilience and the Company’s positioning to withstand inflation and supply chain woes.
Judging by how seriously Owens Corning has beaten the market, there may be more to the story.
Owens Corning is a dividend aristocrat.
If you love dividends, you’ll consider Owens Corning one of the best stocks to buy now. It has a 1.5% dividend yield, solid for a stock trading at around $94 a share. The Company also hiked its dividend by 35% earlier in the year while other cyclicals slashed or paused their dividend hikes.
This is also the seventh year in a row OC increased its dividend.
Perhaps that’s why Finbox sees its dividend growing by an 11.8% CAGR over the next five years.
Strong margins and growth projections add to Owens Corning’s deep value story.
A positive year-to-date return, deeply discounted multiples, and a consistently growing dividend make the Owens Corning stock look like the quintessential deep value play.
Its margins add even more to the story and depict a profitable company that runs efficiently. These include its
Furthermore, like Micron, Owens Corning has an 8 out of 9 Piotroski Score.
It’s frankly criminal for a stock to be trading at this deep discount when revenue could see an 8.4% 5-year CAGR. Or when net income could surge 15.8% and average a 6.2% increase over the next five fiscal years.
Barchart sees technical BUY signals.
Depending on what type of investor you are, you may or may not see technical analysis as witchcraft. But many see technicals as a way to spot the best stocks to buy now.
Barchart’s technical analysis of OC picks up several BUY signals. This includes all of its moving averages and MACD Oscillators.
Analysts are largely bullish on OC, too.
There remains upside for Owens Corning despite its outperformance year-to-date. Tipranks notes that in the last 3 months, 10 Wall Street analysts offered 12-month Owens Corning price targets. The OC stock’s average price target is $109.89, its high is$148.00, and its low is $95.00. OC’s average price target represents a 17.07% upside from June 9, 2022’s $93.87 close.
OC’s year-to-date low and high are $79.35 and $101.12, respectively.