In this article, we will discuss 10 best affordable stocks to buy now.
Recession Fears
The global financial market has been under duress in the past few months. To make matters worse, the Russian invasion of Ukraine has squeezed the global economy due to supply issues from Ukraine and sanctions on Russia.
In May, the Nasdaq and S&P 500 fell for 7 consecutive weeks while Dow Jones Industrial Average went further down for 8 consecutive weeks – the longest losing streak for indexes since the Great Depression in 1932. As of August 3, the S&P 500 was down 13.37% YTD while NASDAQ plunged 19.99%. According to TD Securities, there is a 50% probability that the US economy can go into a recession in the next 18 months. In another survey of 37 economists by Bloomberg, there is a 30% probability that the US economy will fall into a recession in the next 12 months. However, according to some metrics, it appears that the US economy is already in recession.
In the second quarter of 2022, the US GDP went down at an annual adjusted rate of 0.9%, compared to 1.6% in the previous quarter. Moreover, the recession concerns became more severe when the US economy experienced the deepest yield curve inversion since 2007. The benchmark 10-year Treasury note traded below the short-term 2-year Treasury, which happened twice in the first half of 2022.
However, despite the inflation and recession fears, there has been some good news lately. In July, the S&P 500 index experienced a 9.1% surge, the highest in the last two years. In June, US companies created 372,000 jobs, compared to the 250,000 consensus.
The China-Taiwan Conflict
The People’s Republic of China believes that Taiwan should be a part of it and on August 5, Zhang Junshe, a researcher at the PLA Navy Research Institute revealed that China has encircled Taiwan. During this commotion, US House Speaker Nancy Pelosi’s visit to Taiwan raised tensions between the US and Taiwan. If this conflict arises, it will have worse effects on the global economy than the Russian invasion because China supplies 6 times more global exports than Russia. According to United Nations, this war could lower the global economic growth to 3.1% compared to the current 4.0%. Furthermore, according to another report, a single year of the war can cut the US GDP by 5% to 10% and China’s by 25% to 35%.
Even in these times of macroeconomic headwinds, some affordable stocks with stable balance sheets and strong fundamentals have become a great buying opportunity. Some of these stocks are Coterra Energy Inc. (NYSE:CTRA), GFL Environmental Inc. (NYSE:GFL), and Halliburton Company (NYSE:HAL).
Our Methodology
These stocks were picked after a careful assessment of the current stock market. All the stocks on the list have a price range of $10-$30 as of August 3, 2022. For further understanding of the readers, recent financial reports, dividend history, and analyst estimates around the stocks have been added.
The companies have been listed in the ascending order of their stock price as of August 3. The hedge fund sentiment around these stocks has been taken from the Insider Monkey database of 900+ elite hedge funds.
Best Affordable Stocks to Buy Now
10. Energy Transfer LP (NYSE:ET)
Price as of August 3: $11.25
Energy Transfer LP (NYSE:ET) is a Dallas-based mid-stream company focusing on natural gas and propane pipeline transport. Between July 14 and 15, Richard Brannon, a Director of the company, purchased 137,680 shares of the company valued at $1.33 million.
On July 26, Energy Transfer LP (NYSE:ET)’s Board of Directors declared a quarterly dividend of $0.23, a 3-cent increase from the previous quarter. The dividend is payable on August 19 to the shareholders of record on August 6. As of August 2, the company has a dividend yield of 7.07% and a P/E ratio of 10.63.
On July 20, Barclays analyst Theresa Chen reaffirmed an Overweight rating on Energy Transfer LP (NYSE:ET)’s shares. The analyst lowered the price target to $13 from $14. Furthermore, she added that she forecasts “solid” Q2 earnings in the mid-stream sector and expects the group to “generally fare better than other energy subsectors amid a trading environment rife with volatility”.
Coterra Energy Inc. (NYSE:CTRA), GFL Environmental Inc. (NYSE:GFL), and Halliburton Company (NYSE:HAL) are some of the best affordable stocks to consider, in addition to Energy Transfer LP (NYSE:ET).
Here is what Miller Value Partners had to say about Energy Transfer LP (NYSE:ET) in its Q1 2022 investor letter:
“Energy Transfer LP (ET)rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Core of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash f low to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
9. Ford Motor Company (NYSE:F)
Price as of August 3: $15.69
Ford Motor Company (NYSE:F) is an American multinational auto manufacturer. The company sells its commercial vehicles and automobiles under the brand name Ford and it also has a luxury division under the name Lincoln.
Ford Motor Company (NYSE:F) reported a Q2 EPS of $0.68, outperforming the estimates by $0.23. The company also exceeded its revenue estimates by $2.73 billion after generating a revenue of $31.91 billion. The cash flow from operations surged to $2.9 billion, compared to $756 million in the same quarter of 2021. Going forward, the company expects an adjusted EBIT of $11.5 billion to $12.5 billion. Furthermore, the company’s FY2022 adjusted free cash flow estimates are between $5.5 billion to $6.5 billion.
On July 27, Ford Motor Company (NYSE:F) raised its quarterly dividend by 50% to $0.15, to be paid out on September 1, to the shareholders of record on August 11. As of August 3, the company has a dividend yield of 2.61% and a P/E ratio of 5.49.
Here is what Baron Funds had to say about Ford Motor Company (NYSE:F) in its Q1 2022 investor letter:
“Ford (NYSE:F) is another example of typical industrial manufacturing business executive mindsets. The April 18, 2022, Bloomberg Businessweek cover story features Ford CEO Jim Farley behind the wheel of an electrified Ford F-150 Lightning. The article is titled, “Hey Elon, THIS is a truck.” I thought the article was terrific. One idea especially stood out to me. Since the F-150 is such a popular vehicle, it “argued for a gradual approach to electrification. Essentially the company retrofitted an existing F-150 with an electric powertrain rather than develop an entirely new truck.” No all-in financial and operation bet by this company on electrification.”
8. Kimco Realty Corporation (NYSE:KIM)
Price as of August 3: $21.43
Kimco Realty Corporation (NYSE:KIM) is a REIT that holds the biggest market share in open-air shopping centres across North America. 80% of the company’s properties are grocery-anchored. On July 28, Kimco Realty Corporation (NYSE:KIM) reported its second-quarter results and also raised its FFO guidance. The company recorded an FFO of $0.40, exceeding the $0.38 consensus. The company posted a revenue of $419.9 million, exceeding estimates by $7.3 million. Moreover, Kimco Realty Corporation (NYSE:KIM) raised its 2022 FFO outlook to $1.54-$1.57 per diluted share, which was previously $1.50-$1.53.
Kimco Realty Corporation (NYSE:KIM) announced a cash dividend of $0.22 at the end of July, marking a 10% increase from the previous quarter. The company has also raised its dividend in the previous two quarters. The latest dividend is to be paid out by September 23, to the shareholders on record as of September 9. As of August 2, the company delivers a dividend yield of 3.62%.
7. Mattel, Inc. (NASDAQ:MAT)
Price as of August 3: $22.77
Mattel, Inc. (NASDAQ:MAT) is a multinational toy manufacturer operating in 35 countries and selling products in over 150. The company’s most famous toys include Barbie and Hot Wheels. On July 20, the company announced its multi-year deal with SpaceX to manufacture toys influenced by space voyages. The line will commence in FY2023.
For the second quarter of 2022, Mattel, Inc. (NASDAQ:MAT) posted a non-GAAP EPS of $0.18, compared to $0.06 estimates. The company generated revenues of $1.24 billion, representing a 20.4% increase on a YoY basis. Mattel, Inc. (NASDAQ:MAT)’s FY2022 outlook remains unchanged, with an EPS range of $1.42-$1.48. The company also expects its revenue to grow 8%-10% in constant currency.
On July 10, Goldman Sachs analyst Michael Ng upgraded Mattel, Inc. (NASDAQ:MAT)’s shares to Buy from Hold and raised his price target to $31 from $30. The analyst believes that despite the macroeconomic uncertainties, the company stands to benefit from internal demand drivers such as television and film content releases, hinting at the new Barbie movie to be released in 2023.
According to the Insider Monkey database, 38 hedge funds had a stake in Mattel, Inc. (NASDAQ:MAT) at the end of Q1 2022, compared to 29 in the previous quarter.
Here is what Longleaf Partners had to say about Mattel, Inc. in its Q4 2021 investor letter:
“Mattel (24%, 1.40%; 16%, 0.96%), the global toy and media company, was a strong contributor in the fourth quarter and for the year. Despite store closures in Asia causing -20% regional revenues during the third quarter, Mattel’s consolidated sales still grew 8% due to its strong North American recovery. Barbie sales remain impressive as they have been for years, American Girl is finally returning to growth and Fisher Price is also recovering. The company is successfully passing through inflated costs with higher pricing and without losing volume. Despite the impressive results, the stock trades too low at less than 14x forward earnings, and that is before Mattel begins to monetize its massive non-earning asset Intellectual Property portfolio. Our appraisal of the value grew by more than 30% this year.”
6. Marathon Oil Corporation (NYSE:MRO)
Price as of August 3: $22.89
Marathon Oil Corporation (NYSE:MRO) is an oil and gas exploration and production company. The company’s products are petroleum, natural gas, and natural gas liquids. As of August 3, the company stock has returned 35.68% YTD.
Marathon Oil Corporation (NYSE:MRO) announced its Q2 2022 results on August 3. The company reported an EPS of $1.32, outperforming the estimates by $0.04. Moreover, the company generated a revenue of $2.3 billion, beating the consensus by $190 million. Marathon Oil Corporation (NYSE:MRO) also recorded an adjusted cash flow from operations of around $1.586 billion and an adjusted free cash flow of $1.2 billion. The company ended its second quarter with $1.16 billion in cash and cash equivalents and extended its revolving credit facility of $2.5 billion to 2027.
During the second quarter of 2022, Marathon Oil Corporation (NYSE:MRO) returned 51% of its adjusted cash flow from operations to shareholders. Out of the total $816 million, $56 million was paid out as base dividend and $760 million was spent on share buybacks. As of August 3, Marathon Oil Corporation (NYSE:MRO) has a dividend yield of 1.33% and an annual dividend of $0.32. On July 27, the company declared a quarterly dividend of $0.08 to be paid out on September 12.
In addition to Marathon Oil Corporation (NYSE:MRO), Coterra Energy Inc. (NYSE:CTRA), GFL Environmental Inc. (NYSE:GFL), and Halliburton Company (NYSE:HAL) are some of the most significant affordable stocks.
Carillon Tower Advisers mentioned Marathon Oil Corporation (NYSE:MRO) in its first quarter 2022 investor letter. Here is what the firm said:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Marathon Oil (NYSE:MRO) increased its quarterly dividend and executed an impressive share buyback that blew by the target it originally announced.”
5. Univar Solutions Inc. (NYSE:UNVR)
Price as of August 3: $25.71
Univar Solutions Inc. (NYSE:UNVR) is a Washington-based global chemical manufacturer. It is the second-largest value-added chemical distributor in the world, with more than 100,000 customers across 130 countries. On August 2, Univar Solutions Inc. (NYSE:UNVR) reported its second-quarter 2022 earnings and raised full-year EBITDA guidance for FY2022. The company posted a non-GAAP EPS of $1, exceeding the consensus of $0.90. Revenue estimates of $2.95 billion also lagged behind the actual revenues of $3.02 billion. The adjusted EBITDA was recorded at $291.6 million compared to $197.5 million in the same quarter last year. Additionally, the company expects its adjusted EBITDA to increase between $1.04 billion and $1.08 billion in FY2022.
On August 1, Univar Solutions Inc. (NYSE:UNVR) announced the acquisition of Vicom Distribucion Productos Quimicos, a Spanish speciality chemical distributor. The acquisition’s main purpose is to expand the company’s well-established sub-segment and to ground itself in the European market.
On July 13, BofA analyst Steve Byrne maintained a Buy rating on Univar Solutions Inc. (NYSE:UNVR)’s shares and lowered the price target to $34 from $36.
Here is what Rhizome Partners had to say about Univar Solutions Inc. (NYSE:UNVR) in its Q1 2022 investor letter:
“Univar Solutions reported excellent results for the full year of 2021. More important, the company guided to $860-$890 million of EBITDA and $430-$445 million of free cash flow in 2022, with a net debt/EBITDA ratio between 2.0-2.5 times. The year 2022 will be the first normal year without any integration-related costs. We estimate that our cost basis in Univar is roughly 5.7 times 2022 P/FCF, with some lots purchased as low as 3.4 times during the Covid lows. We wish every high-quality business in our portfolio could be bought as cheaply as Univar.”
4. Teck Resources Limited (NYSE:TECK)
Price as of August 3: $28.04
Teck Resources Limited (NYSE:TECK) is a Canadian minerals and mining company. The company’s main operations revolve around coal, zinc, and copper. The company also has an engagement in solar energy.
At the end of the second quarter of 2022, Teck Resources Limited (NYSE:TECK) reported an adjusted profit attributable to shareholders of C$1.8 billion or C$3.3 per share. The adjusted EBITDA was recorded at C$3.3 billion, representing almost a 300% YoY growth. Moreover, the company generated a CFO of C$2.9 billion and exited the quarter with C$8.4 billion in liquidity, including C$3.3 billion in cash.
As of August 3, Teck Resources Limited (NYSE:TECK) has a dividend yield of 1.39% and a 3.54 P/E ratio. On July 27, the company announced a quarterly dividend of C$0.125 per share, payable on September 29. Furthermore, the company also authorized a share repurchase program of $500 million in the second quarter of 2022.
3. Halliburton Company (NYSE:HAL)
Price As of August 3: $28.43
Halliburton Company (NYSE:HAL) is a global oil and gas equipment company specializing in hydraulic fracturing operations. According to the Insider Monkey database, the firm was part of 47 hedge fund portfolios in the first quarter of 2022, compared to 43 in the previous quarter.
For the second quarter of 2022, Halliburton Company (NYSE:HAL) reported an EPS of $0.49, compared to $0.44 estimates. The revenue of $5.07 billion represented a 36.88% YoY growth and outperformed the estimates by $368.54 million. Moreover, the company recorded $215 million in free cash flow for the second quarter. The company has also reduced its debt by $600 million since the beginning of the year.
On July 15, Bank of America revised ratings and price targets for several oil and gas companies including Halliburton Company (NYSE:HAL). BofA sees a positive outlook for the international market and believes that it is set for accelerated growth in the second half of 2022 and 2023. For Halliburton Company (NYSE:HAL), BofA maintained a Buy rating on the stock and slashed the price target to $34 from $47.
As of July 2, Halliburton Company (NYSE:HAL) has a dividend yield of 1.64% with an annualized dividend payout of $0.48. The last quarterly dividend was valued at $0.12 per share and was paid out on June 22.
2. GFL Environmental Inc. (NYSE:GFL)
Price as of August 3: $28.50
GFL Environmental Inc. (NYSE:GFL) is a Canadian waste management company. The company provides collection, transportation, transfer, recycling, and disposal of non-hazardous solid waste services to its customers. On August 2, TD Securities analyst Tim James reaffirmed a Buy rating on GFL Environmental Inc. (NYSE:GFL)’s shares and raised his price target to C$55 from C$53.
GFL Environmental Inc. (NYSE:GFL) posted strong Q2 results with an EPS of $0.19, compared to $0.15 estimates. The company generated revenues of $1.33 billion, representing a 27% YoY growth and beating the forecasts by $116.97 million. Moreover, adjusted EBITDA was recorded at $453.3 million and adjusted cash flow from operations was $250.5 million. The adjusted free cash flow was reported to be $102.2 million.
On July 7, GFL Environmental Inc. (NYSE:GFL) declared a quarterly dividend of $0.012, which was paid on July 29 to the shareholders of record on July 16. As of August 3, the company has a dividend yield of 0.17%.
1. Coterra Energy Inc. (NYSE:CTRA)
Price as of August 3: $28.68
Coterra Energy Inc. (NYSE:CTRA) is a US-based oil and gas company operating mainly in the Marcellus Shale. The company also has properties in the Permian Basin and the Anadarko Basin. As of August 2, the company shares were up 50.13% year-to-date.
On August 2, Coterra Energy Inc. (NYSE:CTRA) declared a quarterly dividend of $0.65, to be paid on August 25 to shareholders of record on August 15. This will bring the quarterly shareholder return to $1.03 per share, including $0.38 per share of repurchases. The total shareholder returns were around 80% of the Q2 2022 free cash flow. Furthermore, Coterra Energy Inc. (NYSE:CTRA) made $303 million worth of repurchases in the second quarter.
You can also take a look at 10 Stocks To Buy According to William Von Mueffling’s Cantillon Capital Management and 10 Important Energy Stocks Making Moves After Earnings.
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Disclosure: None. 10 Best Affordable Stocks to Buy Now is originally published on Insider Monkey.
