In this article, we discuss 10 cheap value stocks to buy for 2022.
The theory of value investing rose to fame in the initial days of the Great Depression when two finance professors, Benjamin Graham and David Dodd, wrote their book called Security Analysis. In that book, they explained a different approach to trading, where investors should track the intrinsic value of stocks rather than estimating the future prices. The idea of value investing proposed diversification of stocks, which gave investors a margin of safety. Value investing also allows traders to detach from their immediate emotions when stock prices fluctuate, and enables them to hold the stocks for long-term gains rather than buying and selling if they’re feeling wildly optimistic or pessimistic because of price volatility.
The most famous value investors in the financial space include the legendary Warren Buffett, Seth Klarman, Bill Miller, Irving Kahn, Michael Price, and Joel Greenblatt, among others. Warren Buffett set the course for value investing for modern day traders, when he invested in cheap value stocks rather than expensive growth stocks and became one of the richest men in the world. Buffet has been a known disciple of the Benjamin Graham school of value investing, and is a believer of the efficient market hypothesis.
Returns of Value Stocks in 2021
Gerard O’Reilly, CEO and CIO of the $600 billion Texas-based private investment firm, Dimensional Fund Advisors, recently noted that the Russell 2000 Value Index is outperforming the major indexes like S&P 500, Dow, and the Nasdaq Composite, and is closing in on the Nasdaq 100. He believes that small-cap and value stocks are poised to keep growing in 2022.
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According to Morgan Stanley, the Russell 1000 Value Index and the Russell 2000 Value Index were both exceeding their respective growth indexes by 10 percentage points in 2021. Higher inflation and rising yields make growth stocks less appealing to investors, and the Morgan Stanley equity analysts believe that value trade is here to stay. The rising interest rates hurt growth stocks since they need to record significant profits to justify their inflated prices, however, interest rates do not have the same impact on value stocks, which are traditionally stable companies whose valuations are based on current cash flow.
Even though growth stocks like Amazon.com, Inc. (NASDAQ:AMZN), Shopify Inc. (NYSE:SHOP), Square, Inc. (NYSE:SQ), and salesforce.com, inc. (NYSE:CRM) usually score headlines, analysts are cautioning against relying too much on growth stocks. Recently, David Neuhauser, chief investment officer at U.S. hedge fund Livermore Partners, said the following in a CNBC program:
“I think that tends to see more investors dive into the growthier assets because they believe that in a low growth world, you want to own higher growth assets that keep up with inflation, or obviously outperform inflation. I think this time is going to be a bit different.”
Some of the popular value stocks include Berkshire Hathaway Inc. (NYSE:BRK-A), Toyota Motor Corporation (NYSE:TM), Verizon Communications Inc. (NYSE:VZ), and Citigroup Inc. (NYSE:C), among others discussed in detail below.
Our Methodology
We selected companies with a price to earnings ratio of less than 10, and made sure that the securities were priced under $30.
We also took into consideration growth catalysts, analyst ratings, and Q3 earnings. The securities are ranked according to the hedge fund sentiment surrounding each stock, which was gauged out of a total of 867 elite funds tracked by Insider Monkey in the third quarter.
Cheap Value Stocks to Buy for 2022
10. Western New England Bancorp, Inc. (NYSE:WNEB)
P/E Ratio: 9.33
Price as of December 9: $8.77
Number of Hedge Fund Holders: 9
Western New England Bancorp, Inc. (NYSE:WNEB), one of the best cheap value stocks to buy for 2022, is a Massachusetts-based bank holding company, offering financial services including residential, commercial, and consumer lending, via its subsidiary named Westfield Bank.
Western New England Bancorp, Inc. (NYSE:WNEB) announced earnings for Q3 on October 26. EPS for the quarter totaled $0.27, beating estimates by $0.05. The revenue over the period totaled $18.77 million, exceeding estimates by $920,000, up 17.35% from the prior-year quarter.
Jim Simons’ Renaissance Technologies is the leading stakeholder of Western New England Bancorp, Inc. (NYSE:WNEB) from the third quarter, holding 1.64 million shares worth over $14 million. Overall, 9 hedge funds were bullish on Western New England Bancorp, Inc. (NYSE:WNEB) in Q3, with total stakes amounting to almost $25 million.
Hovde Group analyst Bryce Rowe on September 17 upgraded Western New England Bancorp, Inc. (NYSE:WNEB) to Outperform from Market Perform with a $9.50 price target.
Western New England Bancorp, Inc. (NYSE:WNEB) is a notable value stock going into 2022, in addition to Berkshire Hathaway Inc. (NYSE:BRK-A), Toyota Motor Corporation (NYSE:TM), Verizon Communications Inc. (NYSE:VZ), and Citigroup Inc. (NYSE:C).
9. Barclays PLC (NYSE:BCS)
P/E Ratio: 5.92
Price as of December 9: $9.80
Number of Hedge Fund Holders: 12
A universal multinational bank, Barclays PLC (NYSE:BCS) is headquartered in London, England, and offers a range of financial services including retail banking, commercial banking, investment banking, wholesale banking, private banking, and wealth management. Barclays PLC (NYSE:BCS) operates two major divisions, Barclays UK and Barclays International.
Mike Masters’ Masters Capital Management is the leading Barclays PLC (NYSE:BCS) stakeholder from the 12 hedge funds that were bullish on the stock at the end of September 2021, holding 4 million shares worth $41.28 million.
On October 21, Barclays PLC (NYSE:BCS) reported its financial results for the nine months ending September 30. Revenue over the period totaled £16.78 billion, with Barclays PLC (NYSE:BCS) retaining robust profitability, reporting year-to-date profit before tax of close to £7 billion. The EPS came in at £0.308 for the nine months.
JPMorgan analyst Kian Abouhossein on December 6 raised the price target on Barclays PLC (NYSE:BCS) to £260 from £240 and kept an Overweight rating on the shares.
8. Chimera Investment Corporation (NYSE:CIM)
P/E Ratio: 5.73
Price as of December 9: $16.21
Number of Hedge Fund Holders: 16
Chimera Investment Corporation (NYSE:CIM) made it to the list of our best cheap value stocks because of its valuation and also because the company has consistently been paying dividends for the last 14 years, since its inception in 2007. On December 2, Chimera Investment Corporation (NYSE:CIM) announced a $0.33 dividend per common share, payable on January 27 to shareholders of record on December 30. Chimera Investment Corporation (NYSE:CIM) offers a high dividend yield of 8.13%.
Chimera Investment Corporation (NYSE:CIM) is a real estate investment trust from New York City, specializing in residential mortgage loans, asset securitization, and mortgage-related securities.
On November 3, Chimera Investment Corporation (NYSE:CIM) announced earnings for the quarter ending September 30, posting an EPS of $0.42, beating estimates by $0.05. The Q3 revenue equaled $149.23 million, up almost 21% from the preceding year quarter, outperforming estimates by $13.11 million.
The biggest Chimera Investment Corporation (NYSE:CIM) stakeholder from Q3 2021 is Arrowstreet Capital, with 4.82 million shares valued at $71.63 million. Overall, 16 hedge funds in the third quarter database of Insider Monkey were long Chimera Investment Corporation (NYSE:CIM), holding total stakes amounting to $155.62 million. This is comparable to the same number of funds in the preceding quarter, with a total stake value of $105.2 million.
7. UWM Holdings Corporation (NYSE:UWMC)
P/E Ratio: 0.48
Price as of December 9: $6.88
Number of Hedge Fund Holders: 16
As a wholesale lender, UWM Holdings Corporation (NYSE:UWMC) facilitates residential mortgage loans and provides lending advisory services in collaboration with independent mortgage brokers, correspondents, small banks, and local credit unions. UWM Holdings Corporation (NYSE:UWMC) is one of the best cheap value stocks to buy for 2022, with a price to earnings ratio of 0.48 and a stock price of $6.88 as of December 9.
UWM Holdings Corporation (NYSE:UWMC) posted its Q3 results on November 9. Earnings per share amounted to $0.16, exceeding EPS estimates by $0.04. The revenue over the period equaled $690.31 million, beating estimates by $61.53 million.
UBS analyst Brock Vandervliet on October 15 initiated coverage of UWM Holdings Corporation (NYSE:UWMC) with a Buy rating and a $8.50 price target. According to the analyst, the company is a “winner” and a “category killer” in the wholesale space, and its market share gains are not yet factored into the stock price. Vandervliet also observed that UWM Holdings Corporation (NYSE:UWMC)’s valuation is “compelling”, with the stock trading near all-time low valuations.
For beginner investors, who might find stocks like Amazon.com, Inc. (NASDAQ:AMZN), Shopify Inc. (NYSE:SHOP), Square, Inc. (NYSE:SQ), and salesforce.com, inc. (NYSE:CRM) expensive and overvalued, UWMC is a suitable investment option.
At the end of September this year, 16 hedge funds reported owning stakes in UWM Holdings Corporation (NYSE:UWMC), valued at $32.1 million. This is compared to 20 funds being bullish on the stock in Q2, holding total stakes amounting to $66.7 million.
6. Old Republic International Corporation (NYSE:ORI)
P/E Ratio: 5.16
Price as of December 9: $24.42
Number of Hedge Fund Holders: 20
Old Republic International Corporation (NYSE:ORI), on October 28, reported earnings for the third quarter. EPS in the period totaled $0.79, beating estimates by $0.16. The Q3 revenue jumped 17.05% year-over-year to $2.20 billion, exceeding estimates by roughly $348 million.
Old Republic International Corporation (NYSE:ORI) is an insurance holding company that operates 19 subsidiaries which are primarily involved in marketing, underwriting, and providing risk management services for a wide variety of coverages, mainly in the property and title insurance fields.
Offering a forward dividend yield of 3.61%, Old Republic International Corporation (NYSE:ORI) declared on November 24 a $0.22 per share quarterly dividend, payable on December 15 to shareholders of record on December 6.
Billionaire Ken Griffin’s Citadel Investment Group holds one of the largest positions in Old Republic International Corporation (NYSE:ORI), with 3.30 million shares worth $76.5 million. Overall, 20 hedge funds tracked by Insider Monkey were bullish on the stock in Q3, with total stakes valued at $357.5 million.
Unlike expensive growth stocks like Amazon.com, Inc. (NASDAQ:AMZN), Shopify Inc. (NYSE:SHOP), Square, Inc. (NYSE:SQ), and salesforce.com, inc. (NYSE:CRM), Old Republic International Corporation (NYSE:ORI) is a cheap value play.
5. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
P/E Ratio: 3.07
Price as of December 9: $11.18
Number of Hedge Fund Holders: 23
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) offers a high dividend yield of 17.89%. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is a Brazilian government-owned multinational petroleum corporation that deals in petroleum products, natural gas, lubricant, petrochemicals, fertilizers, and biofuels.
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) announced Q3 earnings on October 28. EPS in the quarter totaled $0.51, exceeding estimates by $0.02. Revenue over the period equaled $21.61 billion, missing estimates by $264.07 million. On November 16, HSBC analyst Lilyanna Yang upgraded Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) to Buy from Hold with a $13 price target.
The third quarter database of Insider Monkey reported that 23 hedge funds were bullish on Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR), holding stakes amounting to $3 billion. This is compared to 25 funds in the preceding quarter, with total stakes valued at $2.79 billion.
Rajiv Jain’s GQG Partners is the leading Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) stakeholder from Q3 2021, increasing his stake in the company by 25% at the end of September, holding over 173 million shares of the company, worth $1.79 billion.
4. United States Steel Corporation (NYSE:X)
P/E Ratio: 1.94
Price as of December 9: $23.13
Number of Hedge Fund Holders: 26
United States Steel Corporation (NYSE:X), a cheap value stock with a price to earnings ratio of 1.94, is a Pennsylvania-based integrated steel producer that operates in the United States and Central Europe, and deals in flat-rolled steel, tubular steel, and iron ore.
United States Steel Corporation (NYSE:X) posted its Q3 results on October 28, announcing an EPS of $5.36, beating estimates by $0.43. Revenue in the period increased almost 155% year-over-year to $5.96 billion, outperforming estimates by $210.07 million.
On November 16, Wolfe Research analyst Timna Tanners initiated coverage of United States Steel Corporation (NYSE:X) with a Peer Perform rating and a $27 price target, citing a cautious view on steel prices and “looming regional oversupply.”
As of the third quarter of 2021, 26 hedge funds tracked by Insider Monkey were bullish on United States Steel Corporation (NYSE:X), holding total stakes amounting to $576.3 million. The largest United States Steel Corporation (NYSE:X) stakeholder from Q3 is D E Shaw, holding 6.51 million shares worth over $143 million.
3. Vale S.A. (NYSE:VALE)
P/E Ratio: 4.05
Price as of December 9: $13.59
Number of Hedge Fund Holders: 27
Vale S.A. (NYSE:VALE), one of the best value stocks to buy for 2022, offers a forward dividend yield of 8.41%. Vale S.A. (NYSE:VALE) is the largest producer of iron ore and nickel in the world, and the mining company is one of the most significant Brazilian corporations that is expected to survive under low iron prices that are plaguing the industry in 2021.
Vale S.A. (NYSE:VALE) reported Q3 earnings on October 28. EPS in the quarter came in at $1.26, exceeding estimates by $0.19. The $12.68 billion revenue was up 17.84% from the prior year quarter, but missed estimates by $1.31 billion.
Morgan Stanley analyst Carlos De Alba on December 9 upgraded Vale S.A. (NYSE:VALE) to Overweight from Equal Weight with a price target of $16.50, up from $16, stating that iron ore prices are set to increase in the first half of 2022 due to sequentially higher steel output in China.
Fisher Asset Management holds a leading stake in Vale S.A. (NYSE:VALE) as of the end of September, with 34.86 million shares worth $486.35 million. Overall, 27 hedge funds monitored by Insider Monkey were long Vale S.A. (NYSE:VALE) in the third quarter, with total stakes amounting to $1.97 billion.
Here is what Miller Value Partners has to say about Vale S.A. (NYSE:VALE) in its Q3 2021 investor letter:
“Vale (VALE) was the top detractor over the quarter, falling 32.6% in sympathy with iron ore’s 48% decline from record highs on China capacity curbs and growing fears of financial issues within the property sector. Vale reported Q2 EBITDA of $11.24Bn, slightly below consensus of $11.47Bn on higher than expected iron ore cash costs. Free cash flow of $6.5Bn (35% annualized yield) came in well ahead of expectations, driving $2.6Bn of stock buybacks and a 1H21 dividend of $7.6Bn, implying year-to-date (YTD) shareholder returns of roughly $13.8Bn (19% of the current market cap). Management maintained FY21 production guidance for iron ore of 315-335 Metric tons (Mt) and lowered year-end 2022 exit capacity to 370Mt (from 400Mt) due to Northern System licensing delays. Additionally, the company hosted their annual Investor Day, outlining new production initiatives aimed at becoming a key supplier to steelmakers in light of decarbonization goals.”
2. Energy Transfer LP (NYSE:ET)
P/E Ratio: 4.77
Price as of December 9: $8.55
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) is a favorite stock of value investors, offering a 7.12% forward dividend yield at a stock price of $8.55, as of December 9. Energy Transfer LP (NYSE:ET) is a Texas-based company offering propane pipeline and natural gas transport services.
Energy Transfer LP (NYSE:ET), on November 3, posted earnings for Q3. EPS in the period equaled $0.20, missing estimates by -$0.03. The $16.66 billion revenue was up 67.39% year-over-year, beating estimates by $1.65 billion.
Of the 29 hedge funds that were bullish on Energy Transfer LP (NYSE:ET) in the third quarter, Abrams Capital Management is the leading stakeholder of the company, owning over 22 million shares worth approximately $212 million.
Here is what Miller Value Partners has to say about Energy Transfer LP (NYSE:ET) in its Q2 2021 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.”
1. Cleveland-Cliffs Inc. (NYSE:CLF)
P/E Ratio: 5.20
Price as of December 9: $21.17
Number of Hedge Fund Holders: 35
Cleveland-Cliffs Inc. (NYSE:CLF) is one of the best cheap value stocks to buy for 2022 according to the smart money, with 35 hedge funds monitored by the database of Insider Monkey owning positions in the company, with total stakes valued at $682 million as of Q3 2021. Jeffrey Gendell’s Tontine Asset Management is one of the leading Cleveland-Cliffs Inc. (NYSE:CLF) stakeholders, with a $148.9 million stake in the company in the third quarter.
Cleveland-Cliffs Inc. (NYSE:CLF) is a mining company from Ohio, producing iron ore pellets, direct reduced iron, steel, and stainless steel.
Cleveland-Cliffs Inc. (NYSE:CLF) reported third quarter earnings on October 22. EPS in the period totaled $2.35, surpassing estimates by $0.12. The Q3 revenue jumped 264.76% to $6 billion, outperforming estimates by $370.29 million.
Wolfe Research analyst Timna Tanners initiated coverage of Cleveland-Cliffs Inc. (NYSE:CLF) on November 16 with an Outperform rating and a $30 price target, even though Tanners has a cautious view on steel prices and believes the market is experiencing a surplus supply of steel.
You can also take a look at 11 Best High Dividend Stocks Under $50 and 11 Best American Stocks To Buy Now.
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Disclosure: None. 10 Cheap Value Stocks to Buy for 2022 is originally published on Insider Monkey.
