10 Best Bargain Stocks To Buy Right Now

In this article, we shall discuss the 10 best bargain stocks to buy right now.

As of October 2022, the global economy is plummeting towards a recession, with investors incurring massive losses and financial setbacks. According to the October 2022 World Economic Outlook by the IMF, global economic growth is set to slow down from 3.2% to 2.7% in 2023. The report further ascertains that the global deceleration is likely to be broad-based, with the 2023 projection accounting for less than half of 2022’s 6% expansion. Countries which currently account for more than a third of the global economy are expected to suffer a two-quarter contraction in their real GDP in 2023. The report predicts that the future does not seem any less grim. With the Russia-Ukraine conflict showing no signs of resolution, central banks tightening monetary policies in advanced economies to counter rising inflation, and with China’s zero-COVID policy and fragile housing market dominating the macroeconomic plains, the International Monetary Fund predicts a one-in-four probability that global growth will fall below 2% in 2023, with a 15% likelihood of it dropping below 1% in 2024.

This is what Pierre Olivier Gourinchas, the IMF’s chief economist, had to say about the global economic condition in an interview with the Financial Times:

“We are not in a crisis yet, but things are really not looking good. 2023 will probably be the darkest hour for the global economy. As the global economy is headed for stormy waters, financial turmoil may well erupt, prompting investors to seek the protection of safe-haven investments, such as US Treasuries, and pushing the dollar even higher…”

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As Gourinchas has suggested, investors are looking towards profitable and lucrative bargain stocks to shield themselves from the grim macroeconomic headwinds. Bargain stocks are typically stocks trading at exceptionally low valuations, which are not accurately indicative of the shares’ intrinsic value in terms of fundamentals such as earnings, cash flow, and leverage. Some of the best bargain stocks to buy right now are Meta Platforms Inc. (NASDAQ:META), FedEx Corp. (NYSE:FDX), and Alibaba Group Holding Limited (NYSE:BABA). In this article, we shall underline 10 of the best bargain stocks to buy right now.

Our Methodology

For this article, we looked at stocks which are currently down more than 30% year-to-date, as of October 29. Then, we picked 10 stocks which have strong fundamentals, positive analyst ratings, favorable hedge fund sentiment, and are likely to rebound in 2023 or later. The stocks have been arranged based on the number of hedge funds which hold stakes in them, from lowest to highest.

Insider Monkey’s database tracking 895 elite hedge funds in Q2 2022 was used to gauge hedge fund sentiment around each stock.

Best Bargain Stocks To Buy Right Now

10. Coursera Inc. (NYSE:COUR)

Number of Hedge Fund Holdings: 20

YTD Decline (As of October 29): 48.20%

Based in California, Coursera Inc. (NYSE:COUR) is an American open online platform which, in collaboration with multiple universities and other organizations, provides online courses, certifications, and degrees in a variety of subjects. On October 26, Coursera Inc. posted Q3 2022 earnings, with the company beating EPS estimates of -$0.11 by $0.05, posting earnings of -$0.06 per share. Coursera Inc. posted a total revenue of $136.4 million in Q3 2022, beating consensus $128.3 million. Like Meta Platforms Inc. (NASDAQ:META), FedEx Corp. (NYSE:FDX), and Alibaba Group Holding Limited (NYSE:BABA), Coursera Inc. is one of the best bargain stocks to buy right now.

On October 28, Truist analyst Terry Tillman lowered the price target on Coursera Inc. to $17 from $20, maintaining a Buy rating on the shares. The analyst noted that although the company is currently dealing with macro issues in its North American and European markets, the professional certificate demand in Consumer business, Coursera for Government, and Coursera for Campus segments are going particularly strong, with the analyst expecting strong results for the company through 2026. Furthermore, Tillman contends that the company’s Massive Open Online Course market has immense growth potential and multiple tailwinds. Despite a dismal Q2 2022 performance, Tillman contends that the company’s fundamentals remain relatively strong and the headwinds faced by the company are strictly temporary.

 9. Blue Owl Capital Inc. (NYSE:OWL)

Number of Hedge Fund Holdings: 24

YTD Decline (As of October 29): 31.53%

Headquartered in New York City, Blue Owl Capital (NYSE:OWL) is an American alternative investment asset management firm. Hedge fund sentiment around Blue Owl Capital increased in the second quarter of 2022, with 24 hedge funds having stakes worth $608.3 million in the company. This was up from 23 hedge funds long the stock in the preceding quarter. In the second quarter of 2022, Blue Pool Capital was the largest shareholder in Blue Owl Capital, having stakes worth $490.8 million in the company. Moreover, in Q2 2022, Blue Owl Capital posted an EPS of $0.13, beating estimates of $0.11 by $0.02.

On October 12, Deutsche Bank analyst Brian Bedell lowered the price target on Blue Owl Capital to $16 from $19, maintaining a Buy rating on the shares. According to Bedell, Blue Owl Capital is the best positioned alternative assets company to perform into the 2023 earnings prints. Overall, the analyst points out that the company’s price declines in 2022 spell excellent long-term entry points. He also points out that the company has an excellent growth outlook, with the company’s defensiveness and growth not showing in its current valuations.

8. Sony Group Corporation (NYSE:SONY)

Number of Hedge Fund Holdings: 26

YTD Decline (As of October 29): 34.61%

Headquartered in Minato, Tokyo, Sony Group Corp. (NYSE:SONY) is a Japanese multinational conglomerate corporation which manufactures consumer and professional electronic products, video game consoles, and is one of the largest video game publishers in the world. Sony Group Corp. managed to maintain hedge fund sentiment, with 26 hedge funds long the stock in both, Q1 and Q2 of 2022. As of the second quarter of 2022, GAMCO Investors is the largest stakeholder in the company, with total stakes valued at $146.5 million.

Although the video game landscape is incredibly cut-throat, Sony Group Corp. is navigating through the market headwinds fairly successfully. The company’s video game publishing division is highly profitable, with games constantly topping charts and raking in big numbers. Despite its relatively smaller size, the company’s Image and Sensing Solutions division is also quite promising. Although the large size of the company makes it unlikely for Sony to achieve any significant revenue growth, the business fundamentals outline a strong year for the company in 2023. Like Meta Platforms Inc. (NASDAQ:META), FedEx Corp. (NYSE:FDX), and Alibaba Group Holding Limited (NYSE:BABA), Sony’s (NYSE:SONY) low valuation provides an excellent long-term entry point for investors.

Here is what Aristotle Capital Management had to say about Sony Group Corp. in their Q1 2022 investor letter:

“Sony, maker of the PlayStation videogame console, was a leading detractor for the quarter. After a strong year in 2021, a shortfall in PlayStation 5 sales due to continued semiconductor shortages has dampened new console unit sales. Although there are likely to be continued limitations on the supply of components in the short term, consumer demand remains strong, and upcoming releases of major titles such as Horizon Forbidden West and Gran Turismo 7 are likely to further enhance demand. While Sony continues to manage supply-chain headwinds, the company has also again demonstrated its ability to build on the fundamental strength of its business across various segments. During the quarter, Sony acquired Bungie, a U.S.-based videogame developer known for the Destiny franchise and live game services; completed its initial equity investment in Japan Advanced Semiconductor Manufacturing, a foundry service subsidiary of Taiwan Semiconductor Manufacturing Company (TSMC); and acquired Brazilian music label Som Livre. Lastly, Sony announced a partnership with Honda Motor (NYSE:HMC) where the two companies expect to combine Honda’s expertise in manufacturing vehicles with Sony’s proficiency in imaging, sensing, telecommunication and network technologies to develop and commercialize electric vehicles. We feel these strategic actions demonstrate Sony’s ability to continue to improve on its market positions across its business segments with a long-term, forward-looking approach.”

7. Toast Inc. (NYSE:TOST)

Number of Hedge Fund Holdings: 40

YTD Decline (As of October 29): 32.88%

Based in Boston, Massachusetts, Toast Inc. (NYSE:TOST) is an American cloud-based restaurant management software company which provides an all-in-one point of sale system built on Android. As of the second quarter of 2022, the company beat EPS estimates of -$0.12 by $0.04, posting earnings of -$0.08 per share. Investor interest around Toast Inc. increased in the second quarter of 2022, with 40 hedge funds holding stakes in the company, up from 39 hedge funds in the preceding quarter. The company has been generating strong revenue growth, posting a total revenue of $675 million in Q2 2022.

On October 10, Mizuho analyst Dan Dolev upgraded Toast Inc. to Buy from Neutral, with a price target of $24, up from $22. The analyst’s survey of over 55 restaurants operating on the company’s platforms sheds light upon the promising impact on sales and profits from cross-selling payroll and adjacent software-as-a-service products. He noted that restaurants using the company’s platforms for payroll tend to use a higher number of SaaS products on average and spend significantly more, at least $5000 more per annum, than restaurants who don’t. He believes continued payroll and SaaS cross-sell success is expected to propel the company to profitability in 2024, one year in advance of the current consensus expectation.

Here is what Baron Funds had to say about Toast’s (NYSE:TOST) long-term prospects in their Q3 2021 investor letter:

“Toast, Inc. is a cloud-based, end-to-end technology platform purpose-built for the restaurant industry. Its platform provides a comprehensive suite of cloud software products and financial technology solutions to its customers to connect front-of-house with back-of-house operations across all customer channels. Toast’s core module is its point-of-sale software solution and requires all customers to use Toast as their payment processor. Customers then have the option to bundle or add-on additional modules across operations, digital ordering and delivery, marketing and loyalty, team management, and back office. Toast today powers 48,000 restaurants within the 860,000 U.S. restaurant industry, largely focusing on small- and medium-sized (“SMB”) restaurant customers (generally fewer than 10 locations but up to 50), with some larger enterprise customers as well. Toast is the clear market leader in SMB restaurant technology with the best product offering and only full, end-to-end platform. We believe that as restaurants continue to invest in technology at an accelerated pace emerging from COVID, Toast will be a big beneficiary given its leading market position and best-in-class product. At less than 6% penetration of U.S. restaurants and 3% penetration of its $15 billion recurring-revenue TAM, Toast has a long runway for growth by signing on additional locations to the platform and increasing the attach rate of its value-add modules. Only 54% of customers today use 4 or more of Toast’s 10-plus modules, each of which provide significant value to the customer and would drive Toast’s recurring revenue stream higher.”

6. Pinterest Inc. (NYSE:PINS)

Number of Hedge Fund Holdings: 41

YTD Decline (As of October 29): 31.61%

Headquartered in San Francisco, California, Pinterest Inc. (NYSE:PINS) is an image sharing and social media service designed specifically to enable saving and discovery of information on the internet. The company posted their third-quarter results on October 27,  posting an EPS of $0.11, beating estimates of $0.06 by $0.05. The company recorded an 8.2% year-over-year growth in revenue in Q3 2022, beating consensus by $18.37 million by posting a revenue of $685 million.

On October 5, Goldman Sachs analyst Eric Sheridan upgraded Pinterest Inc. to Buy from Neutral with a price target of $31, up from $24. Although the analyst concedes that the digital advertising landscape is cloudy and uncertain, he has more positive expectations from improved user growth and engagement trends for the company over the medium and long term. According to the analyst, there is immense upside potential to the revenue growth trajectory and operating margin estimates, as the company moves into 2023. Sheridan also shed light upon the fact that his recent analysis boosts his confidence in Pinterest’s (NYSE:PINS) ability to expand upon monetization and capture a larger share of advertisement budgets, as the company executes against its shopping and commerce opportunity. Like Meta Platforms Inc. (NASDAQ:META), FedEx Corp. (NYSE:FDX), and Alibaba Group Holding Limited (NYSE:BABA), the analyst also sees the company being well leveraged to long-term secular growth themes such as ad spend shifting online, social commerce, and creator economy over the long term.

Here is what RiverPark Funds had to say about Pinterest Inc. in their Q3 2022 investor letter:

“PINS reported better-than-feared results in an online advertising sector that has struggled during 2022. Additionally, new CEO Bill Ready provided a positive strategic view for the company and activist investor, and now top shareholder Elliott Management supports the view that the company should improve on its 2Q 14% adjusted EBITDA margin (4Q21 margin was 41%). For 2Q22, PINS posted revenue growth of 9%, with average revenue per user increasing 17% year over year on slightly decreased global users (down 5%). The company has over 430 million monthly active users, and we view the growth of monetization to be a much more compelling data point than a marginal decline in this enormous base of users.

Along with our other social media advertising holdings SNAP and META, we believe Pinterest to be an extremely well-positioned internet advertising platform. Users are increasingly coming to Pinterest to get inspiration for their home, their style or upcoming travel, which often means they are actively looking for products and services to buy. The company currently has 433 million MAU’s, 2/3 of whom are female (who continue to control the lion’s share of household purchasing budgets), which positions the company well to continue to take share of future ad dollar allocations. In addition, PINS’ TTM ARPU was $6, significantly less than SNAP’s $16, and Meta’s $32. Closing the ARPU gap with its peers while expanding user engagement should drive a minimum of 20% annual revenue growth over the next few years. In addition, if EBITDA margins merely return to last year’s levels (and we believe they should then scale higher from there), the company should be able to generate strong growth in earnings and cash flow in the years to come.”

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5. Ford Motors Co. (NYSE:F)

Number of Hedge Fund Holdings: 46

YTD Decline (As of October 29): 39.09%

Based in Dearborn, Michigan, Ford Motors (NYSE:F) is an American multinational automobile manufacturer which specializes in the production and sale of automobiles, commercial vehicles, and luxury cars. On October 26, the company posted Q3 2022 earnings, generating a total revenue of $39.4 billion, beating consensus $36.25 billion. Ford Motors beat EPS estimates of $0.27 by $0.03, posting earnings of $0.30 per share in Q3 2022.

On October 5, Morgan Stanley analyst Adam Jonas upgraded the rating on Ford Motors to Overweight from Equal Weight, citing the company’s creation of Ford Blue and Ford Model E, which have the potential to better align the growth and capex needs of the EV business with a more favorable cost of capital, which is likely to profit the company through to 2027.

Here is what Leaven Partners had to say about Ford Motors in their Q3 2022 investor letter:

“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Ford (NYSE:F), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%^[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”

4. Micron Technology Inc. (NASDAQ:MU)

Number of Hedge Fund Holdings: 69

YTD Decline (As of October 29): 43.56%

Headquartered in Boise, Idaho, Micron Technology Inc. (NASDAQ:MU) is an American producer of computer memory and computer data storage including dynamic random-access memory (DRAM), flash-memory, and USB flash drives. The company’s consumer products are marketed under the brands Crucial and Ballistix. In Q3 2022, the company beat EPS estimates of $1.30 by $0.15, posting earnings of $1.45 per share.

On October 13, Loop Capital analyst Charles Park initiated coverage of Micron Technology Inc. with a Buy rating and a $70 price target. Although the analyst expects DRAM  fundamentals to bottom in the first half of 2023, with the near-term macro and demand uncertainties remaining stringent, the memory industry offers a favorable risk/reward ratio, and is likely to pick up in 2024. He contends that with the stock’s low valuation, coupled with drastic cuts in spending of almost 30% year-over-year in Q2 2022, it provides an excellent entry-point for long-term investors.

Here is what Claret Asset Management had to say about Micron Technology Inc. in their Q3 2022 investor letter:

“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party is over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”

3. Booking Holdings Inc. (NASDAQ:BKNG)

Number of Hedge Fund Holdings: 93

YTD Decline (As of October 29): 31.96%

Booking Holdings Inc. (NASDAQ:BKNG) is an American travel technology company based in Norwalk, Connecticut. The company owns and operates several travel fare aggregators and travel fare metasearch engines. After a disappointing 2021, the company’s fundamentals have been on the rebound during Q2 2022, with management issuing a bullish guideline for Q3 2022 in early August. As of the second quarter of 2022, the company posted an EPS of $19.08, beating estimates of $17.48 by $1.60.

Number of Hedge Fund Holdings: 97

YTD Decline (As of October 29): 55.76%

Based in San Jose, California, PayPal Holdings Inc. (NASDAQ:PYPL) is an American multinational financial technology company which operates an online payments system in the majority of countries which support online money transfers, and also provides electronic alternatives to traditional paper methods such as checks and money orders. As of the second quarter of 2022, the company beat EPS estimates of $0.86 by $0.07, posting earnings of $0.93 per share. Net revenues for the stock are expected to reach up to $7.02 billion in Q3 2022, growing about 10% on a spot basis.

On October 12, Atlantic Equities analyst Kunaal Malde lowered the price target on PayPal Holdings Inc. to $110 from $120, maintaining an Overweight rating on the shares. According to the analyst, as the threat of an impending recession becomes more apparent, he is assuming a modest economic downturn in 2023 forecasts. The company’s market cap is set to triple by 2030, with the current leadership of the company focused on acquisitions, share buybacks, a strong cash position, and meaningful partnerships. All these factors are potential growth drivers for the company, with the company aiming to increase its presence in developed countries, where the platform’s consumer penetration is still below 50%. And since payment stocks are beginning to discount, the analyst maintains that high-quality stocks like PayPal Holdings Inc. have attractive valuations and limited downside to consensus earnings forecasts, making them an excellent investment opportunity for the long-term investor.

Here is what RiverPark Funds had to say about PayPal Holdings Inc. in their Q3 2022 investor letter:

“PayPal, announced better-than-expected 2Q results, positive guidance (including more than $1.3 billion of 2023 cost savings leading to operating margin expansion), a $15 billion stock repurchase program, and the appointment of Blake Jorgensen as CFO, who was previously the well-regarded CFO at Electronic Arts. The company reported 9% revenue growth, in-line with guidance, and $0.93 EPS, exceeding guidance due to robust operating leverage. Management narrowed its 2022 revenue guidance from 11%-13% growth to about 11% growth due to the macro environment but raised its EPS guidance due to greater operating margin leverage and share buybacks. The stock also reacted to the news that activist investor Elliott Management had taken a stake in the company. PYPL operates at significantly lower margins than its payment competitors Visa and Mastercard, and sources suggest that Elliott intends, among other things, to push for the company to improve its margins and drive higher cash flow growth in the near term.

PayPal provides direct exposure to the secular growth in ecommerce-driven digital payments as it is the most accepted digital wallet on-line. More than 3/4 of the 1,500 largest online retailers across North America and Europe accept PayPal, which is almost triple the acceptance of Apple Pay, the number two digital wallet. PayPal is also a key beneficiary of the current dramatic shift in consumer buying habits brought on by the pandemic, as well as the relatively newer consumer-to-consumer payment trends through its Venmo peer-to-peer (P2P) payment service. With a 2Q non-GAAP operating margin of 19%, PYPL also has significant margin expansion potential given that competitors Adyen, Visa and Mastercard have 50%-65% operating margins. We believe the combination of the secular growth of eCommerce and P2P payments, along with expanding operating leverage and the strategic use of the company’s significant and growing cash balance should fuel a mid-20% earnings growth rate over the next five years. This, to us, presents an excellent risk/reward profile given that PYPL trades at a modest premium to the market multiple and a 6% 2023 FCF yield.”

1. Meta Platforms Inc. (NASDAQ:META)

Number of Hedge Fund Holdings: 184

YTD Decline (As of October 29): 70.70%

Based in Menlo Park, California, Meta Platforms Inc. is an American multinational technology conglomerate which owns popular social media sites like Facebook, Instagram, and WhatsApp, among other products and services. Although the company’s Q3 2022 earnings report was dismal, with shares plummeting to 70.70% year-to-date as of October 29, the company is still highly lucrative to support its high-potential bets in the long-term. The addressable markets of the company’s VR initiatives are beyond video games and social networks, and the timeline to capitalize on these highly nonlinear potentials is closer than the market recognizes, given the recent advancements in AI and VR algorithms.

On October 28, MKM Partners analyst Rohit Kulkarni lowered the price target on Meta Platforms Inc. to $140 from $195, keeping a Buy rating on the shares. The analyst noted that Meta Platforms Inc. posted a favorable upside in Q3 2022 revenue, with impressive growth in engagement and active users. The outlook for 2023 returns imply a substantial step-up relative to expectations  and though the stock may not see any relief in the near-term, with engagement continuing to rise, the company has turned a monetization corner with rising contributions from messaging ads, reels, and WhatsApp ads.

Here is what Wedgewood Partners had to say about Meta Platforms Inc. in their Q3 2022 investor letter:

“Meta Platforms, Inc. (NASDAQ:META) detracted from performance during the quarter. Meta’s advertising revenue grew +3% (currency-adjusted) over 2021 and is up +70% since 2019 (pre-pandemic). The shift of advertisers and consumers to social media has been fairly dramatic and sticky. The Company reported $2.88 billion “daily active people” of its Family of Apps (as of June 2022) and is +35% higher than the comparable month pre-COVID (June 2019). Meta also serves over 10 million advertisers which is up from 8 million in January 2020. In spite of these impressive gains, the stock now trades at absolute levels well below where it traded before the pandemic. We suspect much of the market’s concern revolves around slowing revenue growth. It is fairly evident that there was a tremendous pull-forward of demand for many businesses and services over the past couple of years, and that the normalization of revenue growth from that “pull-forward” is hardly an existential crisis. Further, while Meta’s profit margins have fallen below pre-pandemic levels, it’s important to note that the Company likely hired well in excess of what it needed because it assumed the pandemic induced growth would continue. Meta has plenty of room to moderate its expense base and drive significant value by repurchasing shares at today’s historically depressed multiples.”

You can also take a peek at 12 Biggest Genomics Companies in the World and 10 Best Medical Stocks Under $5.

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This article is originally published at Insider Monkey.