Top 10 Extreme Value Stocks To Buy Now

In this article, we discuss the top 10 extreme value stocks to buy now.

Value investing is an investment strategy that consists of selecting stocks which seem to be trading for less than their intrinsic or book value. In the ever-evolving and often strange world of investing, investors who seek value plays can follow the Roundhill Acquirers Deep Value ETF, which offers retail and institutional investors exposure to largely undervalued stocks, and seeks investment results that closely track the performance of the Acquirers Deep Value Index. The fund has $42 million in assets under management and an expense ratio of 0.80%. The Roundhill Acquirers Deep Value ETF was launched on September 23, 2014. 

David Einhorn, the portfolio manager of Greenlight Capital, said in the beginning of October 2022 that value investing might never be mainstream again. He noted that there are very few market participants who are actually well versed in value investing, and most investors have turned to passive and quantitative investing. He said that “nobody knows what anything is worth” and explaining his stance further, Einhorn told Bloomberg: 

“So there’s an enormous number of companies that are dramatically mis-valued in ways that we haven’t seen before.”

On the other hand, Aaron Dunn and Brad Galko, Co-Heads of the Value team at Eaton Vance, part of Morgan Stanley Investment Management, stated on June 17 that financial services, healthcare, and industrials may provide lucrative investment opportunities in the current market backdrop. They noted that companies manufacturing medical technology and pharmaceuticals are also attractive value-investing plays. 

Some of the best value stocks include JPMorgan Chase & Co. (NYSE:JPM), Walgreens Boots Alliance, Inc. (NASDAQ:WBA), and QUALCOMM Incorporated (NASDAQ:QCOM). 

Our Methodology 

Our starting point for this article is the 56 holdings of the Roundhill Acquirers Deep Value ETF (DEEP). DEEP invested at least 1% of its assets in each of these stocks. We then obtained the number of hedge funds as well as the total dollar value of hedge fund holdings in each of these stocks using Insider Monkey’s Q3 2022 database of 920 elite hedge funds. After sorting these stocks by hedge fund popularity, we narrowed our list to 10 extreme value stocks.

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Top Extreme Value Stocks To Buy Now

10. The Children’s Place, Inc. (NASDAQ:PLCE)

Number of Hedge Fund Holders: 21

The Children’s Place, Inc. (NASDAQ:PLCE) is a New Jersey-based company that operates as a children’s specialty apparel retailer under the proprietary The Children’s Place, Place, Baby Place, Gymboree, and Sugar & Jade brand names. The company posted a Q3 2022 revenue of $509.12 million, beating Wall Street estimates by $9.67 million. 

On November 18, UBS analyst Jay Sole maintained a Neutral rating on The Children’s Place, Inc. (NASDAQ:PLCE) but lowered the firm’s price target on the shares to $41 from $43. The company’s soft Q3 results will potentially send the stock lower, the analyst told investors in a research note.

According to Insider Monkey’s third quarter database, 21 hedge funds were bullish on The Children’s Place, Inc. (NASDAQ:PLCE), with collective stakes worth $54.7 million, compared to 15 funds in the prior quarter worth $58 million. Dmitry Balyasny’s Balyasny Asset Management is the largest stakeholder of the company, with 296,994 shares worth $9 million. 

In addition to JPMorgan Chase & Co. (NYSE:JPM), Walgreens Boots Alliance, Inc. (NASDAQ:WBA), and QUALCOMM Incorporated (NASDAQ:QCOM), The Children’s Place, Inc. (NASDAQ:PLCE) is one of the top value stocks to monitor. 

9. Camping World Holdings, Inc. (NYSE:CWH)

Number of Hedge Fund Holders: 22

Camping World Holdings, Inc. (NYSE:CWH) was founded in 1966 and is headquartered in Lincolnshire, Illinois. The company retails recreational vehicles, as well as related products and services. On November 21, Camping World Holdings, Inc. (NYSE:CWH) declared a $0.625 per share quarterly dividend, in line with previous. The dividend is payable on December 29, to shareholders of record on December 14. The dividend yield on December 5 came in at 9.02%. 

On November 28, Camping World Holdings, Inc. (NYSE:CWH) announced that it will acquire California-based RV Solutions Inc., a family-owned RV dealership group for an undisclosed sum. With this move, Camping World Holdings, Inc. (NYSE:CWH)’s footprint will expand to 18 locations in the Golden State. The acquisition will be finalized in the first quarter of 2023.

Truist analyst Michael Swartz on September 23 maintained a Hold rating on Camping World Holdings, Inc. (NYSE:CWH) and lowered the price target on the shares to $25 from $30 as part of a broader research note on Recreational Vehicles. The analyst noted that the RV space could be in for “tough sledding” until estimates “hopefully” bottom by the first half of 2023.

According to Insider Monkey’s data, 22 hedge funds were long Camping World Holdings, Inc. (NYSE:CWH) at the end of Q3 2022, compared to 17 funds in the prior quarter. David Abrams’ Abrams Capital Management is the leading stakeholder of the company, with 5.10 million shares worth $129.35 million. 

8. The Buckle, Inc. (NYSE:BKE)

Number of Hedge Fund Holders: 23

The Buckle, Inc. (NYSE:BKE) is a Nebraska-based company that operates as a retailer of casual apparel, footwear, and accessories for men and women in the United States. On November 18, The Buckle, Inc. (NYSE:BKE) reported a Q3 GAAP EPS of $1.24, beating market estimates by $0.05. The revenue of $332.34 million climbed 4% year-over-year, in-line with market consensus. Online sales increased 8.8% to $55 million for the 13-week period ended October 29, 2022, compared to net sales of $50.5 million for the 13-week period ended October 30, 2021. The Buckle, Inc. (NYSE:BKE) is one of the top extreme value stocks to invest in. 

According to Insider Monkey’s data, 23 hedge funds were bullish on The Buckle, Inc. (NYSE:BKE) at the end of the third quarter of 2022, with collective stakes worth $96 million, compared to 23 funds in the prior quarter worth $98.2 million. Jim Simons’ Renaissance Technologies is the leading position holder in the company, with 832,952 shares valued at $26.3 million. 

Miller Value Partners made the following comment about The Buckle, Inc. (NYSE:BKE) in its Q3 2022 investor letter:

“The Buckle, Inc. (NYSE:BKE) had a strong quarter, climbing 14.1%2. Buckle reported 2Q23 net sales of $302.0 million, +2.3% Y/Y, slightly below consensus of $304.3 million, and EPS of $1.01, -2.9% Y/Y, ahead of analyst expectations for EPS of $0.89. The company achieved gross margin of 48.1%, in-line with 2Q21 gross margin, as management noted on the earnings call that “markdown inventory continues to be clean.” Comparable store net sales and online sales saw Y/Y growth of 1.6% and 6.5%, respectively. Free cash flow for the quarter was $40.2MM, bringing TTM FCF to $220MM, or a FCF yield of 12.9%.”

7. Winnebago Industries, Inc. (NYSE:WGO)

Number of Hedge Fund Holders: 23

Winnebago Industries, Inc. (NYSE:WGO) was incorporated in 1958 and is based in Forest City, Iowa. The company manufactures and sells recreation vehicles and marine products for use in leisure travel and outdoor recreation activities. The company operates in six segments – Grand Design Towables, Winnebago Towables, Winnebago Motorhomes, Newmar motorhomes, Chris-Craft Marine, and Winnebago Specialty Vehicles. It is one of the premier extreme value stocks to buy now. 

Winnebago Industries, Inc. (NYSE:WGO) reported its third quarter results on October 19. The non-GAAP EPS came in at $3.02 and the revenue stood at $1.18 billion, outperforming Wall Street estimates by $0.30 and $70 million, respectively. Adjusted EBITDA was $139.2 million for the quarter, an increase of 7.9% compared to $129 million last year.

On October 24, DA Davidson analyst Brandon Rolle maintained a Neutral rating on Winnebago Industries, Inc. (NYSE:WGO) and lowered the price target on the shares to $54 from $60. The company’s Q4 results were a positive surprise, but the management’s earnings call also reiterated a lot of the channel work that he conducted entering the print that called for softer than expected Open House demand and open inventory buildup at the factory level in Elkhart, the analyst told investors. 

According to Insider Monkey’s Q3 data, 23 hedge funds were long Winnebago Industries, Inc. (NYSE:WGO), compared to 20 funds in the prior quarter. Ken Fisher’s Fisher Asset Management held the leading stake in the company, with 1.70 million shares worth nearly $91 million. 

6. Mueller Industries, Inc. (NYSE:MLI)

Number of Hedge Fund Holders: 23

Mueller Industries, Inc. (NYSE:MLI) is a Tennessee-based company that manufactures and sells copper, brass, aluminium, and plastic products in the United States, the United Kingdom, Canada, South Korea, the Middle East, China, and Mexico. It operates through three segments – Piping Systems, Industrial Metals, and Climate. On November 4, Mueller Industries, Inc. (NYSE:MLI) declared a $0.25 per share quarterly dividend, in line with previous. The dividend is payable on December 16, to shareholders of record on December 2. 

On July 18, Northcoast analyst Ryan Connors initiated coverage of Mueller Industries, Inc. (NYSE:MLI) with a Buy rating and a $125 price target. In the water infrastructure space, the analyst favored names tied to the agriculture, irrigation, and industrial demand channels, where he said the demand outlook “appears more promising” relative to construction and municipal. Mueller Industries, Inc. (NYSE:MLI) is one of the analyst’s top stock picks in the sector. 

According to Insider Monkey’s data, Mueller Industries, Inc. (NYSE:MLI) was part of 23 hedge fund portfolios at the end of September 2022, compared to 19 in the prior quarter. Mario Gabelli’s GAMCO Investors is the biggest position holder in the company, with 2.6 million shares worth $155.4 million. 

In addition to JPMorgan Chase & Co. (NYSE:JPM), Walgreens Boots Alliance, Inc. (NASDAQ:WBA), and QUALCOMM Incorporated (NASDAQ:QCOM), Mueller Industries, Inc. (NYSE:MLI) is one of the popular value stocks among smart investors.

5. Warrior Met Coal, Inc. (NYSE:HCC)

Number of Hedge Fund Holders: 24

Warrior Met Coal, Inc. (NYSE:HCC) is an Alabama-based company that produces and exports non-thermal metallurgical coal for the steel industry. Warrior Met Coal, Inc. (NYSE:HCC) is one of the top extreme value stocks to consider. On November 2, the company announced a Q3 GAAP EPS of $1.90 and a revenue of $371.94 million, beating market estimates by $0.06 and $1.2 million, respectively. Revenue over the period climbed approximately 84% on a year-over-year basis. 

On November 3, BMO Capital analyst David Gagliano raised the price target on Warrior Met Coal, Inc. (NYSE:HCC) to $39 from $30 but kept a Market Perform rating on the shares. The company’s Q3 results were “solid,” said the analyst as he raised his FY22 EPS view to $14.24 from $13.53. Warrior Met Coal, Inc. (NYSE:HCC) remains positioned to benefit if met prices stay robust, the analyst told investors in a research note.

According to Insider Monkey’s data, 24 hedge funds were long Warrior Met Coal, Inc. (NYSE:HCC) at the end of Q3 2022, and Jim Simons’ Renaissance Technologies held the largest stake in the company, consisting of 1.6 million shares worth $45.3 million. 

Here is what Horos Asset Management has to say about Warrior Met Coal, Inc. (NYSE:HCC) in its Q3 2021 investor letter:

“In addition, we trimmed our stake in the U.S. company Warrior Met Coal (“Warrior”), following its excellent recent performance. The metallurgical coal producer, which is necessary to produce steel in blast furnaces, benefited during the quarter from the sharp rise in the price of this commodity. Specifically, the price of Warrior’s metallurgical coal, referenced to Australia’s Premium Low-Vol FOB Hard Coking Coal, rose by 100% in the quarter and is up 300% from the lows of the beginning of the year, when it was trading at around 100 dollars per tonne. The reason for the huge price increase can be found in the bottleneck that this industry is experiencing, due to a few factors. On the one hand, the recovery of economic activity after the worst of the pandemic ended and the extra boost given by the huge fiscal and monetary stimuli from governments globally and, on the other hand, the lack of investment in new supply in recent years due to the hangover from previous overcapacity, the poor situation of some players in the industry and, especially, the political and social agenda against climate change.

This rise in the price of metallurgical coal has seen Warrior’s share price appreciate by more than 70% from last summer’s lows, contributing significantly to our fund’s performance. However, the downside of the story is that Warrior has had the bulk of its employees on strike since April, which means that the company is not producing at one of its two mines and the other is not at 100% capacity, so it is not benefiting from the current positive dynamics like other players in the industry.”

4. Tri Pointe Homes, Inc. (NYSE:TPH)

Number of Hedge Fund Holders: 25

Tri Pointe Homes, Inc. (NYSE:TPH) is a California-based company that engages in the design, construction, and sale of single-family attached and detached homes in the United States. The company operates six brands – Maracay in Arizona, Pardee Homes in California and Nevada, Quadrant Homes in Washington, Trendmaker Homes in Texas, TRI Pointe Homes in California, Colorado, and the Carolinas, and Winchester Homes in Maryland, Virginia, and the District of Columbia. 

On October 27, Tri Pointe Homes, Inc. (NYSE:TPH) reported a Q3 GAAP EPS of $1.45 and a revenue of $1.06 billion, outperforming Wall Street consensus by $0.22 and $50 million, respectively. For the fourth quarter of 2022, Tri Pointe Homes, Inc. (NYSE:TPH) anticipates delivering between 1,700 and 1,900 homes at an average sales price of between $700,000 and $715,000. 

Riley analyst Alex Rygiel on October 18 maintained a Neutral rating on Tri Pointe Homes, Inc. (NYSE:TPH) and lowered the price target on the shares to $17 from $20. The analyst believes the “rapid and significant increase” in mortgage rates has and will lead to another drop in new home sales, pricing/incentives, and margins, leading to an even more challenging 2023 than priorly expected by homebuilders and investors. 

According to Insider Monkey’s Q3 data, 25 hedge funds were bullish on Tri Pointe Homes, Inc. (NYSE:TPH), compared to 20 funds in the earlier quarter. Greg Poole’s Echo Street Capital Management is the leading stakeholder of the company, with 7.17 million shares worth $108.3 million. 

Here is what Third Avenue Management Small-Cap Value Fund has to say about Tri Pointe Homes, Inc. (NYSE:TPH) in its Q4 2021 investor letter:

“Single-Family (4.0% of assets): Tri Pointe Holdings own highly attractive land assets in supply constrained geographies. The company have taken advantage of the single-family housing boom by monetizing assets at attractive prices despite a challenged cost environment. Tri Pointe’s exceptional asset quality coupled with insatiable demand for residential housing should allow them to grow intrinsic value despite higher costs and supply chain delays industrywide.”

3. M/I Homes, Inc. (NYSE:MHO)

Number of Hedge Fund Holders: 26

M/I Homes, Inc. (NYSE:MHO) operates as a builder of single-family homes in Ohio, Indiana, Illinois, Minnesota, Michigan, Florida, Texas, North Carolina, and Tennessee. The company operates through Northern Homebuilding, Southern Homebuilding, and Financial Services segments. The company posted a Q3 GAAP EPS of $4.67, outperforming Wall Street estimates by $0.62. M/I Homes, Inc. (NYSE:MHO) is one of the best extreme value stocks to monitor. 

On October 27, Wedbush analyst Jay McCanless reiterated an Outperform rating on M/I Homes, Inc. (NYSE:MHO) but trimmed the price target on the shares to $63 from $83 following the Q3 results. While the analyst is not forecasting huge scale impairments, he believes it is unrealistic to expect a near doubling in M/I Homes, Inc. (NYSE:MHO)’s stock price in a rising rates backdrop.

According to Insider Monkey’s data, 26 hedge funds were long M/I Homes, Inc. (NYSE:MHO) at the end of September 2022, compared to 23 funds in the earlier quarter. Israel Englander’s Millennium Management is the biggest stakeholder of the company, with 450,578 shares worth $16.3 million. 

2. Atkore Inc. (NYSE:ATKR)

Number of Hedge Fund Holders: 27

Atkore Inc. (NYSE:ATKR) is headquartered in Harvey, Illinois, and the company engages in the manufacture and sale of electrical, safety, and infrastructure products in the United States and internationally. Atkore Inc. (NYSE:ATKR) offers conduits, cables, and installation accessories. It is one of the premier extreme value stocks to invest in. 

On November 18, Atkore Inc. (NYSE:ATKR) reported a FQ4 non-GAAP EPS of $5.52 and a revenue of $1.03 billion, topping Wall Street estimates by $0.44 and $48.2 million, respectively. The company provided a long-term fiscal 2025 adjusted net income per diluted share target of more than $18. 

RBC Capital analyst Deane Dray on November 21 raised the price target on Atkore Inc. (NYSE:ATKR) to $136 from $110 and maintained an Outperform rating on the shares.

Among the hedge funds tracked by Insider Monkey, Atkore Inc. (NYSE:ATKR) was part of 27 public stock portfolios at the end of the third quarter of 2022, and Jeffrey Gates’ Gates Capital Management is the largest position holder in the company, with 1.11 million shares worth $86.4 million. 

1. Cowen Inc. (NASDAQ:COWN)

Number of Hedge Fund Holders: 27

Cowen Inc. (NASDAQ:COWN) is one of the best extreme value stocks to consider. The New York-based company provides investment banking, research, sales and trading, prime brokerage, global clearing, securities financing, commission management, and investment management services in the United States and internationally. On October 28, Cowen Inc. (NASDAQ:COWN) declared a $0.12 per share quarterly dividend, in line with previous. The dividend is distributable on December 15, to shareholders of record on December 1. 

On November 15, Cowen Inc. (NASDAQ:COWN) announced that its stockholders approved the previously announced definitive agreement for Cowen Inc. (NASDAQ:COWN) to be acquired by The Toronto-Dominion Bank (NYSE:TD) in an all-cash transaction valued at approximately $1.3 billion, or $39 per share of Cowen’s common stock. The transaction is forecasted to conclude in the first calendar quarter of 2023. 

According to Insider Monkey’s Q3 data, 27 hedge funds were bullish on Cowen Inc. (NASDAQ:COWN), compared to 19 funds in the last quarter. Alec Litowitz and Ross Laser’s Magnetar Capital is the largest stakeholder of the company, with 1.6 million shares worth $63 million. 

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Disclosure: None. Top 10 Extreme Value Stocks To Buy Now is originally published on Insider Monkey.