Despite stock market volatility due to the resurgence of COVID-19 cases and the high-inflation environment, the benchmark indexes have been hovering near their all-time highs lately thanks to strong corporate earnings and investors’ optimism over the Senate’s passage of a $1 trillion infrastructure bill.
The S&P 500 has doubled since its pandemic lows, marking the fastest bull market rally since World War II. But with most stocks trading at lofty valuations, it isn’t easy to find true value stocks now. However, some quality stocks are still trading at reasonable valuations.
Shares of Intel Corporation (INTC) and Bristol-Myers Squibb Company (BMY), for example, are currently trading at discounts to their peers despite having immense growth potential. In addition, our proprietary POWR Ratings system has rated these stocks A for Value along with an overall A (Strong Buy) rating. So, it could be wise to bet on them now.
Intel Corporation (INTC)
One of the established players in the technology space, INTC in Santa Clara, Calif., designs, manufactures and sells essential technologies for the cloud, smart, and connected devices for its consumers across various sectors, such as retail and industrial. Its segments include its Data Center Group; Internet of Things Group; Mobileye; and Non-Volatile Memory Solutions Group.
The company launched its new 11th Generation Intel Core H-series mobile processors on May 11, led by the flagship Intel Core i9-11980HK—the ‘World’s Best Gaming Laptop Processor. Because the demand for gaming and remote working is expected to increase in the foreseeable future, INTC is also likely to benefit from it.
For its fiscal second quarter, ended June 26, 2021, INTC’s non-GAAP revenue came in at $18.50 billion, which exceeded its April guidance by $700 million. Its revenue from its Mobileye segment increased 124% year-over-year to $327 million, while its revenue from its IOTG segment increased 47% year-over-year to $984 million. The company’s non-GAAP EPS came in at $1.28, which exceeded April guidance by $0.23.
In terms of forward P/CF ratio, INTC’s 7.15x is 67.2% lower than the 21.82x industry average. In terms of forward GAAP P/B ratio, the stock’s 2.41x is 58.2% lower than the 5.77x industry average.
INTC’s EPS is expected to grow at a 10% rate per annum over the next five years. In addition, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past nine months, the stock gained 15.8% to close yesterday’s trading session at $53.47.
INTC’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has an A grade for Value, and a B grade for Quality, Sentiment, Momentum, and Stability. Within the B-rated Semiconductor & Wireless Chip industry, INTC is ranked #9 of 99 stocks. To see the INTC’s rating for Growth as well, click here.
Click here to checkout our Semiconductor Industry Report for 2021
Bristol-Myers Squibb Company (BMY)
Biopharmaceutical company BMY in New York City offers products in hematology, oncology, cardiovascular, and immunology therapeutic classes. Its popular products include Revlimid, Opdivo, Eliquis, and Orencia, and it sells its products to wholesalers, distributors, pharmacies, retailers, hospitals, clinics, and government agencies. In addition, it has collaboration agreements with several companies, including Pfizer, Inc. (PFE).
On July 30, BMY announced that the European Commission had approved Opdivo for the adjuvant treatment of adult patients with esophageal or gastroesophageal junction cancer who have residual pathologic disease following prior neoadjuvant chemoradiotherapy. This is expected to lead to increased sales of Opdivo.
BMY’s total revenues increased 16% year-over-year to $11.70 billion in the second quarter, which ended June 30, 2021. Its non-GAAP gross profit grew 14.5% year-over-year to $9.34 billion. The company’s non-GAAP EPS increased 18% from its year-ago value to $1.93.
In terms of forward non-GAAP P/E ratio, BMY’s 9.17x is 60.2% lower than the 23.04x industry average. In terms of forward P/S, the stock’s 3.29x is 57.7% lower than the 7.77x industry average.
For the quarter ending September 30, 2021, analysts expect BMY’s EPS and revenue to increase 19% and 12.3%, respectively, year-over-year to $1.94 and $11.61 billion. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past six months, the stock has gained 15.6% in price to close yesterday’s trading session at $68.68.
BMY’s POWR Ratings reflect its solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. In addition, it has an A grade for Value, and a B grade for Growth, Stability, Sentiment, and Quality.
Click here to see the additional POWR Rating for BMY (Momentum). It is ranked #9 of 215 stocks in the Medical – Pharmaceuticals industry.
Note that BMY is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
Click here to checkout our Healthcare Sector Report for 2021
INTC shares were trading at $52.29 per share on Tuesday afternoon, down $1.18 (-2.21%). Year-to-date, INTC has gained 7.56%, versus a 18.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal’s fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More…
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