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3 Cheap Value Stocks to Buy on the Dip

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Valuations are not very cheap in the overall stock market, and this has made it harder to find high quality stocks that are selling for a bargain.  Fortunately, the recent EU referendum result has created an opportunity to pick up cheap stocks on the dip.

Not all companies that took a beating after the Brexit vote are worth investing in, so it is important to pick up stocks with sound cash flows and attractive valuations.  We have found three such stocks, and all of these picks are forecasted to see significantly higher earnings levels compared to last year. 

Cathay Pacific Airways Ltd-(CPCAY - Free Report)

Cathay Pacific Airways is an international airline based and registered in Hong Kong.  It also offers airline catering, aircraft handling, and engineering services.  It flies to over 60 destinations in locations which include China, Japan, Korea, South East Asia, and Europe.  CPCAY is a Zacks Rank #1 (Strong Buy), and it also doles out a 4.3% dividend to shareholders.  The stock may be undervalued, as it trades at a price-to-book of just 0.92.  Cathay’s stock also has a forward PE of just 5.15.  The corporation’s shares have fallen by 8.85% since the results of the EU referendum came out, so this may be a good opportunity to buy up shares of the company.

Cathay Pacific Airways’ earnings are projected to grow by 16.24% this year.  For the current year, CPCAY has received two positive earnings revisions from analysts over the last 60 days.  This has helped in pushing up our current year consensus estimate over the last 30 days, and it has gone from EPS of $1.16 to $1.36 over that time span. 

EnerSys-(ENS - Free Report)

EnerSys is a leader in providing stored energy solutions for industrial applications.  The company has an extensive line of motive power, reserve power, and specialty batteries with a full range of integrated services and systems.  EnerSys’ stock is a Zacks Rank #2 (Buy), and its shares have fallen by 10% since the 23rd of June.  The company’s stock trades at a forward PE of 12.8, and a PEG of 0.98.  A PEG under one suggests that a stock may be undervalued.

This year, EnerSys’ sales and earnings are projected to grow by 5.33% and 11.7%, respectively.  Over the last 60 days, analysts have unanimously revised their earnings estimates upwards for the current year.  The EPS consensus for this year has increased by 6% over the last 60 days, and it now stands at an estimate of $4.39 per share.  ENS is expected to report its next quarterly earnings in early August.

MS&AD Insurance Group Holdings Inc-(MSADY - Free Report)

MS&AD provides various types of insurance services.  The company also has financial services and risk-related services businesses.  MSADY is a Zacks Rank #1 (Strong Buy), and it has a grade of “B” for value in our Style Scores.  The company has lost 10% of its share price value since the Brexit vote, and it now trades at a price-to-book of 0.56.  MS&AD stock has a forward PE of 7.83, and this is well below the industry’s average PE of 14. 

The corporation’s net income has been improving over the years.  A lot of this can be credited to the company’s efforts in reducing selling, general, and administrative expenses.  Over the last 30 days, our EPS consensus estimate for the next fiscal year has improved, going from EPS of $1.24 to $1.55. 

Bottom Line

These stocks are all trading at a significant discount compared to their share price a week ago.  As a result, their valuations have become more attractive.  What’s even more reassuring about these companies is the fact that they have all seen earnings estimates being revised upwards in recent history.  This indicates that the earnings upside for these companies has been increasing, and that is exactly what shareholders want to see in the stocks they own.

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