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The first stock on the list might stick out to investors from a price perspective, as American Airlines stock still trades around $14 per share. Making its stock price look more attractive is the fact that American Airlines is the largest domestic airline carrier in terms of passengers carried.
American Airlines stock is currently sporting a Zacks Rank #1 (Strong Buy) with earnings estimates on the rise for its current fiscal year 2022 and fiscal 2023. This year’s earnings are now forecasted to be -$0.17 per share compared to an adjusted loss of -$8.38 a share in 2021. Fiscal 2023 earnings are anticipated to be back in the black at $1.73 per share with earnings estimate revisions continuing to trend higher for both FY22 and FY23 over the last week.
Image Source: Zacks Investment Research
On the top line, sales are projected to climb 62% in FY22 and rise another 6% in FY23 at $51.29 billion. Top line estimates have also continued to trend higher. With 2019 sales at $45.7 billion, FY23 would represent 11% growth from pre-pandemic levels.
Along with its “V” like post-pandemic recovery in revenue, American Airlines’ valuation also makes the stock look attractive trading at just 8.2X forward earnings. This is nicely below the industry average of 12X and 61% beneath its decade-long high of 21.1X.
American Airlines also has an overall “A” VGM Style Scores grade for the combination of value, growth, and momentum. Shares of AAL have now rallied more than 20% off of their October lows and its Transportation-Airline Industry is currently in the top 32% of over 250 Zacks Industries.
Cleveland-Cliffs is the largest producer of iron ore pellets and the biggest flat-rolled steel producer in North America. The company is part of the Zacks Mining-Miscellaneous Industry which is also in the top 32% of all Zacks Industries.
After seeing its stock soar in the first half of 2022, CLF stock cooled off as iron and steel prices began to decline following multi-year highs as shown in the nearby chart. Shares of CLF now trade around $18 per share and 46% from their highs.
Image Source: U.S. Bureau of Labor Statistics
However, considering Cleveland-Cliffs valuation the stock is starting to look attractive again trading at just 10.9X forward earnings. This is below the industry average of 11.1X. Even better, CLF stock trades 91% below its decade-high of 134X and closer to the median of 6.1X.
Cleveland-Cliffs carries an “A” Style Scores grade for Value and an overall “A” VGM grade, this combination partly attributes to the stock landing a Zacks Rank #1 (Strong Buy) with earnings estimates revisions starting to trend higher again for FY23 as well. Cleveland-Cliffs annual EPS estimates are still well above pre-pandemic levels.
Image Source: Zacks Investment Research
Cleveland-Cliffs earnings are now expected to drop -55% in its current fiscal 2022 after a very impressive FY21 that saw EPS of $5.87 a share in correlation with soaring iron and steel prices. Fiscal 2023 earnings are expected to decline another -35%. Still, fiscal 2023 earnings of $1.71 per share would be 52% above pre-pandemic levels with CLF’s EPS at $1.12 a share in 2019.
Cleveland-Cliffs stock has now rallied more than 53% off of its November lows and the stock’s valuation could support more upside with iron and steel prices also remaining high despite falling from their multi-year peaks.
Image Source: Zacks Investment Research
Bottom Line
American Airlines (AAL - Free Report) and Cleveland-Cliffs (CLF - Free Report) valuations support that their stocks could still be “cheap” and that more upside may be ahead. For now, the risk to reward appears to remain favorable for investors to buy both stocks at under $20 a share.
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2 Highly-Ranked Stocks to Buy While They're "Cheap"
Investors may be looking for stocks that are bargains following a year that saw hefty declines across the broader market.
Here are two highly-ranked stocks that could end up being bargains from their current levels as we progress through 2023.
American Airlines (AAL - Free Report)
The first stock on the list might stick out to investors from a price perspective, as American Airlines stock still trades around $14 per share. Making its stock price look more attractive is the fact that American Airlines is the largest domestic airline carrier in terms of passengers carried.
American Airlines stock is currently sporting a Zacks Rank #1 (Strong Buy) with earnings estimates on the rise for its current fiscal year 2022 and fiscal 2023. This year’s earnings are now forecasted to be -$0.17 per share compared to an adjusted loss of -$8.38 a share in 2021. Fiscal 2023 earnings are anticipated to be back in the black at $1.73 per share with earnings estimate revisions continuing to trend higher for both FY22 and FY23 over the last week.
Image Source: Zacks Investment Research
On the top line, sales are projected to climb 62% in FY22 and rise another 6% in FY23 at $51.29 billion. Top line estimates have also continued to trend higher. With 2019 sales at $45.7 billion, FY23 would represent 11% growth from pre-pandemic levels.
Along with its “V” like post-pandemic recovery in revenue, American Airlines’ valuation also makes the stock look attractive trading at just 8.2X forward earnings. This is nicely below the industry average of 12X and 61% beneath its decade-long high of 21.1X.
American Airlines also has an overall “A” VGM Style Scores grade for the combination of value, growth, and momentum. Shares of AAL have now rallied more than 20% off of their October lows and its Transportation-Airline Industry is currently in the top 32% of over 250 Zacks Industries.
Image Source: Zacks Investment Research
ClevelandCliffs (CLF - Free Report)
Cleveland-Cliffs is the largest producer of iron ore pellets and the biggest flat-rolled steel producer in North America. The company is part of the Zacks Mining-Miscellaneous Industry which is also in the top 32% of all Zacks Industries.
After seeing its stock soar in the first half of 2022, CLF stock cooled off as iron and steel prices began to decline following multi-year highs as shown in the nearby chart. Shares of CLF now trade around $18 per share and 46% from their highs.
Image Source: U.S. Bureau of Labor Statistics
However, considering Cleveland-Cliffs valuation the stock is starting to look attractive again trading at just 10.9X forward earnings. This is below the industry average of 11.1X. Even better, CLF stock trades 91% below its decade-high of 134X and closer to the median of 6.1X.
Cleveland-Cliffs carries an “A” Style Scores grade for Value and an overall “A” VGM grade, this combination partly attributes to the stock landing a Zacks Rank #1 (Strong Buy) with earnings estimates revisions starting to trend higher again for FY23 as well. Cleveland-Cliffs annual EPS estimates are still well above pre-pandemic levels.
Image Source: Zacks Investment Research
Cleveland-Cliffs earnings are now expected to drop -55% in its current fiscal 2022 after a very impressive FY21 that saw EPS of $5.87 a share in correlation with soaring iron and steel prices. Fiscal 2023 earnings are expected to decline another -35%. Still, fiscal 2023 earnings of $1.71 per share would be 52% above pre-pandemic levels with CLF’s EPS at $1.12 a share in 2019.
Cleveland-Cliffs stock has now rallied more than 53% off of its November lows and the stock’s valuation could support more upside with iron and steel prices also remaining high despite falling from their multi-year peaks.
Image Source: Zacks Investment Research
Bottom Line
American Airlines (AAL - Free Report) and Cleveland-Cliffs (CLF - Free Report) valuations support that their stocks could still be “cheap” and that more upside may be ahead. For now, the risk to reward appears to remain favorable for investors to buy both stocks at under $20 a share.