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3 Incredible Stocks Trading at Historical Discounts
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When great stocks go on sale investors must act decisively.
Rarely do the best companies trade down to deep discounts, but when they do finally get below their historic averages, it can be a powerful signal for strong forward returns.
Today I will share three extremely high-quality businesses, with long histories of successful execution, winning business models, and high Zacks Ranks. For investors looking to add long-term holdings to their portfolios these may be great picks for the next few years.
Paychex (PAYX - Free Report) , CME Group (CME - Free Report) , and Adobe (ADBE - Free Report) all boast exceptional business staying power ensuring their future returns and have outperformed the market index over the last 10 years.
Image Source: Zacks Investment Research
Paychex
Paychex is a prominent provider of payroll, human resources, and benefits outsourcing solutions for businesses of all sizes. With a strong market presence, Paychex offers comprehensive services, including payroll processing, tax administration, employee benefits, and regulatory compliance assistance.
The company's reliable and user-friendly platforms empower organizations to streamline their HR operations effectively. PAYX serves over 740,000 customers in the US and Europe and delivers one out of every 12 American workers paycheck.
Paychex has grown with incredible consistency on both the top and bottom line over the last 25 years. Sales have grown from $1 billion to $5 billion over that time, with just two years that didn’t experience growth. EPS have grown from $0.37 to $4.28, which is an incredible CAGR of 10.3%.
PAYX has also paid out a dividend every year over the last 25 years. It currently yields 3% and has increased the payment by an average of 8.5% annually over the last five years.
Image Source: Zacks Investment Research
With a Zacks Rank #2 (Buy) rating, PAYX has experienced some slight earning estimate upgrades over recent months. Next quarter estimates have been revised higher by 1% and are projected to grow 11.1% YoY. FY23 earnings expectations have also been increased by 1% and are forecast to grow by 9.4% YoY.
Paychex is trading at a one-year forward earnings multiple of 25.3x, which is above the industry average of 20.6x, and below its five-year median of 28x.
Image Source: Zacks Investment Research
CME Group
CME Group is the largest futures exchange in the world in terms of trading volume as well as notional value traded. The Chicago Mercantile Exchange was originally formed as a non-profit organization in 1898 but was converted to a for-profit company in 2000. It became the first publicly traded financial exchange in the U.S. in Dec 2002.
CME Group offers a broad range of products covering major asset classes, based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, and metals. Trades are executed through CME Group's electronic trading platforms, open outcry and privately negotiated transactions. CME Group also operates one of the world's leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives.
CME has more than 10x’d both its sales and earnings over the last 25 years. Annual sales have grown from $430 million to $5.1 billion, and EPS has climbed from $0.69 to $8.29 per share.
The company introduced a dividend 20 years ago and it has since grown from $0.13 per share to $8.60 per share. Today CME has a dividend yield of 2.4% and has raised it an average of 9.8% annually over the last five years.
CME has experienced some earnings estimate upgrades over the last two months, reflected by its Zacks Rank #2 (Buy). Analysts have unanimously upgraded estimates across timeframes. Current quarter earnings estimates have been revised higher by 2.4% and are expected to grow 8.1% YoY.
Image Source: Zacks Investment Research
CME Group is trading at a one year forward earnings multiple of 20.8x, which is below the industry average of 25x, and below its five-year median of 26.7x. This is just off the ten year low in term of forward earnings and offers a compelling opportunity.
Image Source: Zacks Investment Research
Adobe
Adobe is one of the largest software companies in the world collecting licensing fees from customers, which form the bulk of its revenue. ADBE also offers technical support and education, which accounts for the balance.
Not only have Adobe earnings grown steadily, but they have accelerated considerably in the last decade, forming the always desirable hockey stick chart. Adobe’s EPS have compounded at a ridiculous 14.4% annually over the last 25 years and its stock has appreciated over 9,000% over that period.
Image Source: Zacks Investment Research
Adobe also has a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Current quarter earnings estimates have been revised higher by 3% and are expected to grow 16.8% YoY. FY23 earnings estimates have been upgraded by 2% and are projected to increase by 14.5% YoY.
Adobe is trading at a one year forward earnings multiple of 40.4x, which is above the industry average of 34.2x, and below its five-year median of 44.4x.
Image Source: Zacks Investment Research
Bottom Line
It is hard to go wrong buying industry-leading stocks at historical discounts. If you are an investor with a longer time horizon, these may be perfect fits for your portfolio. Additionally, with the strong earnings revisions trends they all demonstrate, the near-term expectations of the stocks are also strong.
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3 Incredible Stocks Trading at Historical Discounts
When great stocks go on sale investors must act decisively.
Rarely do the best companies trade down to deep discounts, but when they do finally get below their historic averages, it can be a powerful signal for strong forward returns.
Today I will share three extremely high-quality businesses, with long histories of successful execution, winning business models, and high Zacks Ranks. For investors looking to add long-term holdings to their portfolios these may be great picks for the next few years.
Paychex (PAYX - Free Report) , CME Group (CME - Free Report) , and Adobe (ADBE - Free Report) all boast exceptional business staying power ensuring their future returns and have outperformed the market index over the last 10 years.
Image Source: Zacks Investment Research
Paychex
Paychex is a prominent provider of payroll, human resources, and benefits outsourcing solutions for businesses of all sizes. With a strong market presence, Paychex offers comprehensive services, including payroll processing, tax administration, employee benefits, and regulatory compliance assistance.
The company's reliable and user-friendly platforms empower organizations to streamline their HR operations effectively. PAYX serves over 740,000 customers in the US and Europe and delivers one out of every 12 American workers paycheck.
Paychex has grown with incredible consistency on both the top and bottom line over the last 25 years. Sales have grown from $1 billion to $5 billion over that time, with just two years that didn’t experience growth. EPS have grown from $0.37 to $4.28, which is an incredible CAGR of 10.3%.
PAYX has also paid out a dividend every year over the last 25 years. It currently yields 3% and has increased the payment by an average of 8.5% annually over the last five years.
Image Source: Zacks Investment Research
With a Zacks Rank #2 (Buy) rating, PAYX has experienced some slight earning estimate upgrades over recent months. Next quarter estimates have been revised higher by 1% and are projected to grow 11.1% YoY. FY23 earnings expectations have also been increased by 1% and are forecast to grow by 9.4% YoY.
Paychex is trading at a one-year forward earnings multiple of 25.3x, which is above the industry average of 20.6x, and below its five-year median of 28x.
Image Source: Zacks Investment Research
CME Group
CME Group is the largest futures exchange in the world in terms of trading volume as well as notional value traded. The Chicago Mercantile Exchange was originally formed as a non-profit organization in 1898 but was converted to a for-profit company in 2000. It became the first publicly traded financial exchange in the U.S. in Dec 2002.
CME Group offers a broad range of products covering major asset classes, based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, and metals. Trades are executed through CME Group's electronic trading platforms, open outcry and privately negotiated transactions. CME Group also operates one of the world's leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives.
CME has more than 10x’d both its sales and earnings over the last 25 years. Annual sales have grown from $430 million to $5.1 billion, and EPS has climbed from $0.69 to $8.29 per share.
The company introduced a dividend 20 years ago and it has since grown from $0.13 per share to $8.60 per share. Today CME has a dividend yield of 2.4% and has raised it an average of 9.8% annually over the last five years.
CME has experienced some earnings estimate upgrades over the last two months, reflected by its Zacks Rank #2 (Buy). Analysts have unanimously upgraded estimates across timeframes. Current quarter earnings estimates have been revised higher by 2.4% and are expected to grow 8.1% YoY.
Image Source: Zacks Investment Research
CME Group is trading at a one year forward earnings multiple of 20.8x, which is below the industry average of 25x, and below its five-year median of 26.7x. This is just off the ten year low in term of forward earnings and offers a compelling opportunity.
Image Source: Zacks Investment Research
Adobe
Adobe is one of the largest software companies in the world collecting licensing fees from customers, which form the bulk of its revenue. ADBE also offers technical support and education, which accounts for the balance.
Not only have Adobe earnings grown steadily, but they have accelerated considerably in the last decade, forming the always desirable hockey stick chart. Adobe’s EPS have compounded at a ridiculous 14.4% annually over the last 25 years and its stock has appreciated over 9,000% over that period.
Image Source: Zacks Investment Research
Adobe also has a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Current quarter earnings estimates have been revised higher by 3% and are expected to grow 16.8% YoY. FY23 earnings estimates have been upgraded by 2% and are projected to increase by 14.5% YoY.
Adobe is trading at a one year forward earnings multiple of 40.4x, which is above the industry average of 34.2x, and below its five-year median of 44.4x.
Image Source: Zacks Investment Research
Bottom Line
It is hard to go wrong buying industry-leading stocks at historical discounts. If you are an investor with a longer time horizon, these may be perfect fits for your portfolio. Additionally, with the strong earnings revisions trends they all demonstrate, the near-term expectations of the stocks are also strong.