September 24, 2023

BDC Advertising

Investment is a business for the future

10 Best Bargain Stocks To Buy Right Now

In this article, we discuss 10 best bargain stocks to buy right now. If you want to see more stocks in this selection, click 5 Best Bargain Stocks To Buy Right Now

Oaktree Capital’s co-founder and hedge fund manager, Howard Marks, announced on June 26 that the market is hot to invest in “bargains” amid the market-wide selloff. He noted that stocks are significantly cheaper as compared to the previous year, and waiting for the market to bottom is not a wise strategy. He pointed towards the cheap valuations, and said that he would purchase more assets if the market dipped further. He is aggressively in favor of bargain hunting in the current stock market. 

Similarly, amid concerns of an upcoming recession in the United States, some investors are gravitating towards the star growth stocks of last year that have taken a heavy beating so far in 2022. Growth names tend to be less affected by the overall macro environment, and prominent players in the market that have stumbled amid the broad selloff do have the underlying assets to survive and thrive in uncertain economic conditions. 

Saira Malik, chief investment officer at the Chicago-based asset manager Nuveen, recently said that outperformers and top companies in the tech space are positioned to do well, while revealing her bullish stance on Amazon and Salesforce. Some of the most prominent bargain stocks to watch right now include Booking Holdings Inc. (NASDAQ:BKNG), PayPal Holdings, Inc. (NASDAQ:PYPL), and Pinterest, Inc. (NYSE:PINS). 

10 Best Bargain Stocks To Buy Right Now

Our Methodology 

We selected market names that have suffered YTD share price declines of more than 25% as of June 30, but received positive analyst ratings in the past few weeks. In addition to that, the underlying business is significant and the companies have strong fundamentals. We have mentioned the hedge fund sentiment around the holdings as of Q1 2022 as well. 

Best Bargain Stocks To Buy Right Now

10. SoFi Technologies, Inc. (NASDAQ:SOFI)

Number of Hedge Fund Holders: 22


YTD Share Price Decline as of June 30: 66.39%

SoFi Technologies, Inc. (NASDAQ:SOFI) is a California-based digital personal finance and online banking company. The company facilitates customers with student loans, home loans, personal loans, stock brokerage, wealth management, and credit cards. On June 14, the stock rose 4.72% after its director, Harvey Schwartz, purchased 53,500 common shares. CEO and director Anthony Noto also bought 46,500 shares of the common stock at $5.3664 per unit, for a total transaction of $0.55 million. Overall, SoFi Technologies, Inc. (NASDAQ:SOFI) stock has fallen over 66% year to date as of June 30. 

On June 16, Mizuho analyst Dan Dolev reiterated a Buy rating on SoFi Technologies, Inc. (NASDAQ:SOFI) with a $9 price target. The analyst observed that SoFi Technologies, Inc. (NASDAQ:SOFI) defied macro concerns in terms of demand for consumer loans. He thinks that SoFi Technologies, Inc. (NASDAQ:SOFI)’s “diversified” revenue channels, “durable” business model, and Galileo’s service offerings should positively contribute to business fundamentals in the long-term.

In Q1 2022, 22 hedge funds reported long positions in SoFi Technologies, Inc. (NASDAQ:SOFI), compared to 24 funds in the earlier quarter. Silver Lake Partners is the biggest position holder in the company, with 31.15 million shares worth $294.40 million. 

In addition to Booking Holdings Inc. (NASDAQ:BKNG), PayPal Holdings, Inc. (NASDAQ:PYPL), and Pinterest, Inc. (NYSE:PINS), elite hedge funds are monitoring SoFi Technologies, Inc. (NASDAQ:SOFI). 

Here is what Altron Capital Management has to say about SoFi Technologies, Inc. (NASDAQ:SOFI) in its Q4 2021 investor letter:

“We have been building our position in SoFi over the last two quarters but have not yet written about our thesis until now. SoFi is an online financial technology company that started off refinancing student loans. This segment remains a big part of the company’s business, but they have more recently expanded their products to offer an entire suite of financial services including personal banking, investing, and credit. While their collection of products is still evolving and not yet complete, we believe the company is in the early stages of its inflection. The company nearly doubled its member count over the past year and is growing 50%+ despite its loan refinancing business taking a hit due to the COVID-related loan moratorium. Furthermore, the company is close to obtaining a bank charter through its acquisition of Golden Pacific Bancorp, a community bank based in Sacramento. A bank charter would allow SoFi to take in its own customer deposits, lowering its cost of capital and expanding the company’s breadth of financial offerings.

While SoFi is not the only online banking platform out there, we believe it could take a decent share of the financial services market. Banking is a notoriously sticky business, as the inconvenience and hassle of switching banks prevent consumers from jumping to competitors regardless of cost. This is one of the reasons that traditional banks are one of the few businesses to have truly been disrupted by technology. We think SoFi is well on its way to changing that and creating a new paradigm for the future of consumer banking and financial services.

The factors that will ultimately drive consumer adoption of online banking are cost and convenience. In our opinion, SoFi is best positioned to drive consumers away from the legacy banking model. Their one-stop-shop approach for financial services and their lack of a brick-and-mortar branch network to maintain may eventually propel them into becoming one of the larger players in the banking industry in the United States…” (Click here to see the full text)

9. EPAM Systems, Inc. (NYSE:EPAM)

Number of Hedge Fund Holders: 38


YTD Share Price Decline as of June 30: 54.10%

EPAM Systems, Inc. (NYSE:EPAM) is a Pennsylvania-based software engineering company that specializes in software product development, digital platform engineering, application development, enterprise application platforms, application testing, and application maintenance and support. As of June 30, the stock has plummeted about 54% from its highs YTD. 

Wedbush analyst Moshe Katri on June 6 raised the price target on EPAM Systems, Inc. (NYSE:EPAM) to $400 from $380 and reiterated an Outperform rating on the shares. According to the analyst, the company should keep on benefiting from moderating disruption from the Russian/Ukraine war, notably lower employee relocation and recruitment costs, robust demand trajectory for digital/SMAC based services, and bill rate increases. 

EPAM Systems, Inc. (NYSE:EPAM) was part of 38 hedge fund portfolios in the first quarter of 2022, with collective stakes worth $669 million. Cliff Asness’ AQR Capital Management held a prominent stake in the company, comprising 326,028 shares worth $96.70 million. 

Here is what Harding Loevner Emerging Markets Equity Fund has to say about EPAM Systems, Inc. (NYSE:EPAM) in its Q1 2022 investor letter:

“The losses in Russia accounted for over 500 bps—roughly half—of our total underperformance. IT services business EPAM Systems, Inc. (NYSE:EPAM) developed market-listed companies that have significant operations in Russia, Ukraine, and Belarus—together cost a further 200 bps in underperformance. By sector, the wipe out of our Russian and Russia-related holdings appeared as severe negative stock selection across IT (NYSE:EPAM).

We continue to hold  EPAM in IT. EPAM’s core advantage is its engineering capability that allows it to provide highly complex and valuable services to its customers. While recognizing that its business prospects are uncertain due to the displacement of many of its engineers by the conflict and potential client and staff defections, we believe it will be difficult for its clients to switch providers in the near term notwithstanding their preferences. EPAM should thus have time to adjust its geographic footprint.”

8. Pinterest, Inc. (NYSE:PINS)

Number of Hedge Fund Holders: 56


YTD Share Price Decline as of June 30: 50.12%

Pinterest, Inc. (NYSE:PINS) is an American social media platform where ideas are shared by putting up images, animated GIFs, and videos. These ideas are saved in the form of pinboards. As of June 30, the stock has stumbled over 50% YTD. On June 10, the company announced the acquisition of the fashion shopping platform, THE YES.

On June 29, Citi analyst Ronald Josey maintained a Neutral rating on Pinterest, Inc. (NYSE:PINS) with a $24 price target. The analyst observed that Pinterest, Inc. (NYSE:PINS) appointed Bill Ready, Google’s President of Commerce, Payments, and Next Billion Users, as the CEO. The last CEO, co-founder, and President, Ben Silbermann, will now take up the Executive Chairman role. Since the new CEO is highly experienced in terms of payments and e-commerce, the appointment will result in Pinterest, Inc. (NYSE:PINS) developing its full-funnel personalized shopping platform, the analyst told investors. 

According to Insider Monkey’s Q1 data, 56 hedge funds were bullish on Pinterest, Inc. (NYSE:PINS), with combined stakes worth $1.25 billion. Harris Associates is the leading shareholder of the company, with 18.5 million shares worth $456.7 million. 

Here is what Oakmark Fund has to say about Pinterest, Inc. (NYSE:PINS) in its Q1 2022 investor letter:

“We previously had an opportunity to own Pinterest (NYSE:PINS) when the stock sold off during the Covid-19-related downturn, and we were pleased to be able to invest in the company once again at an attractive price during the quarter. Pinterest is an online personal discovery tool that people use to find ideas based on their tastes and interests. Unlike most social media companies, the objectives of users and advertisers are fundamentally aligned on Pinterest. Users find a positive and useful product discovery experience, and advertisers find an audience with high commercial intent and the ability to integrate ads naturally. Although Pinterest had more than 430 million global users as of year-end, the company is still in the early days of monetizing its platform. We believe that its shares trade well below fair value on conventional metrics, such as enterprise value to revenue, as well as when we benchmark its ultimate revenue and margin potential against more mature internet companies.”

7. Lam Research Corporation (NASDAQ:LRCX)

Number of Hedge Fund Holders: 59


YTD Share Price Decline as of June 30: 41.26%

Lam Research Corporation (NASDAQ:LRCX) is a California-based company that distributes semiconductor manufacturing products, such as wafer fabrication equipment, transistors, capacitors, and wiring. Lam Research Corporation (NASDAQ:LRCX) stock has taken a notable hit so far in 2022, falling 41.26% YTD. 

BofA analyst Vivek Arya on June 29 assigned a Buy rating to Lam Research Corporation (NASDAQ:LRCX) but lowered the price target on the stock to $540 from $650. According to the analyst, downturns in the semiconductor space are imminent every three to four years, and “we could be due for another one”. However, unit weakness “could be cushioned by richer non-consumer mix, robust pricing, expanding content, and constrained supply,” he pointed out. 

Lam Research Corporation (NASDAQ:LRCX) was part of 59 public hedge fund portfolios at the conclusion of the first quarter of 2022, compared to 62 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management held the biggest stake in the company, comprising 1.90 million shares worth over $1 billion. 

Here is what Vulcan Value Partners has to say about Lam Research Corporation (NASDAQ:LRCX) in its Q1 2022 investor letter:

“Lam Research Corp. designs and manufactures equipment used in the fabrication of semiconductors. Recent supply chain issues have negatively impacted the industry and have resulted in chip shortages. The industry is performing well, exceeding our expectations, and Lam Research’s fundamentals remain strong. The long-term secular drivers of demand and growth in the industry continue to be very powerful. Lam Research is experiencing increasing returns on capital, higher margins, and more stable results.”

6. Micron Technology, Inc. (NASDAQ:MU)

Number of Hedge Fund Holders: 78


YTD Share Price Decline as of June 30: 42.27%

Micron Technology, Inc. (NASDAQ:MU) is an Idaho-based company that produces computer data storage devices including DRAM, flash memory, and SSDs. On July 1, Evercore ISI analyst C.J. Muse observed that the estimates for Micron Technology, Inc. (NASDAQ:MU) are moving significantly lower after the company’s Q3 results and Q4 guidance. The analyst told investors that since Micron Technology, Inc. (NASDAQ:MU) has a “very new” CFO, he thinks “there is some excess conservatism in the updated outlook” and he now expects an EPS bottom in February. There will be incremental recovery after that and he projects earnings per share of $6.00 in 2023, the analyst added. He likes the risk/reward for Micron Technology, Inc. (NASDAQ:MU) and reiterated his Outperform rating and a long-term price target of $90 on the stock.

According to Insider Monkey’s Q1 data, 78 hedge funds were bullish on Micron Technology, Inc. (NASDAQ:MU), compared to 83 funds in the last quarter. Seth Klarman’s Baupost Group is a prominent shareholder of the company, with 3.11 million shares worth $242.3 million. 

Like Booking Holdings Inc. (NASDAQ:BKNG), PayPal Holdings, Inc. (NASDAQ:PYPL), and Pinterest, Inc. (NYSE:PINS), Micron Technology, Inc. (NASDAQ:MU) is on the radar of institutional investors despite significant YTD share price decline. 

Here is what Hazelton Capital Partners has to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter:

“It’s hard to explain how shares of Micron Technology, manufacturer of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.

Currently Micron Technology trades at just 8x 2022 estimated earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”

Click to continue reading and see 5 Best Bargain Stocks To Buy Right Now

Suggested articles:


Disclosure: None. 10 Best Bargain Stocks To Buy Right Now is originally published on Insider Monkey.