Cheap stocks to buy for the long term during the volatility
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Several stocks, including an e-commerce play and a major snack maker, appear cheap after the broader market’s recent volatility. Investors could take advantage of the opportunity for long-term gains. All three major U.S. indexes have seen a rebound and are trading above their Aug. 2 closing level, which was the session before the global market sell-off picked up steam. But many stocks are still way down from their highs and are now sporting more attractive valuations. CNBC searched for S & P 500 stocks that are “cheap” relative to the broader market and that meet the following criteria. Data used was from FactSet. Forward valuation less than S & P 500’s overall forward price-to-earnings ratio of 22.56 Cheap relative to their sector and the broader market Upside to analysts’ average price target of 10% or more Has gained 5% or more over the past month Consensus analyst buy or overweight rating Take a look at the list of stocks below: PayPal has the highest potential upside of the group at 23.10%, according to analysts’ average price target of $78.12. The company has a price-to-earnings ratio of 14.1 over the next 12 months, less than that of the broad market index. The stock has added more than 7.5% since the start of the year — and 14% this quarter alone, after the company surpassed second-quarter expectations, reviving analysts’ enthusiasm for the stock after nearly three years of heavy underperformance. Bernstein analyst Harshita Rawat upgraded shares to outperform on July 31, the first upgrade from the firm for PayPal since it downgraded the stock to market perform in 2021. Rawat also raised her price target by $7 to $78, pointing to improving gross profit trends and e-commerce product momentum under PayPal’s new management for the change. She predicted there would be a “greater likelihood of steady beats and raises over the coming quarters.” Oreo maker Mondelez International is another cheap, yet well liked, stock among analysts. The average price target implies shares could gain roughly 13.7%, according to FactSet. Year to date, the stock is down 1.3%. It is up more than 9% this quarter off its second-quarter beat, which was driven by strong gross margins but still reflected lower-than-expected organic growth. Goldman Sachs on Monday named Mondelez among its buy-rated packaged food stocks, as it also began coverage of the sector. Analyst Leah Jordan wrote to clients in a note that the company should see above-average earnings growth, and said the stock is a high-quality core holding. Jordan’s $80 price target is just above the consensus price target of $78.79. Analysts also think Molina Healthcare , a stock tied to Medicare that has seen pressure this year, could see further growth ahead. The stock, which is down more than 6% this year, could gain another 10.5% over the next year, per the average price target on FactSet. Shares have already rebounded this quarter after Molina posted better-than-expected quarterly financial results in late July and reaffirmed its strong full-year forecast. Other stocks that could be cheap, long-term winners include toymaker Hasbro , food company Kraft Heinz and insurance company Assurant .
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