Morningstar, a research firm, has compiled a list of 10 stocks that investors should buy now. These stocks offer bargain prices while providing consistency in terms of fundamentals and cash flows. Morningstar believes the best companies have predictable cash flows and are run by management teams that make smart capital-allocation decisions. The list includes Wells Fargo, Comcast, and Taiwan Semiconductor Holding, among others.
While investors who own technology stocks are seeing impressive gains, there are still several reasons to be uncertain about what the next six months will bring. The market is not out of the woods yet, and the start date of the expected economic recession seemingly keeps getting postponed. On Friday, investors had one more reason to push it further out after the jobs report showed that employers added 339,000 jobs in May, more than even the most optimistic forecast.
To find names that still offer bargain prices and consistency in terms of fundamentals and cash flows, investors should look for companies that have predictable cash flows and are run by management teams that make smart capital-allocation decisions. The price-to-fair-value ratios were considered for this list, which accounts for a company’s competitive advantage, its cash-generating potential, and the level of uncertainty about its cash flows. A ratio below 1 means a stock is undervalued, and greater than 1 means it’s overvalued.
Investors should opt for consistent cash flows and smart capital-allocation decisions when looking for stocks to buy. With the help of Morningstar’s list of 10 undervalued stocks, new investors can make smart decisions with their money and opt for fundamentally sound investments.
