Susan Dziubinski: Hi, I’m Susan Dziubinski, co-host of The Morning Filter podcast. On a recent episode, Morningstar’s Chief US Market Strategist Dave Sekera talked about undervalued value stocks he thinks investors should buy to balance out overweight positions in artificial intelligence and growth stocks. Dave’s picks were Verizon Communications VZ, Thermo Fisher Scientific TMO, Duke Energy DUK, Realty Income O, and Devon Energy DVN.
Today, we’re covering a few more attractive value stocks to consider if you’d like to rebalance your portfolio.
3 Cheap US Value Stocks to Invest In Now
The first undervalued stock is Bristol-Myers Squibb. This healthcare giant has built a strong portfolio of drugs and maintains a robust pipeline. As a result, Morningstar awards the company a wide economic moat rating. However, the company is facing some challenging patent losses in the next few years, and its current stock price reflects that. In fact, we’ll be seeing major pipeline readouts later this year across cardiovascular, neuroscience, immunology, and oncology, most of which we’re bullish on. We think Bristol-Myers’ stock is worth USD 70 per share.
Read Morningstar’s full report on Bristol-Myers Squibb.
The second value stock to rebalance your portfolio is Clorox. The company’s eclectic portfolio of brands extends beyond its namesake and also includes household names like Liquid-Plumr, Pine-Sol, and Kingsford, among others. We think the company has built out a wide economic moat based on its brand mix and entrenched position with leading retailers. Because the company has such a strong balance sheet, it has the pocketbook to support its leading-brand mix through innovation and marketing, which is critical in the face of competition and consumer belt-tightening. We think Clorox stock is worth USD 163 per share.
Read Morningstar’s full report on Clorox.
The final undervalued stock for rebalancing is Lockheed Martin. As the world’s largest defense contractor, Lockheed has carved out a wide economic moat. After all, the firm’s extreme product complexity limits new competition, as do decades-long product cycles and contract structures that reduce risk for the contractor and lock out alternative suppliers. Although investors had bid up Lockheed’s stock ahead of the war in Iran, shares have pulled back since and now look attractive relative to our USD 640 fair value estimate.
Read Morningstar’s full report on Lockheed Martin.
For more stock ideas, be sure to tune in to The Morning Filter wherever you get your podcasts, and visit Morningstar.com, too.
Morningstar directors Karen Andersen and Erin Lash, and analyst Nic Owens provided the research behind this segment.
