Analysts love these cheap stocks. With the S&P 500 up more than 100% from its March 2020 lows and trading…
Analysts love these cheap stocks.
With the S&P 500 up more than 100% from its March 2020 lows and trading at all-time highs, it may seem like there are no cheap stocks left in the market. In fact, most stocks trading at less than $10 at this point are there for good reasons and should be avoided at all costs. However, for investors willing to do some digging, the Morningstar analyst team still sees a handful of attractive buying opportunities. Here are nine cheap stocks to buy for less than $10 that have significant valuation upside, according to Morningstar.
Banco Santander SA (ticker: SAN)
Banco Santander is the largest Spanish bank by market cap. Analyst Johann Scholtz says Banco Santander’s capital ratios still need some improvement following the latest European Central Bank stress tests, but the bank proved to be less sensitive to stress than peers. Scholtz says Santander could improve its profitability, capitalization and valuation if it would trim its presence in underperforming geographical regions. He says the bank’s Latin American business is particularly impressive, and it is a market leader in Brazil, Mexico and Chile. Morningstar has a “buy” rating and a $4.50 fair value estimate for SAN stock.
Lloyd’s Banking Group PLC (LYG)
Lloyd’s Banking Group is a British retail and commercial bank. Analyst Niklas Kammer says remediation costs weighed on Lloyd’s second-quarter earnings, but the bank’s underlying performance was solid. Almost 95% of Lloyd’s assets are based in the U.K., making it essentially a pure play investment. Kammer says the bank has become a much more attractive investment since its massive restructuring than began in 2011. Now, he says the company is one of the strongest retail banking franchises in the U.K. Morningstar has a “buy” rating and a $3.40 fair value estimate for LYG stock.
Telefonica SA (TEF)
Telefonica is the major telecom operator in Spain. Analyst Javier Correonero says the company is doing an impressive job of divesting underperforming divisions, but it may still be difficult for Telefonica to generate excess return on invested capital over the next decade. Still, Correonero says the company’s decision to sell its tower assets will help it reduce debt, a top capital allocation priority. Correonero says Telefonica will likely continue to sell assets and streamline its business, efforts that could potentially unlock hidden value in the company. Morningstar has a “buy” rating and a $5.80 fair value estimate for TEF stock.
Energy Transfer LP (ET)
Energy Transfer is a U.S. midstream oil and gas infrastructure company. Analyst Travis Miller says Energy Transfer is set up for a “blockbuster” 2021, but there are still plenty of capital allocation risks that investors should monitor. Miller says…
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