Welcome back to this weekly series reviewing the market and identifying undervalued dividend growth stocks to research.
Another week of volatility in the market! Seems like we need to get used to this type of market movement for a while. The week started off nice and green but then Thursday and Friday just completely reversed.
Concerns with inflation, with the CPI coming in at 7.5%, the highest in 40 years, the possibility of a rate hike from the U.S. Federal Reserve earlier than expected (they meet on Monday) instead of in March, and the tension between Russia and Ukraine have caused a lot of selling and uncertainty. We also are in the middle of earnings season so there is increased volatility with that as well. As DGI investors, this is not necessarily a bad thing, but it definitely makes some interesting times!
The S&P 500 ended down 1.82%, Dow down 1.00%, and the NASDAQ down 2.18% for the week. The overall market is still down for the year as well, down 7.29%, 4.40%, and 11.85%, respectively.
With that said, here are some quality dividend growth stocks that are appearing undervalued based on all 5 of my valuation methods, including:
- Discount to Analyst Price Target
- 5% or more off the 52-week high
- Discounted Cash Flow (DCF)
- P/E Mean Reversion
- Dividend Yield Theory (DYT)
For more information on how to calculate these valuation formulas, check out my How to Value a Dividend Stock post: https://dividendstockpile.com/how-to-value-a-dividend-growth-stock/
The following are new companies on the list this week:
- MRK
- SBUX
- TROW
The others – FNF, HBI, MDT, MMM, SWK, UGI, and WBA continue from last week as remaining undervalued.
As I mention each week, valuation is only one part of the decision puzzle that investors need to evaluate. Other metrics, dividend safety, earnings growth, payout ratio and other metrics should be considered before investing.
Thanks for reading and happy investing!