Welcome back to this weekly series on the market and finding undervalued dividend growth stocks to research.
Another week of red, another week that the conflict in Ukraine continues, another week of additional rhetoric across the globe regarding sanctions and responses to those sanctions. Gasoline prices have continued to soar, leading many in the financial media to begin talks of a looming recession. Next week the Federal Reserve in the U.S. is expected to raise interest rates, which could lead to higher borrowing costs to individuals and businesses. Those businesses that are highly leveraged will see the higher interest expenses eat away at their profit margins.
In this market I would recommend focusing on companies that have strong cash positions, pricing power, and that sell goods that are needed in good times and bad. Highly speculative names or those with weak financial conditions will continue to struggle. Even quality companies are being sold off by investors, so there is little place to hide, but if you have a long term investing horizon and outlook, the lower prices are something to get excited about.
The selloff continued this week and all indices were down and the selling accelerated from the pace last week, with the Dow down 1.99%, S&P 500 down 2.88%, and the NASDAQ down 3.53% for the week. With this continued downward trend for the year (Dow down 9.34%, S&P down 11.79%, and NASDAQ down 17.9%), even more quality dividend growth stocks are now approaching fair values or well undervalued. This week’s results of the screening shows 27 companies on my tracker are now undervalued based on my 5 criteria. That is up from 21 names last week. One additional company was added to my screener, Morgan Stanley (MS), but they did not hit all 5 undervaluation criteria.
With all that said, here are some quality dividend growth stocks that are appearing undervalued based on all 5 of my valuation methods:
- 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)
The new companies to make the list this week are:
APD, BAC, INTC, MCD, SYY, WBA
The remaining names – AVGO, BLK, BR, CMI, FNF, HBI, IIPR, IP, JPM, LEG, MDT, MMM, MSM, PRU, SBUX, SWK, TROW, TSCO, TXN, UGI and V are a continuation of last week and remain undervalued.
This list should be used to begin your research to determine if the stock meets all of your investment goals and criteria. Valuation should only be one of many aspects you look at when deciding to make an investment.
Best of luck, happy investing, and check back next week for more undervalued stock ideas!
Hey man, I liked your blog a lot. I have also own one and trying to explain how dividends are most undervaluead and solid investments to my readers. But in Turkish. I just have a question for you. Do you have any explanation about DCF and / or DYT calculations. BC I want to apply these calculations to my Turkish stocks and we can share the our knowledge to wider population. I will much appreciate if you can help me and will promote you in all of my social media accounts and my blog. Thx in advance 👋🏻
Thanks for the feedback and best of luck with your blog also. I made a post last year on how to calculate these methods. Hope this helps. Let me know if you need anything else! https://dividendstockpile.com/how-to-value-a-dividend-growth-stock/