Welcome back to this weekly series on the market and finding undervalued dividend growth stocks to research.
It ended up being a quiet week in the market this past week. It seems that inflation and the yield curve are the two biggest concerns for market participants right now. The war in Ukraine, while tragic, appears to have been mostly forgotten in investors’ minds. As I mentioned last time, the war is continuing to be one of attrition. No real progress has been made. I hope they can resolve the conflict quickly so there is no more human suffering.
The yield curve, meaning the graph of the differences between short term interest rates and longer term rates inverted at the 2 year and 10 year rates, meaning the market is willing to accept less yield for a 10 year investment than a 2 year one. This is not the normal market function as investors should demand higher yields for locking in their investment for a longer term. When this happens it may be forecasting that there is uncertainty in the long term so investors are not willing to lock up their money. It is hard to say how long this will last but it does happen occasionally throughout history.
This past week saw the Dow basically flat at down .10%, S&P 500 was up .16%, and the NASDAQ lead the group at up 1.24%. The market was up most of the week but dipped sharply on Friday. For the year the markets are now down 3.90%, 3.85%, and 7.41% respectively. With earnings season mostly behind us, the next major catalyst will be if the Fed raises rates next meeting, and if the war in Ukraine is resolved.
This week’s results of the valuation screening shows 21 companies on my tracker are now undervalued based on my 5 criteria (up from 19 last time).
With that said, here are the 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)
New on the list this week: DLR, HD, IIPR, MSM, and TSCO
APD, BAC, BR, CMI, FNF, HBI, JPM, LEG, MDT, MMM, SBUX, SWK, TROW, UGI, V, and WBA continue from last week to look 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!