Undervalued Dividend Growth Stocks To Research This Week (05/30/2022)

Welcome back to this series on the market and finding undervalued dividend growth stocks to research.

After posting negative returns the past 7-8 weeks (depending on the index), the stock markets rallied this past week, each closing out the week up over 6%.  This was a broad rally across the board.  

Looking at the S&P500 Heat Map, it shows how broad the rally over the past week was.

The increase in prices comes as a relief to many, and while it may be too early to call a bottom of the market, this continuous rise each day this week, and the breadth of the companies included in the rally, lead some to think that the market may be changing course to the upside.  The CNN ‘Fear and Greed Index’, shown below, while still in Extreme Fear, is up from 12 to 21 in two weeks.  

One of the drivers of the rally appears to be the positive news on the inflation front.  The Bureau of Economic Analysis (BEA) released that the Personal Consumption Expenditures (PCE) was up 6.3% from a year ago, lower than the previous reading of 6.6% last month.  Is this showing that inflation is going down?  That is yet to be determined as one report can’t establish a trend but it is going in the right direction.

If this is ‘Peak Inflation’, then the market will likely deem that to be a positive and may return to a “risk on” mindset, especially now that the prices and valuations have come down year to date.

The market was significantly up last week, with the Dow, S&P 500 and Nasdaq up 6.24%, 6.58%, and 6.84%, respectively.  With this broad rally, there are less opportunities to find undervalued stocks, but there are still good values available. 

This week’s results of the valuation screening shows 28 companies on my tracker are now undervalued based on my 5 criteria. 

1. Discount to Analyst Price Target
2. 10% or more off the 52-week high
3. Discounted Cash Flow (DCF)
4. P/E Mean Reversion
5. Dividend Yield Theory (DYT) 

Here are the quality dividend growth stocks that are appearing undervalued based on all 5 of my valuation methods:

Stocks Listed: AOS, AVGO, BAC, BLK, BR, DLR, HBI, HD, IIPR, INTC, JPM, LEG, LOW, MDT, MMM, MSM, RY, SBUX, SMG, SPG, STOR, SWK, TROW, TSCO, TXN, UGI, V, WBA

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!