It’s hard to believe, at least for me, that it has been almost a year since the pandemic crashed the stock market in March 2020. The market has rebounded from lows, and savvy investors seized the opportunity to grab stocks. of big companies that were hit along with the market in general. But with the stock market already at record levels, it doesn’t seem like there are too many bargains left to make.
Many large companies have seen their stock prices soar, even if sales have not fully recovered. For example, DisneySales were down 22% in the first fiscal quarter of 2021, but its share price is 44% higher than a year ago.
And “bargain” doesn’t always mean cheap. There are many struggling companies with low-priced stocks, which does not make them bargains, but value traps.
But here are two solid companies whose stocks underperform their overall business and can still be bought at bargain prices.
Old business, new address
Lowe’s (NYSE: LOW) opened its first store in 1921, but consistently plays a secondary role to the home improvement leader House deposit, which only exists since 1978.
The second-place company hired Marvin Ellison as CEO in 2018, making big strides in time for the pandemic. It outperformed its main rival, and benchmarks increased 30% in the third quarter ended October 30.
Lowe’s invested heavily in its digital infrastructure shortly before the pandemic, and digital sales grew 106% in the third quarter. He is also focused on his professional business, and compensation increased more than 20% in that segment.
The company expects sales growth to slow as coronavirus vaccines are rolled out and people start spending their money elsewhere, but its new and improved digital program should keep sales moving. Digital only accounts for 7% of total sales, and Lowe’s made more investments in recent months in its supply chain, including opening fulfillment centers and distribution centers to handle digital orders. It is also in the process of revamping store designs to be project driven rather than product driven, which Ellison believes will form a more intuitive shopping experience for customers, and especially professionals.
Lowe’s in the exclusive Dividend Kings club, which means it has increased its dividend annually for more than 50 years. It’s not a very high return at 1.32%, but it’s growing steadily and stable. Lowe’s stock has gained 80% in the past three years and is trading at a reasonable price of 24 times 12-month earnings. But sales and earnings are likely to keep growing, as is the stock price.
Old company, new business
American express (New York Stock Exchange: AXP) It has been around since 1850, but has been modernized with technology to fuel its unwavering dedication to customer service.
Revenue fell during the pandemic, dropping 29% in the second quarter, and the company performed worse than similar companies as its customers typically spend a large amount on travel and entertainment, which plummeted during closures. T&E accounted for 28% of total spending in the fourth quarter of 2019, but only 12% in the fourth quarter of 2020.
On the other hand, your wealthier clientele can still afford to spend in challenging circumstances, and non-T&E spending has already passed pre-pandemic levels. Revenue improved to an 18% decrease in the fourth quarter ended December 31, and American Express posted full-year revenue, including $ 1.76 in the fourth quarter, a decrease of 13% year-over-year.
The financial services company, which is known for its credit cards, also offers small business solutions for merchants, including digital solutions through its financial technology platforms. Its cards have won numerous awards and customers shell out $ 1.2 billion in annual fees for the privilege of carrying an American Express card in the fourth quarter, a 13% year-over-year increase representing 13% of total revenue.
You’re prepared to see high growth as the pandemic recedes and customers address their pent-up travel demands. This may take some time, but that is why stocks are a bargain at the moment.
American Express maintained its dividend throughout the pandemic, which also yields 1.32%. Its stock price has risen 35% in the past three years, and shares are trading at 35 times their 12-month earnings, which isn’t very cheap. But that price reached new heights just before the pandemic knocked it down, and as business recovers, it should soar to new heights again.