We’ve all been there – scrolling through our watchlists and portfolios, envying those who bought shares of company “X,” “Y,” or “Z” back when they were trading for pennies on the dollar compared to current levels. “If only I had loaded up on those shares when I had the chance!” we moan. Well, while we can’t go back in time and invest in yesterday’s bargains, we can identify the potential bargains of today. Finding beaten-down value stocks poised for a major rebound is what I’m after in this piece.
When I look for value opportunities, I love finding strong companies that have been irrationally oversold due to temporary headwinds. If a company’s underlying business fundamentals remain intact, an overreaction to short-term challenges can create the perfect chance to grab shares on the cheap. And when the storm clouds pass, these stocks often bounce back with a vengeance. Here are three such value stocks I think are worth buying right now.
Bombardier (BDRBF)
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Bombardier (OTCMKTS:BDRBF) is a Canadian business jet manufacturer headquartered in Montreal. This company can’t be compared to Boeing (NYSE:BA) or Airbus (OTCMKTS:EADSY). However, it is a very popular aircraft manufacturer for regional airliners in many countries.
The stock suffered greatly from the pandemic and the volatility that followed. However, the company’s stock price currently sits right at January 2020 prices at just $36 per share. And I think there is significant upside to be had in the coming years.
Bombardier trades at just 8.7-times forward earnings and 0.4-times forward sales. Its forward price-to-earnings ratio is better than 97% of its peers, and the company’s price-sales ratio is better than 90% of its peers. This makes the stock extremely undervalued compared to similar companies.
While free cash flow has come in short of expectations recently (likely due to supply chain issues and inflationary pressures affecting the aerospace industry), analysts still expect the company’s earnings per share to more than double from 2024 to 2027, before a possible decline in 2028 as demand normalizes. The company has $6 billion in debt, but interest rates are expected to come down globally. This should make refinancing and servicing the company’s debt pile easier, adding more profitability. Current analyst consensus for BDRBF stock upside sits at 56% over the next 12 months.
With air travel demand forecasted to keep increasing over the next decade ,and business jet demand hitting new highs, Bombardier’s niche business model should thrive. Pair this industry outlook with its dirt-cheap valuation metrics, and BDRBF stock presents a promising and overlooked turnaround opportunity.
JOYY (YY)
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JOYY (NASDAQ:YY), formerly known as YY Inc., is a global video-based social media platform operating apps like Bigo Live, imo, Likee, Hago, and Shopline. While none of these applications are very popular on a standalone basis, they aren’t unpopular either. Currently, tens of millions of people use these apps in aggregate. JOYY is often incorrectly linked solely to China. In fact, the vast majority of its business is actually outside of China.
Notably, BIGO is generating significant offshore cashflow and demonstrating strong user growth. Bigo Live has been adding users steadily, reaching 40.3 million monthly active users in Q3 2023, up 14.5% year-over-year. This app alone represents 81% of JOYY’s total sales and virtually all of its profits. When excluding the YY Live segment, 84% of JOYY’s year-to-date live streaming sales have come from outside mainland China. In 2022, 36% of sales came from developed countries, 21% from the Middle East, and 43% from Southeast Asia, South America, & rest of the world.
The company’s apps have been unfairly pinned to China. This has led to stock price volatility, especially when Chinese stocks started declining over the past year. But with the vast majority of its revenue coming from outside China, JOYY’s intrinsic value is much higher than what Mr. Market is pricing it at today. I believe JOYY’s apps should be worth significantly more than the current $1.9 billion market cap. Additionally, the company also provides a juicy dividend yield of 5.3% to pay investors to be patient.
JinkoSolar (JKS)
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JinkoSolar (NYSE:JKS) is a Chinese solar company that I think has been unduly punished in recent months. Investors have been generally bearish on Chinese companies, causing Chinese stocks to get the short end of the stick, with relatively strong fundamentals standing in contrast to this wave of pessimism. JinkoSolar has also been under excessive tariff and sanction fears. That’s led to capital flight out of this stock, and many of its peers.
But the reality is that JinkoSolar has grown rapidly over the past few years, demonstrating best-in-class operations. Indeed, the company’s valuation should be far higher with the growth trajectory it’s on. Currently, JKS stock trades at just 2.3-times forward earnings and 0.09-times sales, pricing in irrational fears rather than business performance. The company’s earnings per share are also expected to climb from $12 currently to $20 by 2027 alongside solid top-line growth. Analysts expect revenue to rise from $16 billion today to $26 billion by 2027 as global solar demand expands.
The main justification behind this rock-bottom valuation seems to be the company’s high debt load. However, I do not think that should warrant so much bearishness. JinkoSolar has delivered very strong earnings growth despite its debt obligations. Once Mr. Market’s perception shifts, the upside for this solar stock could be tremendous given its growth metrics.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
