Value investors could be interested in the following stocks, since their share prices are trading below their respective Peter Lynch earnings lines. This indicates they could be undervalued by the market. These stocks have also received positive ratings from sell-side analysts on Wall Street.
Occidental Petroleum Corp
The first stock investors could be interested in is Occidental Petroleum Corp. (OXY, Financial), a Houston, Texas-based explorer, developer and miner of oil and natural gas assets located in the United States, the Middle East, Africa and Latin America. The company also manufactures and markets basic chemicals and operates processing and storage facilities while conducting collection, transportation and marketing activities for oil and natural gas.
The chart below shows the share price ($71.29 as of the end of regular trading on Aug. 19) is currently trading below the most recent intrinsic value estimate of $152.54 calculated by the Peter Lynch earnings line.
The stock is up 203.75% over the past year for a market cap of $66.41 billion and a 52-week range of $22.80 to $74.04.
During the most recent reporting period of the second quarter of 2022, Occidental Petroleum Corp. mined 1.147 million barrels of oil equivalent per day worldwide, which was about halfway through the guidance. This, combined with the rapid increase in fossil fuel prices in global markets, resulted in a significant improvement in free cash flow, which grew 25.8% sequentially and 107.6% year over year. Occidental Petroleum Corp. has made notable progress in reducing its balance sheet, now sporting total debt of $23.44 billion as of June 29. It has reinstated its share repurchase program.
GuruFocus has assigned a score of 5 out of 10 to the company's financial strength and 7 out of 10 to its profitability.
The stock has a median recommendation rating of overweight on Wall Street and an average target price of $75.27.
Warren Buffett (Trades, Portfolio), Dodge & Cox and Vanguard Group Inc. are among the company's largest top shareholders. Warren Buffett (Trades, Portfolio) holds 20.22% of its shares outstanding, Dodge & Cox owns 10.57% and Vanguard Group Inc. has 8.65%.
Ford Motor Co.
The second stock investors could be interested in is Ford Motor Co. (F, Financial), a Dearborn, Michigan-based American automotive designer and manufacturer that supplies global markets with Ford trucks, cars, sport utility vehicles, electric vehicles and Lincoln luxury vehicles.
The chart below shows the share price ($15.88 as of the end of regular trading on Aug. 19) is currently trading below the most recent Peter Lynch earnings line's intrinsic value estimate of $43.20.
The stock has risen nearly 24.74% over the past year, determining a market capitalization of $63.84 billion and a 52-week range of $10.61 to $25.87.
In the second quarter of 2022, Ford Motor Co.'s automotive segment sales grew 57.1% year over year to nearly $38 billion on the back of resilient utilitarian vehicle demand, beating analysts' average forecast by $2.73 billion. Pro forma earnings per share rose 423% year over year to 68 cents, beating the average analyst estimate by 24 cents.
On a pro forma basis, free cash inflow for the second quarter of 2022 was $3.619 billion versus free cash outflow of $580 million for the first quarter of 2022 and free cash outflow of $5.122 billion for the second quarter of 2021. Additionally, Ford Motor Co. increased its quarterly cash dividend by 50% to 15 cents per common share, payable to shareholders on Sept. 1, up from the previous 10 cents per common share, which was paid on June 1.
Looking ahead to the full year 2022, the U.S. auto giant expects pro forma free cash inflow to be between $5.5 billion and $6.5 billion.
GuruFocus has assigned a score of 4 out of 10 to the company's financial strength and 7 out of 10 to its profitability.
Wall Street sell-side analysts have issued a median recommendation rating of overweight for this stock with an average target price of $16.33.
Vanguard Group Inc., BlackRock Inc. and State Street Corp are among the company's largest shareholders. Vanguard Group Inc. holds 8.16% of its shares outstanding, BlackRock Inc. holds 6.67% and State Street Corp has 4.20%.
Intel Corp
The third stock investors could be interested in is Intel Corp. (INTC, Financial), a Santa Clara, California-based semiconductor company.
The chart below shows the share price ($35.38 as of the end of regular trading on Aug. 19) is trading below the Peter Lynch earnings line's intrinsic value estimate of $70.05.
The stock has declined 33.53% over the past year for a market capitalization of $145.27 billion and a 52-week range of $34.4 to $56.28.
Due to weaker demand for personal computers than in the recent past, Intel's customers, especially its most important customers, have been destocking on a scale rarely seen in the past. This has caused very significant declines. Revenue for the second quarter of 2022 was about $15.3 billion, down more than 17% year over year. It is also losing market share to competitors.
To mitigate the very strong headwinds, the company will lay off staff, which makes up the bulk of corporate spending. Following this measure, the profit margins should already improve significantly in the last quarter of this year. With the challenging environment expected to persist for some time, Intel decided to revise its 2022 revenue guidance to $65 billion to $68 billion, down 9% to 13% from 2021, while the consensus analyst estimate was $66.3 billion as of this writing.
GuruFocus has assigned a score of 7 out of 10 to the company's financial strength and 9 out of 10 to its profitability.
The stock has a median recommendation rating of hold on Wall Street with an average target price of $38.66 per share.
Vanguard Group Inc., BlackRock Inc. and State Street Corp are among the company's largest shareholders. Vanguard Group Inc. holds 8.71% of its shares outstanding, BlackRock Inc. holds 8.47% and State Street Corp has 4.29%.
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