Wall Street gave up on these 3 stocks, and that’s a huge mistake

Looking for value stocks is pretty straightforward: Find financially strong companies that have performed poorly from a stock price perspective and buy them when they are down. When the stock price returns to reality, you will be a winner. Wall Street has a habit of kicking a stock when it’s going down, as the negative sentiment surrounding a particular name can be fatal for shareholders.

For those looking for value, these moments present an opportunity. Here, we’ll take a look at three value stocks that have seen better days, but also have a good chance of rebounding.

Gilead Sciences

Over the past five years, Gilead Sciences (NASDAQ: GILD) managed to lose around 40% of its value in the open market and significantly underperformed a passively held index fund over the same period (as shown below). As a market leader in oncology, HIV and hepatitis C, respectively, the company produces a range of antivirals for diseases that are generally difficult to treat. While Gilead was – and is – at the forefront during the pandemic in its production of Veklury (more commonly known as remdesivir), it is not a major producer of the vaccine.

Perhaps the best news for those considering an investment in Gilead is that the company is basically pretty strong. It trades at 9 times earnings, which is comparatively cheap in the large-cap biotech industry. He predicts a strong year 2021, releasing forecasts for revenue of $ 25 billion and EPS of around $ 7.

Put simply, the company is trading at an attractive price for the revenue it generates, and the hope is that patients will begin treatment for other viral and chronic (non-COVID) illnesses now that the pandemic has subsided. is somewhat attenuated at the start of the year.

BROWN given by YCharts.

DISH Network

Despite a stagnant stock price – DISH Network (NASDAQ: FLAT) has gone from just under $ 50 a share to around $ 35 today – there’s reason to believe a comeback is underway. The stock is currently trading at 11 times earnings, relatively cheap by current standards, and has shown strong revenue growth in 2020, up around 40% from 2019.

DISH has engaged in a few creative partnerships; perhaps the most promising of the group is a pact with DraftKings, which seeks to offer sports betting from DISH decoders. The undercurrent here is that DISH Network has shown an ability to think outside the box, which is reflected in its profitability measures. This is a purchase at its current price, and has the potential to make a return in the years to come.

man watching tv

Image source: Getty Images.

Tupperware brands

While not the most premium name you’ve ever heard, Tupperware brands (NYSE: TUP) simply running a sustainable profitable business. Last year’s earnings were $ 2.24 per share, and the share is currently trading around $ 25 per share, leading to a current price-to-earnings ratio of only around 11. While overall sales were down in 2020, profitable sales growth has increased, a sign that the company is still able to control costs and make money under the most difficult circumstances.

The stock has also lost two-thirds of its value since 2013 but remains profitable. According to its end-of-year press release, the company has succeeded in restructuring its debt and executing its recovery plans (particularly concerning its core businesses). Stocks remain cheap for now, but the fact remains: the company is making money and has the financial data to prove it.

When in doubt, look for the value

The basic principle of value investing is to find profitable businesses that are for sale in the open market. While investing in a single stock is far from a guaranteed strategy, it’s worth looking at seemingly “forgotten” companies that just haven’t had their day in the sun yet. Businesses that have a proven ability to grow and maintain profitability are your best bet, especially when they’re cheap.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

About Roberto Frank

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