With the stock market’s new quarter off to a lukewarm start so far, CNBC Pro has ideas for investors searching for value. The S & P 500 faltered this week, pulling back after notching its best first quarter since 2019. That has left investors asking if the market could be in for some consolidation after megacap stocks pushed the broad index higher in the five months since the end of October. Given the run-up in momentum stocks and concerns about a second-quarter pullback, CNBC Pro screened for names with cheap valuations that might offer value. To find these names, CNBC Pro screened for the following criteria: Forward and trailing price-to-earnings multiples both below 12. By comparison, the SPDR S & P 500 ETF Trust (SPY) currently sells for 25.8 times earnings, according to FactSet. Earnings growth within the past year. Stocks that are higher this year, in order to exclude those whose P/E multiples are low just because the stock price fell. CNBC Pro subscribers can see the screen here. Here are the 13 stocks that made the list: General Motors made the list, with both multiples under seven. The stock has climbed more than 25% this year, while posting earnings growth of more than 19%. Even as GM traded Thursday at its highest since March 2022, analysts see still more upside ahead. The average analyst polled by LSEG has a buy rating and a price target implying further upside of more than 10%. Citi analyst Itay Michaeli is even more bullish. He recently called GM a top pick with a price target of $95 — reflecting the potential for shares to rally more than 110%. “With Q1 wrapping up, [it’s] become clearer that GM is likely to post another resilient quarter,” Michaeli wrote to clients Wednesday. “While industry headwinds & execution risks persist, the now 5+yr running pushback that GM’s latest strong quarter/year will be its last is increasingly looking stale.” Air carriers Delta and United also made the list. While both are higher in 2024, only the former has outperformed the broader market. .SPX DAL,UAL YTD mountain The S & P 500 vs. Delta and United Delta has grown earnings more than 240% over the past year, and both its trailing and forward P/E ratios are near seven. The average analyst has a buy rating and a price target implying a rally of more than 17% over the next year, according to LSEG. United, meanwhile, has lower multiples while seeing growth of more than 250%. After underperforming the market this year, analysts see big gains ahead. The consensus rating among analysts polled by LSEG is a buy, with an average price target implying more than 42% upside.
These are the cheapest stocks in the S&P 500 at the start of the second quarter
Apr 5, 2024
