3 Cheap Stocks to Buy Before the End of the Year

President Biden selected Jerome Powell to lead the Federal Reserve for a second term. The announcement on Monday morning drove the benchmark indices higher. Stocks have also received a boost from solid third-quarter corporate earnings, with collective S&P 500 corporate profits improving 42.3% year-over-year to $ $452.9 billion.

The economic recovery has regained its momentum, as is evident in the reduction in jobless claims to near pre-pandemic levels. Jobless benefits declined to a 20-month low in early November.

However, the tech-heavy Nasdaq Composite declined on Tuesday, as a rise in Treasury yields prompted investors to buy stocks. Hence, with the low-interest-rate environment continuing, we think it could be wise to invest in fundamentally sound stocks ArcelorMittal (MT – Get Rating), Silicon Motion Technology Corporation (SIMO – Get Rating), and Genesco Inc. (GCO – Get Rating). Each name looks undervalued at its current price levels.

ArcelorMittal (MT – Get Rating)

MT owns and operates steel manufacturing and mining facilities in Europe, North and South America, Asia, and Africa. It sells its products to customers in the automotive, appliance, construction, and machinery industries. It is headquartered in Luxembourg City, Luxembourg.

On November 17, MT announced the closing of its fourth share buyback program and declared the commencement of the new $1 billion buyback program. The shares acquired under the program are expected to meet MT’s debt obligations and reduce its share capital.

On November 3, at a COP26 event, the company and the government of Quebec announced that ArcelorMittal Mining Canada would invest CAD205 million ($161.31 million) in its Port Cartier pellet plant to convert the facility into a direct reduced iron (DRI) pellet plant by the end of 2025. The Quebec government will contribute with electricity rebates. The initiative should enable MT to strengthen its footprint in the DRI pellets market.

In terms of its forward non-GAAP P/E, MT is currently trading at 2.27x, which is 85.2% lower than the 15.30 industry average. Its 1.98 forward EV/EBIT multiple is 84.6% lower than the 12.87 industry average.

 

 

MT’s sales increased 52.5% year-over-year to $20.23 billion in its third fiscal quarter, ended September 30. Its net income attributable to equity holders of the parent and earnings per common share came in at $4.62 billion and $4.16, respectively, both up substantially from their negative year-ago values. Its EBITDA rose 572.4% from the prior-year quarter to $6.06 billion.

The Street’s $3.80 EPS estimate for the current quarter (ending December 2021) reflects a 1,900% year-over-year improvement. Similarly, the Street’s $20.70 billion revenue estimate for the current quarter indicates a 45.9% increase from the same period last year. Furthermore, MT has an impressive earnings surprise history; it has topped consensus EPS estimates in three of the trailing four quarters.

The stock has gained 78.5% in price over the past year to close yesterday’s trading session at $30.49. It has gained 33.1% year-to-date.

MT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

MT has an A grade for Value and Momentum, and a B grade for Growth, Sentiment, and Quality. In the 34-stock Steel industry, it is ranked #4. The industry is rated A.

To see the additional POWR Rating for Stability for MT, click here.

Note that MT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.

Silicon Motion Technology Corporation (SIMO – Get Rating)

Based in Kowloon, Hong Kong, SIMO designs and sells NAND flash controllers for solid-state storage devices. Its offerings include SSDs (solid-state drives) for PCs and other devices and UFS mobile embedded smartphone storage. The company also provides SSDs for data centers, industrial, commercial, and automotive.

On October 25, SIMO declared an annual dividend of $2.00 per ADS, representing a 43% increase from its previous dividend of $1.40 per ADS. The dividend is to be paid to shareholders in…

 

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