Investors have experienced significant stock market volatility in recent years. Given the continued uncertainty around interest rates and the economy, investors may be wondering which equities to buy today.
Regardless of where interest rates and the economy are headed, investors may choose to purchase companies that provide some predictability in terms of cash flows and business fundamentals. That’s where WealthyMilestone’s Best Companies to Own ranking comes in. The companies on this list have considerable competitive advantages. We believe that the greatest companies have predictable cash flows and are led by management teams with a track record of making sound capital allocation decisions.
However, the best firms do not always make the best stocks to buy. It is also vital to consider how much an investor pays to own a company, whether it is profitable or not. So, here we’ll look at the ten greatest firms with the most discounted stock prices today.
10 Best Stocks to Buy Now—July 2024
The 10 most undervalued stocks from our Best Companies to Own list as of June 27, 2024, were:
The 10 most undervalued stocks from our Best Companies to Own list as of June 27, 2024, were:
- Yum China YUMC
- Estee Lauder EL
- Polaris PII
- Ambev ABEV
- Zimmer Biomet ZBH
- Roche Holding RHHBY
- British American Tobacco BTI
- Reckitt Benckiser Group RBGLY
- Anheuser-Busch InBev BUD
- Bristol-Myers Squibb BMY
Here’s a little bit about why we like each of these companies at these prices, along with some key metrics. All data is as of market close on June 27.
4 Wide-Moat Stocks to Buy for the Long-Term While They’re Undervalued Today
Yum China
- Price/Fair Value: 0.41
- WealthyMilestone Uncertainty Rating: Medium
- WealthyMilestone Capital Allocation Rating: Standard
- Industry: Restaurants
Yum China’s stock is 59% undervalued relative to our fair value estimate of $76 per share and stays at the top of our list of best stocks to buy again this month. WealthyMilestone senior analyst Ivan Su believes the current market price overlooks two things: Yum China’s opportunities for restaurant expansion in China’s growing fast-food industry and margin improvement that will be realized by operating leverage and ongoing digital investments. Over the longer term, we believe there are several opportunities for Yum China to gain a share in the fragmented $700 billion Chinese restaurant market. Our conviction in rising fast-food penetration is underpinned by three long-term secular trends: longer working hours for urban consumers, rapidly rising disposable income, and ever-smaller family sizes. Coupled with strong brand recognition and an unrivaled supply chain, Yum China is set to be the prime beneficiary of growing Chinese fast-food spending.
Roche Holding
- Price/Fair Value: 0.63
- WealthyMilestone Uncertainty Rating: Low
- WealthyMilestone Capital Allocation Rating: Exemplary
- Industry: Drug Manufacturers—General
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Roche is the first of two drug manufacturers to make the list of the best companies to invest in now. The company’s drug portfolio and industry-leading diagnostics provide significant competitive advantages and underpin our wide WealthyMilestone Economic Moat Rating, says WealthyMilestone strategist Karen Andersen. “This Swiss healthcare giant is in a unique position to guide healthcare into a safer, more personalized, and more cost-effective endeavor,” she notes. Though Roche is facing pressure owing to the weakness of the Swiss franc against other major currencies, we expect its biologics focus and innovative pipeline to allow the firm to continue to achieve growth as its competitors face competition. Roche stock trades 37% below our fair value estimate of $55 per share.
Zimmer Biomet
- Price/Fair Value: 0.62
- WealthyMilestone Uncertainty Rating: Medium
- WealthyMilestone Capital Allocation Rating: Exemplary
- Industry: Medical Devices
Zimmer Biomet is the undisputed king of large-joint reconstruction, says WealthyMilestone senior analyst Debbie Wang, and we expect aging baby boomers and improving technology suitable for younger patients to fuel solid demand for large-joint replacement that should offset price declines. Zimmer has cultivated close relationships with orthopedic surgeons who make the brand choice. High switching costs and high-touch service lead to strong loyalty to the brand. Zimmer also aims to accelerate growth through innovative products and improved execution, which we view as critical. Zimmer Biomet stock trades 38% below our fair value estimate of $175 per share.
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British American Tobacco
- Price/Fair Value: 0.65
- WealthyMilestone Uncertainty Rating: Medium
- WealthyMilestone Capital Allocation Rating: Standard
- Industry: Tobacco
British American Tobacco stock is trading 35% below our fair value estimate of $49 per share. While cigarettes will likely remain the driving force of profits in the industry for the next decade, British American Tobacco has been the most aggressive of the Big Tobacco makers with its push into new-generation products, with exposure to several emerging categories, including vaping, heated tobacco, and oral products, says WealthyMilestone strategist Kristoffer Inton. We forecast tobacco volumes to decline about 4% annually through 2028, but we expect price increases and incremental revenue from next-generation products to offset the volume declines.