Top Stocks That Are Down Right Now: It’s no mean feat trying to pick a top stock let alone find one that is trading at an attractive price. As Warren Buffett likes to say, it doesn’t feel good when stocks fall, but it can be good for your wallet.
Investors are motivated by different factors that influence their choice. Some are more interested in dividend, others are more concerned about rapid growth, and then there are investors who place the greatest emphasis on deep value.
All these factors are important, but with thousands of publicly traded stocks, an investor is bound to feel overwhelmed. The best way forward as such is to look for all these important factors rather than sift through different stocks looking for individual qualities.
You’ve only got a limited amount of money to invest, and under these circumstances, it is best to take into account all the aforementioned three possibilities.
That’s why in this article we look at 5 top stocks that are selling cheaper, have a good projected growth rate and pay good dividend yield.
Carnival Has Been Infected By CoronaVirus But…
Carnival Corporation [NYSE: CUK] is a leisure travel company. The company offers cruises to all major vacation destinations throughout the world, including North America, South America, Southern Europe, United Kingdom, Germany, and Asia Pacific.
It operates in four segments: North America and Australia Cruise Operations, Europe and Asia Cruise Operations, Cruise Support, and Tour and Other. The company also leases cruise ships through travel agents and tour operators.
Carnival Corporation is the world’s largest leisure travel company with a fleet of more than 100 ships visiting over 700 ports around the world.
Carnival employs over 120,000 people worldwide and its 10 cruise line brands cater to nearly 12 million guests annually, comprising 50% of the global cruise market. The Miami, Florida-based company is dually listed on both the New York Stock Exchange and the London Stock Exchange.
Carnival Corp [NYSE: CUK], in its latest quarterly earnings, reported revenue of $4.78 billion, up 7.3% compared to the same quarter last year. The leisure travel company reported $0.62 EPS for the quarter, topping the consensus estimate, though it fell short of $0.70 EPS it posted in the same quarter last year.
However, the cruise giant has warned about a future dip in earnings as the travel industry is reeling from coronavirus’ growing impact. The cruise behemoth expressed uncertainty about the full impact of the deadly virus on its results for the current fiscal year.
Carnival said the EPS could take a hit of 55 cents to 65 cents per share, if the company was forced to take the extreme step of ceasing its operations in Asia through April, a scenario it seeks to avoid at this juncture.
It should not come as a surprise as the spiraling crisis is causing major travel disruptions across the globe. Investors fear the rising virus fear would derail its Asian operations, and in the worst case scenario, turn away vacationers worldwide from planning cruise holidays.
The company said that it was drawing up exigency plans to alleviate the impact of the crisis and that it would provide an update when it released its next quarterly earnings announcement in late March.
Carnival’s Diamond Princess made it to headline news recently for all the wrong reasons. Its 3,700 passengers were quarantined in the port of Yokohama, Japan after suffering an explosion of infections.
The Westerdam, operated by Carnival’s Holland America Line, was turned away by five ports on virus concerns before finally being accepted by Cambodia. Carnival stock has been under pressure ever since the virus’ outbreak, and has declined over 20% from its peak in January.
The situation remains fluid and no one can predict with certainty how far the coronavirus will spread, or how long the outbreak will last. Of course, it will not last forever, and Carnival has the resources to bounce back from the precarious position it currently finds itself in. But for now, the expanding crisis and the fear it raises is keeping investors away from investing, even as the shares fall.
Upcoming IPO in Middle East and Africa, Low PE and Good Growth Projection Make Orange a Highly Attractive Investment Option
Orange SA [NYSE: ORAN] is a telecommunication services company, which provides telecommunications services to residential customers, professionals, and businesses in Europe, Africa, and the Middle East.
The company offers public fixed-line telephone, leased lines and data transmission, mobile telecommunications, cable television, fixed network business solutions, Internet and wireless applications, broadcasting services, broadband and narrowband services as well as telecommunications equipment sales and rentals, along with other value-added services.
Orange SA was earlier known as France Télécom S.A., and changed its name to Orange SA in July 2013. Orange SA was founded in 1990 and is headquartered in Paris, France.
Orange is the largest mobile phone operator in France. However, operating in a more developed economy presents saturated opportunities for growth. Keeping this factor in mind, the telecom operator recently asked BNP Paribas SA and Morgan Stanley to advise on its proposed IPO of its Middle East and Africa businesses. Orange operates in more than 20 countries across Africa and the Middle East.
The IPO, estimated to be one of the biggest listings to come out of the Middle East and Africa in 2020, is expected to raise capital for expansion and help accelerate the company’s growth in the Middle East and Africa.
The company’s Middle East and Africa businesses reported 1.67 billion euros ($1.8 billion) of adjusted EBITDA in 2018, accounting for about 13% of the group’s adjusted EBITDA.
Orange’s P/E of 16.3 is 30% cheaper than the average S&P 500 stock, and on top of that, Orange’s growth rate is impressive as well.
A dividend yield of 5.2% is more than twice the S&P 500 average. A remarkable improvement in its net income means that the company has enough cash in its hand to be liberal with its dividends.
All in all, the company’s projected growth, its upcoming IPO in Africa and Middle East, good dividend and low P/E ratio make investing in this French telecom stalwart a prudent option.
Huge Investment in New Capital Projects and a Diversified Asset Base Make Exxon a Top Pick
ExxonMobil [NYSE: XOM] is huge, which also makes it one of the bigger targets for environmentalist groups.
BP Plc’s pledge to zero out all its carbon emissions by 2050 further broadens the chasm between major European and American oil companies on the thorny issue of climate change, further mounting the pressure on Exxon Mobil Corp.
The company though remains unapologetic about its practices and recently announced to double down on oil drilling, planning to spend as much as $35 billion a year on capital projects like expanding onshore U.S. oil production and drilling in the waters around Guyana.
In fact, Exxon is likely to witness an enhancement in its production over the next few years, after a few years of contraction. However, apart from drilling, the energy giant is also directing a significant part of its capital to fine-tune its refining and petrochemical manufacturing capabilities.
A large and diversified asset base shields Exxon even during weaker industry trends. This allows the company to spend heavily on new investments where it expects to generate higher returns in the years to come, while disposing of assets that are proving to be a laggard.
Higher production originating from new investment augurs well for both top and bottom line growth of the oil giant. The current fall in ExxonMobil’s stock price and the high dividend yield of 5.8%, along with its potential free cash flow growth, make it a top investment pick.
Virtu To Pick Up Steam as Acquisition of ITG Starts To Reap Benefits
Virtu Financial LLC [NASDAQ: VIRT] operates as a brokerage company. It provides market making and liquidity services to the financial markets in various countries around the world.
The company offers electronic trading, equities, fixed income, funds, brokerage, currencies and commodities, financial planning, and advisory services in 235 markets across more than 35 countries.
Virtu uses proprietary multi-currency technology platform to trade large volumes of securities. The New York-based company operates through three segments: Market Making, Execution Services, and Corporate.
Virtu Financial’s [NASDAQ: VIRT] recent substandard stock performance can be mostly ascribed to a challenging 2019 and acquisition integration hurdles. The company purchased KCG in 2017, which at $1.42 billion marked the company’s largest acquisition to date.
The company recently made its second-largest purchase ever at $1.11 billion for Investment Technology Group Inc. known as ITG. VIRT’s losing steam, apart from its high-stake acquisition, could also be attributed to low-volatility, low-volume trading environment in many of the markets in which it operates.
The financial services provider reported $0.27 EPS in its latest quarterly results, in contrast to $0.67 EPS it posted in the same quarter the previous year. It reported a revenue of $257.20 million for the quarter, which was down 14.0% on a year-over-year basis.
Virtu Financial has lost more than half its value in the past 18 months but it remains a good dividend payer, offering a dividend yield of 5.14%.
Additionally, the company’s buying of ITG has widened its product offering and should diminish earnings volatility. Moreover, the company’s lower P/E makes it the right time to invest in its stocks.
United Steel Is Down, but Certainly Not Out
United States Steel Corporation [NYSE: X] is an integrated steel producer, which manufactures and sells a wide range of value-added steel sheet and tubular products.
The company’s main market is in North America and Europe. It operates through three segments: North American Flat-Rolled (Flat-Rolled), U. S. Steel Europe (USSE), and Tubular Products (Tubular). The Pittsburgh, Pa-based company serves the construction, industrial machinery, automotive, appliance, container, and oil and gas industries.
United States Steel Corporation [NYSE: X] has taken a severe beating over the past year, with the stock losing around 55%. It seems investors are avoiding it like the plague and their pessimism does not seem to be out of place.
The steel maker earned a profit of $630 million in 2019, which compares rather poorly with the $1.1 billion it earned in 2018.
The company announced cutting of its quarterly cash dividend from $0.05 per share to $0.01. The fourth-quarter earnings’ forecast was way below Wall Street’s expectations.
And to top it all, the company is laying off more than 1,500 employees as it grapples to cut costs. But this still doesn’t mean that the world is suddenly going to stop needing someone to make steel to build cars, appliances, and infrastructures of tomorrow.
The company is investing in new technologies such as electric-arc furnaces (EAFs), which can produce steel by melting scrap steel, a method much less expensive than producing it from ores in blast furnaces.
Also, ERFs can be quickly started and stopped, which adds to flexible production. However, ERFs are expensive – the one being built by US Steel at its production facility in Alabama is likely to cost at least $280 million. This is the reason US Steel is pruning its dividends and indulging in other cost cutting measures.
US Steel is preserving cash so that it can invest that money in new technologies and projects that can bring it back on track. The company is definitely going to witness a turnaround in its fortunes. As and when steel prices pick up, this stock, valued at a lowly $1.6 billion in market cap today, could rise like a phoenix.
An intelligent way to make money in the market is to buy stocks that seem down and out for all intents and purposes. You can then accumulate the stocks on the cheap, and reap a windfall when they start to surge.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.