5 Most Undervalued Stocks in $4 Billion Portfolio

Looking for that diamond in the rough of Wall Street stocks? You know, that one under-the-radar gem that’s about to skyrocket? Yes, it’s like finding a treasure chest in your grandma’s attic—unlikely but not impossible. That’s where Chilton Investment Company comes into play. This Connecticut-based hedge fund has a knack for sniffing out companies that are basically Wall Street’s best-kept secrets.

Of course, they don’t hit a home run every time but they’ve got enough trophy stocks to make even the most jaded Wall Street vets give ’em a nod of respect. So if you’re itching to know which stocks are hiding in Chilton’s magic bag, ready to bloom when the spotlight hits, hang tight.

We’re about to break down five under-the-radar stocks from Chilton’s lineup, and yes, we’re talking real numbers, discounted cash flows and all.

Lands’ End Is an Outfitter in Disguise

Do you still associate Lands’ End with those cozy fleece jackets your grandma loved? It might be time to update your perspective.

Lands’ End (NASDAQ: LE) is crafting a comeback story, transitioning from a mere clothing retailer to an e-commerce force. According to a discounted cash flow forecast, the stock is a staggering 61.8% undervalued.

The reason for the company being so undervalued stems from a plunge in clothing sales during the 2020-21 period when lockdown were enforced. Management didn’t let the grass grow under their feet, though, because they pivoted to e-commerce. The strategy seemed to work because overall sales rose by 14.7% in 2022.

With a Price-to-Book (P/B) ratio of just 0.7x, compared to the industry average of 1.4x, you’re essentially buying a stock trading at half the comparative value of its peers. In short, it’s high time to take this stock out of the “grandma” category and move it to your watchlist.

CVS Offers So Much More Than Prescriptions

CVS Health (NYSE: CVS) is usually associated with pharmacy counters and aisles filled with toiletries. But look closer, and you’ll see a healthcare giant quietly revolutionizing itself.

Currently sitting at a remarkable 56.3% undervalued according to a discounted cash flow forecast (DCF), CVS is more than just a one-trick pony.

Following its merger with Aetna in 2018 for a jaw-dropping $69 billion, CVS has diversified into the insurance sector. Add to that its testing and vaccination programs, and CVS is setting itself up as a healthcare titan.

When you factor in its P/B ratio of 1.2x, well below the sector average of 2.6x, it’s clear why this stock is an unsung hero in Chilton’s portfolio.

Is American Airlines Ready for Liftoff?

Certainly, the airline biz has seen better days, but don’t write off American Airlines (NASDAQ: AAL) just yet—they’re clawing their way back. According to discounted cash flow analysis, the stock is undervalued by a whopping 45.6%.

You might be thinking, “Airline stocks? Really?” But don’t jump to conclusions too quickly. American Airlines has been hacking away at their mountain of debt—down from $35 billion two years ago to $31.8 billion last year, thanks to some serious belt-tightening.

Plus, the TSA’s been counting more heads at the airport every month this year compared to last. So while American Airlines may not be skyrocketing, it’s certainly not in a nosedive either. 

Kroger Is The Unassuming Grocery Giant

Groceries aren’t glamorous, but everyone needs to eat, and Kroger (NYSE: KR) is ravenous in this consumer staples space.

According to a discounted cash flow forecast, Kroger is 44.9% undervalued. Kroger’s sales have climbed in each of the past 4 years in spite of the market and economic turbulence. Better still, operating income popped from $2.6 billion in 2020 to $4.5 billion in fiscal year 2023.

With a PEG of 0.63x, Kroger’s stock appears undervalued when factoring in its earnings growth. Especially when you factor in its vast footprint—with 2,719 stores in 35 states, this is a giant you can’t afford to ignore.

Is Truist The Financial Dark Horse?

You might not recognize the name Truist Financial (NYSE: TFC) as quickly as you would Bank of America or JP Morgan Chase. That’s probably because Truist is the new kid on the block, born from the merger of BB&T and SunTrust. But this stock absolutely deserves a second glance.

Why, you ask? Our number crunching shows that it’s undervalued by nearly 45%. Plus, it’s a fresh way to get in on regional banking, especially with an eye-popping $555 billion in assets as of the second quarter this year.

Add to that a P/E ratio of just 7.2x—sitting pretty below the industry average of 7.8x—and a sweet dividend yield of 6.73%. Put it all together, and you’ve got a sleeper hit in Chilton’s lineup that could make your portfolio sing.

Wrap-Up

If you’re on the hunt for hidden gems in the stock market, you might want to steal a page from Chilton Investment Company’s playbook. Lands’ End, CVS, American Airlines, Kroger, and Truist are all stocks that could be trading way below their true value.

Now, these stocks might not be making headlines just yet, but knowing Chilton’s knack for spotting winners, they’re probably not going to stay low-key for long. So, maybe it’s time you give these under-the-radar picks a closer look.

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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.