Morningstar: These are 10 of the best stocks to buy in November, and all of them are way cheaper than they should be
- Finding high-quality stocks at a low price is a winning investment strategy.
- Morningstar analysts have compiled their list of the 10 best cheap stocks to buy in November.
- All of them of them are at least 30% below their fair value right now.
Finding the best stocks to buy is never easy, especially in today’s economy.
For example, last week’s nonfarm payrolls report showed a lower-than-expected increase in job creation, as well as a higher unemployment rate and slower monthly wage growth in October. Instead of a sell-off, the market soared on hopes that a bad economy will force the Fed to abandon its rate-hike agenda sooner rather than later.
When good news is bad news and a long-awaited recession has yet to arrive, investing becomes even more difficult.
Of course, there are some tried-and-true rules that investors should follow. Finding companies with strong moats, or competitive advantages that set them apart from the competition, is a tried-and-true strategy. Seeking out companies with strong fundamentals, such as strong margins, plenty of cash, and consistently rising sales and earnings, is also a good idea.
However, in today’s market, it’s difficult to know where to look for great stock picks. A mere seven stocks account for the majority of the S&P 500’s gains year to date, creating an imbalance that threatens to tip the market into a downturn if those stocks fail to maintain their gains. Meanwhile, geopolitical conflict, domestic political conflict, and persistently high inflation perplex investors at every turn.
Margaret Giles of Morningstar comes in handy here. She recently reduced Morningstar’s list of the best companies to own to the most undervalued handful, implying that these great stock picks are currently undervalued. These companies have “predictable cash flows and are run by management teams that have a history of making smart capital-allocation decisions,” she wrote in her article.
The ten companies that made the cut are listed below, along with their ticker, last closing price, price to fair value ratio, Morningstar’s Uncertainty Rating, Morningstar’s Capital Allocation Rating, and industry.
1. Estee Lauder
Ticker: EL
Last Closing Price: $112.65
Price/Fair Value: 0.51
Morningstar Uncertainty Rating: Medium
Morningstar Capital Allocation Rating: Standard
Industry: Household & Personal Products
Source: Morningstar
2. Zimmer Biomet
Ticker: ZBH
Last Closing Price: $109.28
Price/Fair Value: 0.59
Morningstar Uncertainty Rating: Medium
Morningstar Capital Allocation Rating: Exemplary
Industry: Medical Devices
Source: Morningstar
3. Roche Holding
Ticker: RHHBY
Last Closing Price: $32.85
Price/Fair Value: 0.60
Morningstar Uncertainty Rating: Low
Morningstar Capital Allocation Rating: Exemplary
Industry: Drug Manufacturers—General
Source: Morningstar
4. Anheuser-Busch InBev
Ticker: BUD
Last Closing Price: $58.89
Price/Fair Value: 0.60
Morningstar Uncertainty Rating: Medium
Morningstar Capital Allocation Rating: Exemplary
Industry: Beverages—Brewers
Source: Morningstar
5. US Bancorp
Ticker: USB
Last Closing Price: $35.28
Price/Fair Value: 0.60
Morningstar Uncertainty Rating: Medium
Morningstar Capital Allocation Rating: Exemplary
Industry: Banks—Regional
Source: Morningstar
6. Taiwan Semiconductor Manufacturing
Ticker: TSM
Last Closing Price: $92.60
Price/Fair Value: 0.62
Morningstar Uncertainty Rating: Medium
Morningstar Capital Allocation Rating: Exemplary
Industry: Semiconductors
Source: Morningstar
7. Medtronic
Ticker: MDT
Last Closing Price: $73.41
Price/fair value: 0.62
Fair value uncertainty: Medium
Capital Allocation Rating: Standard
Industry: Medical Devices
Source: Morningstar
8. Yum Chin
Ticker: YUMC
Last Closing Price: $44.98
Price/Fair Value: 0.63
Morningstar Uncertainty Rating: Medium
Morningstar Capital Allocation Rating: Standard
Industry: Restaurants
Source: Morningstar
9. British American Tobacco
Ticker: BTI
Last Closing Price: $31.05
Price/Fair Value: 0.63
Morningstar Uncertainty Rating: Medium
Morningstar Capital Allocation Rating: Standard
Industry: Tobacco
Source: Morningstar
10. Pfizer
Ticker: PFE
Last Closing Price: $31.19
Price/Fair Value: 0.64
Morningstar Uncertainty Rating: Medium
Morningstar Capital Allocation Rating: Standard
Industry: Drug Manufacturers—General
Source: Morningstar
