The stock market has had a huge run over the last year and most of the popular stocks are trading at all-time highs. Some analysts argue that this kind of bloated valuations can cause the stock market to stagnate in 2021. However, there are still a few stocks that are relatively cheap and can still generate great results if you start investing now. Here are some of them:
- DISCOVERY COMMUNICATIONS INC. / Ticker: DISCA
Discovery, Inc., formerly Discovery Communications, is an American multinational mass media company based in New York City. Established in 1985, the company primarily operates a group of factual and lifestyle television brands, such as the namesake Discovery Channel, Animal Planet, Science Channel, and TLC.
The latest rally in Discovery share price is supported by the company’s strategy of moving into the streaming services business. Discovery launched its streaming service Discovery+ this month, with a library of more than 55K shows.
Andaz Private Investments, which posted a return of 14.6% in the first nine months of 2020, presented a bullish case for Discovery in an investor’s letter. Here’s what Andaz Private Investments stated:
“Discovery is extremely undervalued and on a c.30% free cash flow yield. The company also believes its stock is extremely undervalued and is allocating half of that free cash into share buybacks. At a recent conference, they informed the market that they have successfully and significantly increased pricing in their recent Upfront (gathering of TV networks and advertisers). This will most likely result in greater profits and cash flow over the medium term. Discovery continues to gain share in the USA and Internationally.”
DISCA has a PE ratio (Price to Earnings) of 20, which is quite lower than other streaming services like Netflix (PE ratio of 80) and Disney (Estimated PE ratio of 111 in 2021). Investors can take advantage of this cheap price and future potential growth.
- Lockheed Martin Corporation / Ticker: LMT
Lockheed Martin Corporation is an American aerospace, defense, arms, security, and advanced technologies company with worldwide interests. It was formed by the merger of Lockheed Corporation with Martin Marietta in March 1995.
Lockheed Martin (LMT) is a blue-chip stock with a market-beating 3% dividend yield, long-term growth, and a business model built to outlast even a severe economic downturn.
This company operates multiple segments, with its flagship aeronautics programs like the F-35, F-22 and F-16 accounting for approximately 40% of total revenue. Other major programs include combat ships, helicopters, missile defense systems and satellites.
Some of the Big recent news regarding LMT has been that they have completed assembly and testing of the Orion Artemis I spacecraft and has transferred possession to NASA’s Exploration Ground Systems (EGS) team. Lockheed Martin is the prime contractor for NASA and built the crew module, crew module adaptor and launch abort system.
ARK invest is launching a space exploration ETF soon. They have already bought huge amounts of LMT stock for their ARKQ ETF last week and it’s a good bet that Lockheed Martin will be big part of Their Upcoming Space Exploration ETF as well. This can potentially bring a huge amount of new investors to LMT. Stock is still very undervalued however this window is getting closed quickly.
- Teck Resources / Ticker: TECK
Teck Resources Limited, known as Teck Cominco until late 2008, is a diversified natural resources company headquartered in Vancouver, British Columbia, that is engaged in mining and mineral development, including steelmaking coal, copper, zinc and energy. At the moment it Has PE ratio of just 4.4
Copper soared from US$2.10 per pound last March to the current price near US$3.60. Zinc is up about 50% over the same timeframe. On the coal side, Teck saw surge in demand from China in recent months. As global fiscal stimulus measure kick into gear this year demand for steel and copper should increase.
Copper is a key component in the manufacturing of wind turbines, solar panels, and electric vehicles. The renewables sector should attract significant investment as part of U.S. and European initiatives to drive a green recovery in their economies.
Teck Resources trades near $25 per share. That’s already way above the 2020 low around $8, but more upside should be on the way based on the stock’s performance in past cyclical recoveries. Once the global economy starts to get back on track in the second half of 2021 and 2022, copper and met coal prices should rise.
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