With the market digesting comments issued by Federal Reserve Chair Jerome Powell, those willing to ride out the storm may want to target compelling bargain stocks to buy. Naturally, it’s always a heart-pounding moment to move into the fire. However, acquiring deflated securities may lead to significant upside – so long as you buy the right ones.
But how to go about this process represents the million-dollar question. As with any market endeavor, risks abound. However, to mitigate downside threats, investors may want to consider the below bargain stocks for the “trifecta”: strong value, passive income and upside potential (as adjudicated by Wall Street analysts).
Fundamentally, companies trading at a discount to trailing earnings while offering dividends and enjoying support from market professionals should benefit from a higher probability of success. So, without any more delay, here are the bargain stocks to consider.
Bargain Stocks: Valero Energy (VLO)
One of the top downstream petroleum firms, Valero Energy (NYSE:VLO) benefits from natural relevancies. With both geopolitics and soaring inflation contributing to higher profitability potential, VLO represents a cynical recipient of downwind catalysts. To be fair, VLO is a strong performer. Since the beginning of the year, shares gained almost 11%. And in the trailing year, they’re up over 52%.
Nevertheless, VLO may swing higher. Financially, the business appears undervalued. For example, the market prices VLO at a trailing multiple of 4.56. As a discount to earnings, Valero ranks better than nearly 69% of the industry. As well, VLO trades at a price-to-sales ratio of 0.31 times. In contrast, the sector median stands at 1.02 times.
Turning to the passive income component, Valero carries a forward yield of 3.07%. Notably, its payout ratio sits at 25.79%, indicating high confidence of yield sustainability. Finally, Wall Street analysts peg VLO as a consensus strong buy. Further, their average price target stands at $159.71, implying over 20% upside potential. Thus, it’s one of the bargain stocks to buy.
Bargain Stocks: Qualcomm (QCOM)
A multinational technology giant, Qualcomm (NASDAQ:QCOM) creates semiconductors, software and services related to wireless technology. In recent years, Qualcomm has expanded into selling semiconductor products in a predominantly fabless manufacturing model. Still, QCOM is working through some market volatility. In the past 365 days, shares gave up nearly 23% of equity value.
At the same time, QCOM gained 13% since the Jan. opener. It’s likely to attract even more attention as one of the bargain stocks to consider. Specifically, the market prices QCOM at a trailing multiple of 11.69. As a discount to earnings, Qualcomm ranks better than 68.3% of the competition. Also, its forward price-earnings ratio is 13 times, in contrast to the sector median value of nearly 21 times.
For passive income, QCOM carries a forward yield of 2.48%. Conspicuously, this ranks higher than the tech sector’s average yield of 1.37%. Also, the payout ratio sits at 26.16%. Lastly, covering analysts peg QCOM as a consensus moderate buy. Additionally, their average price target stands at $146.06, implying almost 21% upside potential.
Bargain Stocks: HF Sinclair (DINO)
A diversified energy company, HF Sinclair (NYSE:DINO) manufactures and sells products such as gasoline, diesel fuel, jet fuel, renewable diesel, specialty lubricant products, specialty chemicals and specialty and modified asphalt, among others. Since the start of the new year, DINO hasn’t exactly performed up to snuff, gaining a little over 1%.
However, broader relevancies helped spike DINOI skyward to a 50% profit in the trailing year. Because of this, at first glance, DINO doesn’t seem a natural candidate for bargain stocks. Financially, though, it is. Specifically, the market prices DINO at a forward multiple of 5.89. As a discount to earnings, HF Sinclair ranks better than 62.5% of sector peers.
Heading over to the passive income component, the company carries a forward yield of 3.58%. It doesn’t feature a long history of consecutive dividend increases. However, its payout ratio sits at a lowly 25.19%. Turning to Wall Street, analysts peg DINO as a consensus moderate buy. In addition, their average price target stands at $61.40, implying 22% upside potential.
An agribusiness and food company, Bunge (NYSE:BG) mainly focuses on its international soybean export business. Furthermore, it involves itself in food processing, grain trading and fertilizer production. With so many wild events transpiring across the world, Bunge enjoys significant relevancies (albeit cynically). Still, it hasn’t been a brilliant performer, only gaining 1.3% since the January opener.
What may be more surprising to market observers is that BG shed 10% of equity value in the trailing year. However, the red ink may be an opportunity to pick up one of the underrated bargain stocks to buy. Enticing, the market prices BG at a forward multiple of 8.19. As a discount to earnings, Bunge ranks better than 86.84% of the competition. Looking at passive income, Bunge carries a forward yield of 2.58%. Notably, that’s above the consumer staple sector’s average yield of 1.89%. As well, its payout ratio is subterranean at 22.1%.
Lastly, Wall Street analysts peg BG as a consensus strong buy. Moreover, their average price target stands at $123, implying 27% upside potential.
Silicon Motion Technology (SIMO)
An American-Taiwanese firm, Silicon Motion Technology (NASDAQ:SIMO) focuses on developing NAND flash controller-integrated circuits for solid-state storage devices. With society steadily normalizing, demand may increase for various technological products. However, SIMO gained modestly so far this year, moving up nearly 3%. Over the trailing year, SIMO gave up nearly 7% of market value.
Still, investors willing to weather acute geopolitical tensions may want to consider SIMO as one of the bargain stocks. Right now, the market prices SIMO at a forward multiple of 14.7. As a discount to earnings, Silicon Motion ranks better than 72.14% of its peers. As well, SIMO trades at 1.42-times trailing sales. Here, the company ranks better than 70.16% of the industry.
Regarding passive income, TipRanks notes that Silicon Motion carries a dividend yield of 3%. Conspicuously, its payout ratio sits at 15.65%, implying strong confidence for dividend sustainability. Looking to the Street, analysts peg SIMO as a consensus strong buy. Also, their average price target stands at $91, implying nearly 38% upside potential.
Evolution Petroleum (EPM)
Headquartered in Houston, Texas, Evolution Petroleum (NYSEAMERICAN:EPM) is an independent energy company focused on maximizing total returns to its shareholders through the ownership of and investment in onshore oil and natural gas properties in the U.S. Given the pertinent relevancies affecting the hydrocarbon sector, one might think EPM would be killing it in the charts.
Unfortunately, EPM is more like getting killed. Since the beginning of this year, shares stumbled 6%. In the past 365 days, EPM declined by over 11%. Nevertheless, it could make up the ranks of bargain stocks to consider. Specifically, the market prices shares at a trailing multiple of 5.25. As a discount to earnings, Evolution ranks better than 65.77% of sector players. Also, it enjoys excellent revenue growth and profit margins.
Moving to passive income, Evolution Petroleum features a forward yield of 7.35%. That’s well above the energy sector’s average yield of 4.24%. True, the payout ratio of 49.48% is elevated. However, it’s not that bad at all considering the yield. Finally, Northland Securities’ Donovan Schafer pegs EPM as a buy, placing an $11 price target on shares. If so, this forecast would imply over 68% upside potential.
Based in South Africa, DRDGold (NYSE:DRD) is a gold producer. It also specializes in the recovery of the metal from the retreatment of surface tailings. With inflation concerns running high due to a robust labor market, gold may swing higher yet. And that may benefit DRD handsomely. Still, it’s a patient person’s investment, with shares down nearly 10% since the start of the year. In the past 365 days, they’ve lost about 31% of market value.
To be sure, labor strikes in South Africa often negatively impact mining operations in the region. However, that might be a temporary issue, possibly making DRD one of the bargain stocks to buy. Additionally, the market prices DRD at a trailing multiple of 8.46. As a discount to earnings, DRDGold ranks better than 62.17% of the competition.
Heading over to the passive income component, TipRanks notes that DRDGold features a dividend yield of 3.62%. Plus, its payout ratio sits at a favorably low 33.41%. Lastly, H.C. Wainwright’s Heiko Ihle rates DRD as a buy, anticipating a rise to $15 a share. If so, investors would be looking at upside of almost 115%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.