Markets

5 Beaten-Down Large Cap Value Stocks to Buy Now

After 6 years of a bull run, investors were suddenly faced with a major stock market correction in August. Standing at the end of September, tremors of the sell-off are still perceptible. The major U.S. indexes - S&P 500, NASDAQ Composite and Dow Jones Industrial Average - are currently yielding negative year-to-date returns in the range of 4-10%.

The equity markets have become extremely volatile. The primary reasons are continuous downward pressure on oil prices and slowing Chinese economy, along with weaknesses in several economies such as Europe, Russia, Japan and Brazil. The Federal Reserve's "no rate hike" decision over similar concerns as well as low inflation in the U.S. has added fuel to the fire.

While the domestic economy is showing signs of growth, global concerns are making investors jittery. Also, concerns pertaining to divergent monetary policies across major economies have made matters worse.

Amid all these, investors are becoming increasingly skeptical about entering the market. Nevertheless, with extreme volatility leading to substantial valuation correction in several stocks, you have chances to turn the tide in your favor. But one should be careful and not get caught into a 'value trap.' When investors put their money in a stock simply because the company is trading at an artificial discount, they usually end up as a victim of the value trap.

In order to avoid falling into a value trap, you must select stocks with strong fundamentals. With several large cap stocks currently yielding negative year-to-date returns, this is a good time to bet on stocks that hold solid growth potential.

5 Lucrative Beaten-Down Stocks

With the help of our Zacks Stock Screener , we have shortlisted 5 large cap stocks (market cap more than $5 billion) trading at year-to-date negative return of more than 20% and carrying a Value Style Score of 'A' or 'B,' with projected long-term growth rate of 8% or higher. Further, all these stocks sport a favorable Zacks Rank.

Our style score system helps locate stocks that have a solid upside potential. Our Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of 'value traps' and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of 'A' or 'B,' when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy), offer the best upside potential.

Seagate Technology Public Limited CompanySTX , headquartered at Dublin, Ireland, is one of the largest manufacturers of hard disk drives ("HDDs"). The company has an industry-leading vertically integrated operation with internal control over majority of its key component suppliers.

Zacks Rank: #2

Value Score: A

Long-term EPS Growth: 8%

Year-to-date Negative Return: 37.17%

Market Cap: $12.40 billion

NetApp, Inc.NTAP , based in California, provides enterprise storage & data management software and hardware products & services. The company also offers support, consulting and training services.

Zacks Rank: #1

Value Score: A

Long-term EPS Growth: 11%

Year-to-date Negative Return: 30.16%

Market Cap: $8.54 billion

Mylan N.V.MYL , based in Potters Bar, Hertfordshire, specializes in development, manufacture, marketing, and distribution of generic, branded, and branded generic pharmaceutical products, as well as active pharmaceutical ingredients ("APIs").

Zacks Rank: #2

Value Score: B

Long-term EPS Growth: 8.80%

Year-to-date Negative Return: 29.40%

Market Cap: $19.57 billion

PACCAR Inc.PCAR , headquartered in Bellevue, WA, is the third-largest manufacturer of heavy-duty trucks in the world and has substantial manufacturing exposure to light/medium trucks.

Zacks Rank: #2

Value Score: A

Long-term EPS Growth: 10.3%

Year-to-date Negative Return: 23.23%

Market Cap: $18.53 billion

EricssonERIC , based in Stockholm, Sweden, is a leading provider of communication networks, telecom services and support solutions. A leader in telecommunications, the company is now expanding its role as an ICT solutions provider.

Zacks Rank: #1

Value Score: A

Long-term EPS Growth: 17.2%

Year-to-date Negative Return: 21.98%

Market Cap: $30.66 billion

Final Thoughts

Value investing is probably the most predictable investment style in the current market scenario, and one of the safest too. However, investors should play cautiously by picking stocks with long-term price appreciation potential.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SEAGATE TECH (STX): Free Stock Analysis Report

PACCAR INC (PCAR): Free Stock Analysis Report

NETAPP INC (NTAP): Free Stock Analysis Report

ERICSSON LM ADR (ERIC): Free Stock Analysis Report

MYLAN NV (MYL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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