The wave of market volatility may be far from over, but prudent investors may wish to scavenge for a bargain amid the turbulence. In terms of high-quality stocks, look to the names that boast high TipRanks Smart Scores. It takes a lot to be awarded a high Smart Score. You can check out the contributing factors that go into calculating a Smart Score here. In this piece, we'll look at two intriguing value stocks with strong (9/10 or better) TipRanks Smart Score ratings — F and BKNG. These firms sport solid fundamentals and technicals.
Undoubtedly, the S&P 500 (SPX) is closing in on bear-market territory (20% drop) once again on the back of disappointing CPI numbers. Inflation may have peaked, but it's not plunging quick enough for many investors. With rate-cut hopes diminishing and 10-Year Treasury yields rising toward 3.5%, the unprofitable growth companies could continue to face the most turbulence.
Also, with so much attention on market-moving Fed minutes and monthly CPI results, less attention may be focused on the individual companies themselves. A rate-induced recession seems like a major overhang on any stock. The earnings bar appears to have been lowered across the board, as the dovish pivot is seemingly off the table. Despite the negativity, contrarian investors may have a chance to stretch their dollar further by insisting on stocks of the utmost quality.
Ford (NYSE: F)
Ford is an old-time automaker that's endured quite the painful fall from its 2021 high just north of $25 per share. Indeed, investors grew increasingly excited (even euphoric) over Ford's push into electric vehicles (EVs). Though the EV boom is still in play, the valuation reset in the stock has many sitting on the sidelines.
Despite clocking in better-than-expected second-quarter results, Ford can't seem to pick up any meaningful traction, even as the firm continues to embark on its electrifying plans. Indeed, Ford is playing catch-up in EVs, but it doesn't seem to be any rush to go all-electric.
The company continues to invest in its traditional ICE (internal combustion engine) business while moving forward with its electric capabilities. It's an intriguing strategy, to say the least. I think advanced ICE vehicles and EVs can co-exist down the road. In such a world, Ford benefits from the best of both worlds.
Looking ahead, there's more distress in the cards. On Monday, management warned investors of supply-chain and inflation woes that could continue to weigh. An extra $1 billion in supply-chain costs are expected in the third quarter. Such a pre-announcement caused Ford shares to sag around 4.4% in the after-hours trading session following the announcement.
Down more than 42% from all-time highs, Ford stock seems to be a great value (5.2x trailing earnings) with robust long-term fundamentals. The stock sports a 9 out of 10 Smart Score rating, which, I believe, is well-earned.
What is the Price Target for Ford Stock?
Turning to Wall Street, analysts are less bullish, with a "Hold" consensus recommendation. The average F stock price target of $15.96 implies just 6.9% upside potential.
Booking Holdings (NASDAQ: BKNG)
Booking Holdings is a well-run firm to play the post-COVID recovery in travel and leisure. In a television interview, President Joe Biden stated his belief that the pandemic is over. I'm inclined to agree that the pandemic is just about over. Even if COVID-19 continues to linger, booster shots will help the world continue to heal.
As COVID-19 cases continue to retreat, consumers will have a chance to meet pent-up demand for travel experiences built up over the past two years. Undoubtedly, Booking is one of the better ways to play the ongoing travel recovery. In any case, another hurdle seems to be staring down the travel and leisure stocks: a recession.
Though a recession could delay a travel demand surge until a later date, I still think Booking will be ready for when it hits. In the meantime, Booking has the network to beat. With greater exposure to the European region (smaller boutique hotels are more popular), Booking's network of stays seems tough to top.
At 53x trailing earnings and 5.2x sales, Booking stock isn't cheap considering the potential recession on the horizon. The stock is down around 27% from its high, which is pretty much in line for a tech firm.
Booking is also on an earnings-beat streak that could carry into a recession year as estimates are slashed. With a 'Perfect 10' Smart Score, Booking stock is a top-tier blue-chip that seems more than worth a second look.
What is the Price Target for Booking Holdings Stock?
Wall Street is upbeat on Booking, with a "Moderate Buy" rating and the average BKNG stock price target of $2,418.45, implying 27.1% upside from current levels.
Conclusion: F and BKNG Shares Can Deliver Decent Gains
Ford and Booking stock boast impressive TipRanks Smart Scores and seem well-equipped to deliver decent gains for investors over the year ahead.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.