Investors hunting for value should not only look at beaten-down stocks hitting lows, but also remember the other side of the value equation – future growth potential versus today’s prices. A stock hitting recent highs could offer value if revenue and earnings can still grow much further.
That’s why long-term investing is important. The exact future value may not be clear. Companies with good growth track records can be bought and held over the years because they are more likely to continue earlier earnings trends. Over short time periods like a year to two, profits can rise and fall because of temporary setbacks and weak markets, yet in the long run the stocks still prevail.
Here are two large-cap stocks that have good growth track records and may be mispriced by the market.
Amcor Limited (ASX: AMC) price: $10.60
The global packaging company was on the rise since late 2012 until about December 2013 when it demerged from Orora Ltd (ASX: ORA), which took over the fibre and beverage packaging as well as Amcor’s distribution business in North America. Since December, Amcor’s share price has been relatively flat around $10.50.
Interim statutory net profit was up about 21%. After the demerger, Amcor has announced two acquisitions of packaging companies in the US and Indonesia. A stronger US economy will help drive business and earnings are expected to be higher than in FY 2013.
Flight Centre Travel Group Ltd (ASX: FLT) price: $50.71
Down from a high of about $55, the flight reservations and travel agency company is moving ahead with its international expansion. It is acquiring a corporate travel business in Ireland, which will be added to its FCm Travel Solutions corporate travel subsidiary.
It has increased its store network to 2,660 worldwide and is targeting further growth of its high margin corporate travel business in the US market. It is also strengthening the domestic brand stores with its new hyperstore format to attract more customers and stay ahead of competition.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
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