Analysts love these 12 cheap stocks — and give one 70% upside
2022 was a bad year for many investors, with most stocks — especially tech — plummeting to levels not seen since 2008. The tech-heavy Nasdaq Composite Index dropped more than 33% in 2022, while the S & P 500 fell nearly 20%. But there could be some opportunities in the chaos, with a number of companies trading at steeper discounts on a price-to-earnings basis than they have in recent history. A price-earnings ratio is the current share price of a stock divided by its earnings per share. Forward P/E incorporates a company’s forward-looking, estimated earnings per share from Wall Street analysts. CNBC Pro screened for analyst favorites using these criteria: Stocks trading at a lower forward price-to-earnings ratio relative to their average five-year forward P/E multiple, “Buy” ratings from at least 60% of analysts covering them, Upside to average price target of 50% or more. The following names appeared on the screen. Cybersecurity firms CrowdStrike and Palo Alto Networks are two names that showed up. Both are trading at significant discounts to their average five-year forward P/E multiples, with CrowdStrike at an 88% discount — the highest on the list — and Palo Alto at a 20% discount. Palo Alto’s CEO said earlier that it was seeing tailwinds from customers looking to slash costs in a worsening economy. CrowdStrike said in December that new earnings growth had slowed , but some investors were still optimistic on the stock. Josh Brown and Cathie Wood snapped up more of it , with Brown saying he views CrowdStrike as a long-term prospect. More than 70% of analysts covering these two stocks give them a buy rating. They also see big upside potential — 70% for CrowdStrike and 55% for Palo Alto. Wall Street has been particularly bullish on the cybersecurity sector recently, despite the volatile market. Canada-based payments tech firm Nuvei also made the list, trading at a discount of nearly 70% to its average five-year forward P/E multiple. The firm recently made a $1.3 billion acquisition that’s set to boost its operations in the United States. It’s had a good start to the year, with its stock surging nearly 24% in January so far. Hong Kong-based real estate firm ESR Group stood out for its 100% buy rating. The company is trading at a respectable discount of 42%. Other firms such as cloud service companies Datadog and Zscaler also showed up on the screen. — CNBC’s Maggie Fitzgerald contributed to this report.
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