The stock market has shown some weakness recently. While this may be discouraging for investors, a decline can be a great buying opportunity, especially if you stick with it for the long term. There is no shortage of offerings for investors to consider.
Three stocks are trading at incredibly cheap valuations today CVS Health (NYSE:CVS), Carnival Corp. (NYSE:CCL)And Toronto Dominion Bank (NYSE:TD). Here’s a closer look at why you should think about stocking up now.
CVS Health
CVS Health has evolved over the years from a pharmacy retailer to a much more comprehensive healthcare company. And the company remains focused on becoming larger and more diverse. Last year, the company acquired Signify Health, a home health care company, to go deeper into healthcare and address the growing needs of seniors through home care options.
And in 2023, the company reported profits of $8.3 billion on revenue of nearly $358 billion. This truly huge business will only get bigger in the future. And while the margins aren’t very large, they’re enough to support the company’s dividend, which is 3.8%, and provide CVS with growth opportunities. Free cash flow totaled $10.4 billion last year, and CVS paid out just $3.1 billion in dividends.
With a dirt-cheap forward price-to-earnings ratio (based on analyst estimates) of just 8.4, shares of CVS Health today could look like a bargain in a few years.
Carnival Corp.
Another good long-term option for investors to consider is cruise operator Carnival Corp. Without the closures during the pandemic, the company wouldn’t have had to accumulate so much debt, and its stock price would likely be much higher today.
However, the good news is that Carnival’s financial position is improving and the company is able to pay off its debts, especially as cruise demand remains robust. In March, the company reported record sales and booking levels for its fiscal first quarter, which ended February 29. Revenue in the period increased 22% to $5.4 billion compared to the same period last year, and the company reported an operating profit of $276 million (compared to the same period last year). loss of $172 million a year earlier).
Carnival has a total of $28.5 billion in long-term debt on its books, which could spook some investors given its more modest cash balance of $2.2 billion. However, with financials trending in the right direction and the company having more than $5.2 billion in total liquidity, Carnival is in strong shape and should be able to reduce its debt over time.
At just 13 times estimated future earnings, investors are getting the growth stock at a good discount to offset the risk associated with its high debt load. However, the risk may be overstated as the cruise line is doing exceptionally well at a time when many companies are struggling.
Toronto Dominion Bank
Leading Canadian bank Toronto-Dominion rounds out this list of cheap stocks. At just 10x future earnings and less than 1.4x book value, investors can add this solid bank stock to their portfolio at a very reasonable price. Over the past 10 years, TD has achieved an average price-to-book ratio of nearly 1.7.
The stock is down more than 5% in the last 12 months, but it’s not a risky bank stock that’s at risk of running into liquidity problems like some regional banks. TD is among the safest bank stocks you can own.
In the company’s most recent quarter, which ended Jan. 31, TD’s revenue was $13.7 billion Canadian, increasing 12% year-over-year. Net income of C$2.8 billion rose an impressive 79% and diluted earnings per share of C$1.55 were well above the C$1.02 the company pays in dividends per share.
With a cheap price and a high yield of 5.2%, TD is a fantastic dividend stock to buy now.
Should you invest $1,000 in CVS Health now?
Before buying CVS Health stock, consider the following:
The Motley Fool Stock Advisor The analyst team has just identified what they think this is The 10 best stocks so investors can buy it now… and CVS Health wasn’t one of them. The ten stocks that made the cut could deliver huge returns in the years to come.
Think about when Nvidia created this list on April 15, 2005… if you have $1,000 invested at the time of our recommendation, You would have $505,010!*
Stock Advisor provides investors with an easy-to-follow roadmap to success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks per month. The Stock Advisor has service more than quadrupled the return of the S&P 500 since 2002*.
See the 10 stocks ยป
*Stock Advisor returns from April 22, 2024
David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends CVS Health and Carnival Corp. The Motley Fool has a disclosure policy.
“3 Absurdly Cheap Stocks to Buy and Hold for Years” was originally published by The Motley Fool