After the Standard & Poor’s 500 Index achieved close to the historical record for two consecutive months, investors have now fallen for two consecutive months. Although this does not really tell us what will happen to stocks next month or later, it does confirm one thing: stocks may be unpredictable in the short term. For example, the S&P 500 Index was down 8% when writing this article, and the Dow Jones Industrial Average fell more than 9% from its high point.
On the other hand, stocks are still the best long-term creators of Joe and Jane’s average wealth, and the market’s recent volatility – much higher than the normal level of steady rises last year – has created some good opportunities for investment. The top five companies that belong to the top of your shopping list are Pattern Energy (PEGI), Cintas (CTAS), Sabre Corp (Nasdaq: SABR).
Best Undervalued Stocks For 2018: Cindas (CTAS)
Some growth stocks are quite speculative investments, but not unified tenants Cintas. Its share price has more than five times in the past ten years and is poised to continue to grow as it benefits from current employment trends and the fragmentation of the domestic unified rental market.
Sintas not only rents work uniforms – most of his business – but also provides other business services, including floor mat rental, fire and safety services, and replenishment of restrooms. With the increase in the labor force participation rate and the increase in employment opportunities, the demand in all these areas is increasing, especially in the manufacturing industry where the work uniforms are common, the warehousing industry, the healthcare industry, the hotel industry and the transportation industry.
Due to its size and industry leadership, Cintas can use these trends in the second quarter of fiscal year 2018. Year-on-year revenue increased by 26.4%, while net income increased by 12.9% year-on-year. The company seems to be absorbing its competitors G&K Services, which it acquired in 2017. The unified leasing market is still highly fragmented, giving Cintas a number of potential targets to achieve and sustain growth.
Prospective investors should not be intimidated by the performance of Cintas in the past. The company’s growth engine appears to be soaring in the coming years.
Best Undervalued Stocks For 2018: Sabre Corp (Nasdaq: SABR)
Sabre Corp (Nasdaq: SABR) is the world’s second largest travel distribution system, accounting for 36% of global airline bookings and is a market leader outside the United States. The company is also developing a rapidly growing IT solutions division, which has accounted for 29% of revenue.
The massive expenditures on technology infrastructure and other systems created profitability last year. Although the company’s annual revenue growth rate reached 11% in the past three years, investor sentiment has weakened.
With the capital investment plan coming to an end, cash flow may increase. The company’s new cloud-based Red Workspace product is the first of its kind and has already won an important Sabre contract.
Sabre generates more than $360 million in free cash flow each year, and Sabre will increase as capital expenditures decrease and sales continue to increase. Last year, a total of $155 million in dividends and $109 million in stock repurchases were equivalent to a 4.6% cash return and could be further expanded.
Best Undervalued Stocks For 2018: Mode Energy (PEGI)
The stock of this small independent renewable energy company has suffered a slump in the past six months, a 30% drop from the recent peak. This slump has prompted the company’s dividend yield to rise to a staggering 9.7 percent in recent months, making Pattern Energy’s spending solely on its incredible potential investments. But in my book, this is a top-tier stock to buy because of its incredible long-term growth prospects.
I know what you are thinking: As stocks fall 30%, there will be problems, right? Well, not exactly; the market’s fears about the future have sold out the company, not actual weaknesses. In the past few months, interest rates have risen, and potential changes to solar panel tariffs and renewable energy tax policies have shocked investors because all of this has affected Pattern Energy.
But I think the market has over-reacted, which creates an opportunity for a very attractive price buying model.
I think investors can rely on the leadership of Pattern Energy to deal with the changing environment and lead the company for years of development. The bottom line is that renewable energy sources gain market share from fossil fuels in power generation. In the past decade, renewable energy has taken up most of the new global power production capacity. As energy prices decline and capabilities increase, the growth of renewable energy sources may accelerate. This is great for Pattern Energy.
Pattern’s management did not implement the risk as I expected. But overall, the enormous potential for years of growth exceeds the potential risks that offsetting models face.