3 Best Value Stocks to Buy Right Now

The market has been doing well over the last 15 months and valuations have risen significantly over that period. But there are still really good deals among quality companies that have catalysts for growth.

Here are three of the best value stocks to consider right now.

One stock that has significant upside but is trading at a lower-than-average valuation is Goldman Sachs Group (NYSE:GS). Goldman Sachs, one of the world’s largest investment banks, has done more deals than any other investment bank over the past few years.

A few years ago, the company tried to diversify its revenues to achieve balance, like JPMorgan Chase or Bank of America, but it didn’t work out. So the company decided to leave behind efforts to grow its consumer banking business and focus on its strengths: investment banking and asset management.

As such, it may be more volatile than other diversified financial services giants due to the higher percentage of its revenue coming from investment banking. However, the positive side is that when investment banking comes back, the company could see a higher upside than some of its competitors due to the higher percentage of its revenue coming from investment banking.

This is a scenario that could play out this year and in the coming years, as mergers and acquisitions are already starting to increase and interest rates starting to fall could open the floodgates for more deals. Trading at just 11 times forward earnings, Goldman Sachs looks like a good bet at this valuation.

Delta Air Lines (NYSE:DAL) is a third-largest U.S. airline and has several catalysts that could boost its stock price. Delta stock is already up 15% year-to-date as of April 2, but it’s still dirt cheap, with a price-to-earnings ratio (P/E) of 6 and a forward P/E of just 7.

Delta is on track to recover in 2023, with revenue of $14.2 billion in the fourth quarter, up 6% year-over-year, and net income of $2 billion, up 141% year-over-year. In particular, the surge in travel demand and falling oil prices drove performance. Delta also improved its finances, including reducing debt by $2 billion to $20 billion and increasing free cash flow to $2 billion from $244 million at the end of 2023.

The macro trend will likely continue in 2024, as the International Air Transport Association predicts record profits for airlines in 2024.

Delta expects first-quarter revenue to grow 3% to 6% and is targeting adjusted earnings per share of $6 to $7 for the full fiscal year 2024, compared to $6.25 at the end of 2023. Additionally, free cash flow is estimated to be between $3 billion and $4 billion at the end of the year. So Delta will need to be in good financial shape to take full advantage of the growing travel trend, and it could also be a beneficiary of the struggles faced by rival United.

PayPal’s (NASDAQ:PYPL) turnaround has been a long time coming. This is because former fintech companies that soared during the pandemic have shown a steady decline over the past three years. During that time, the stock price rose from over $300 per share in the summer of 2021 to approximately $51 per share in October 2023. There were a number of reasons for the downfall, which are well documented, but a new CEO arrived last fall. , Alex Chriss vowed to turn things around by streamlining operations and refocusing on the company’s strengths and building on them.

As of now, it is still a work in progress and will likely take place throughout 2024. But things are slowly moving in the right direction. PayPal’s stock is up 5% year-to-date as the company posted solid, better-than-expected numbers in the fourth quarter, with revenue up 9%, operating margin up 468 basis points to 21.5% and profits up 61%. However, revenue forecasts for the first quarter and fiscal 2024 showed solid growth but failed to meet analysts’ expectations.

But returns may be better than expected, based on recent settlements in cases brought by merchants against Visa and Mastercard. This could allow credit card companies to reduce swipe fees by agreeing to set them at least 7 basis points lower than they are now. Next 5 years. Analysts say PayPal should be one of the main beneficiaries of the agreement, and some have raised their price targets.

PayPal trades at just 12 times forward earnings and has a five-year P/E growth (PEG) ratio of 0.60. This means it is undervalued compared to its future growth potential. For a company that is still a leader in online and person-to-person payments, it should be able to overcome the slump and grow with new leadership that appears to be moving in the right direction.

disclaimer: All investments involve risk. Under no circumstances should this article be taken as investment advice or constitute liability for investment profits or losses. The information in this report should not be relied upon for investment decisions. All investors should conduct their own due diligence and consult their own investment advisors when making trading decisions.