We recently compiled a list of the 8 Best Bargain Stocks To Buy in October. In this article, we are going to take a look at where Vale S.A. (VALE) stands against the other bargain stocks.
The Aftermath of an Easing Cycle
September has historically been sluggish for stocks. However, with an easing cycle and an upcoming election in store, the results this year may be untypical. On September 26, Tom Lee, Fundstrat Global Advisors managing partner and head of research, appeared in an interview on CNBC to discuss the market outlook ahead of the easing cycle.
Lee suggests that an easing cycle indefinitely improves the performance of markets, especially from a historical standpoint, hinting that with 40 days to the election, the market may change its course of action accordingly. While stocks reposition themselves positively after an easing cycle, the markets may see delays, especially because investors are more likely to wait until after the results are out.
Lee added that rallies in November and December will be significantly high, especially when markets have been up more than 10% in the first half of the fiscal year 2024. While the economy is not officially in a recession, the number of investors and analysts who believe the economy is going down is immense. Therefore, to get investors on the move evidence has to be better than expected.
What do the Elections Mean for Markets?
The 50 basis point cut may have redeemed positive results for the market. On September 28, Matt Powers, Powers Advisory Group managing partner, appeared in an interview on Yahoo Finance to discuss the plausible sectors to target as elections approach.
Powers shared that inflation numbers validated the 50 basis point cut, showing positive economic signs. However, he does reiterate that there will be some short-term volatility, especially in October.
According to him, investors must focus more on stocks in the defensive sectors, including utilities, consumer staples, and financials. Powers advises investors to spare some short-term equity but focus on long-term and medium-term results. Overall, he believes that the market is more balanced and a reallocation to the dividend stocks and dividend ETFs is highly probable.
Now that we have studied the aftermath of the easing cycle and the market outlook before an impending election, let’s take a look at the 8 best bargain stocks to buy in October according to analysts.
Our Methodology
To come up with the best bargain stocks in October, we used the Finviz screener to find stocks trading at a forward P/E of less than 20. We sorted our screen by market cap and went through the 30 biggest stocks. We then shortlisted the stocks that were the most popular among hedge funds, as of Q2 2024, and that analysts saw the most upside to. The stocks are ranked in ascending order of analysts’ upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial view of a giant iron ore mine, showcasing the mineral deposits of the company’s Ferrous Minerals segment.
Vale S.A. (NYSE:VALE)
Forward P/E as of September 28, 2024: 5.51
Analyst Upside Potential as of September 28, 2024: 27%
Number of Hedge Fund Holders: 34
Vale S.A. (NYSE:VALE) is one of the best bargain stocks in October according to analysts. The mining company is headquartered in Brazil and is present in more than 20 countries. The company engages in sustainable mining and is one of the largest producers of iron ore, pellets, and nickel. It also has operations in the logistics of mineral exporting.
The company’s responsibility towards the planet is remarkable. Currently, Vale S.A. (NYSE:VALE) produces 54% of the energy it consumes and protects 8,500 square feet of natural areas, 6 times the size of its operations. Over the years the company has launched a range of initiatives to give back to society including the Vale Foundation, Valia Portal, Vale Museum, Vale Cultural Institute, Vale Fund, and Vale Social Network, to name a few.
On the financial front, Vale S.A. (NYSE:VALE) logged $9.92 billion in revenue during the second quarter. In addition to that, the company reported record performances in production. Iron ore production stood at 81 metric tons (MT), S11D production at 20 MT, and iron sales at 90 MT, up by 3%, 2%, and 7% year-over-year, respectively.
Overall, Vale S.A. (NYSE:VALE) is set to add another 50 metric tons of capacity by 2026, making it one of the best bargain stocks to buy now. The company also signed a partnership for a new iron ore concentration plant in Sohar, which will be completed by 2027.
The growing need for sustainable energy sources makes Vale’s (NYSE:VALE) position in the industry crucial and an important name over the next few years. This explains why the company has several projects and sustainable initiatives in the pipeline.
Overall VALE ranks 6th among the 8 best bargain stocks to buy in October. While we acknowledge the potential of VALE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VALE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.