Best Undervalued Stocks to Buy Now for August 2022

When this happens, it can pull in even the best stocks. That means the bad, unprofitable stocks and the best-in-breed stocks are sold off. They become undervalued – and that’s bargain time for long-term investors.

Markets and Big Money in the Last Six Months

When trying to make sense of markets, I look to data. So, what does the data say?

Well, my research firm, MAPsignals, follows the Big Money because we believe it moves markets. We created the Big Money Index (BMI), a 25-day moving average of Big Money buys and sells. It recently hit oversold levels twice (below the green line), meaning selling has been driving down markets big time:

Oversold territory doesn’t occur often. But when it has in the past, it’s almost always been a bullish indicator. For a recent example, look at what happened after the BMI hit oversold in early 2020 (the start of the pandemic) – a monster rally:

Going back to 2011, history suggests that oversold BMI instances indicate being at or near market bottoms. Looking at the chart below, we can see that the BMI hitting the green line often corresponds with a market low. We can also see how rallies tend to follow:

While these metrics are not guarantees, history suggests markets rise over time after the BMI hits oversold. So, this puts us on the lookout for quality stocks that will rise as buyers return and markets trend upward again. We want fundamentally sound companies with good histories and discounted prices. Right now, that points to the technology, discretionary, financial, and staples sectors. Here are our best undervalued stocks to buy now for August 2022: TGT, SBUX, LOW, MA, and QCOM.

Target Corporation (TGT) Analysis

Up first is Target, which is one of the biggest retail chains around.

Even though great companies’ stocks can be volatile, like TGT over the past year, they’re worthy of attention, especially on pullbacks. Check out Target:

• Year-to-date performance (-31.0%)
• Recent Big Money sell signals

To show you what our Big Money signals look like on a stock, have a look at all the buys and sells in TGT over the past year:

Looking more broadly, Target has been a high-quality stock for years, and it pays a current dividend of more than 2.8%. The blue bars in the chart below show when TGT was a high-ranking Top 20 stock likely being bought by a Big Money player, according to MAPsignals. When you see a lot of blue, it can be very bullish:

Source: www.MAPsignals.com

Those blue signals indicate Big Money buying and solid fundamentals. As you can see, Target’s sales growth has been strong and the expected earnings outlook is solid, making it worthy of attention:

• 3-year sales growth rate (+12.2%)
• 2-year vs. 1-year EPS growth estimate (+41.3%)

Starbucks Corporation (SBUX) Analysis

Next up is Starbucks, the coffee giant.

Check out these technicals for SBUX:

• Year-to-date performance (-29.0%)
• Recent Big Money sell signals

It’s been getting sold heavily, creating a big downtrend:

Now let’s look long-term. Below are the Top 20 buy signals for Starbucks since 2004. The Big Money has been on SBUX for a while and loves its dividend (currently near 2.4%):

Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Starbucks has grown sales well and the outlook for future earnings looks good:

• 1-year sales growth rate (+23.6%)
• 2-year vs. 1-year EPS growth estimate (+19.8%)

Lowe’s Companies, Inc. (LOW) Analysis

Another potential growth name is Lowe’s, the enormous home improvement retailer.

Strong candidates for growth usually have Big Money buying the shares. Lowe’s has historically had that. Until December 2021, it was a gem. But it’s seen big selling since, which could be an opportunity:

• Year-to-date performance (-27.0%)
• Historical Big Money signals

Below are the blue Top 20 Big Money buy signals LOW has made since 1990. It’s clearly a Big Money favorite. That’s the JUICE!

Source: www.MAPsignals.com

Now let’s dig deeper. Sales growth for Lowe’s has been impressive. I expect more of the same in the coming years. Its earnings estimate and profit margin bode well for the future too. LOW also pays a current dividend of more than 2.2%.

• 1-year sales growth rate (+7.4%)
• 2-year vs. 1-year EPS growth estimate (+8.8%)
• Profit margin (+8.7%)

Mastercard Corporation (MA) Analysis

Number four on the list is Mastercard, the huge credit card company.

Here are the technicals important to me:

• Year-to-date performance (-5.0%)
• Historical Big Money signals

MA has chopped along over the past year, with lots of Big Money selling and buying:

But Mastercard is a Big Money favorite, and it pays a current dividend of almost 0.6%. Below are the Big Money Top 20 buy signals for MA since 2006:

Source: www.MAPsignals.com

Let’s look under the hood. Despite the price slide, Mastercard’s sales and earnings have jumped quite a bit:

• 1-year sales growth rate (+23.4%)
• 3-year EPS growth rate (+19.8%)

QUALCOMM, Inc. (QCOM) Analysis

Our last growth candidate is  QUALCOMM, which is a large semiconductor company.

Last winter it was being bought up. But since then there’s been lots of Big Money selling as technology stocks have been slammed:

Check out these technicals:

• Year-to-date performance (-19.0%)
• Historical Big Money signals

But QCOM is a high-quality stock since it’s made the MAPsignals Top 20 report. Right now, it pays a current dividend of more than 2.0% and it’s on a pullback. So, QCOM could be an opportunity. As you can see, it’s been a Big Money favorite for years:

Source: www.MAPsignals.com

Now let’s look below the surface a bit. Sales have been growing and the profit margin is solid:

• 1-year sales growth rate (+42.6%)
• Profit margin (+26.9%)

Bottom Line and Explanatory Video

 

TGT, SBUX, LOW, MA, and QCOM represent the top undervalued stocks for August 2022. They’ve been sold a lot lately…perhaps too much. Strong, fundamentally-sound stocks seeing near-term sell signals are worthy of extra attention because of their long-term potential.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions SBUX and QCOM in personal and managed accounts, and LOW in managed accounts.

Contact

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