In this article, we discuss the 15 quality undervalued non-cyclical stocks to buy now. If you want to read about some more non-cyclical undervalued stocks, go directly to 5 Quality Undervalued Non-Cyclical Stocks to Buy Now.
The United States stock market has been on a roller coaster ride over the past few years. The pandemic served to sow a state of panic in investors that has been hard to shake despite a post-pandemic economic boom. Record inflation in 2021 and 2022 led to several rate cuts from the Federal Reserve, further eroding investor appetite for equities. However, as the market stabilizes and yields shrink, analysts predict record growth for stocks in the coming months, as evidenced by the 5.2% acceleration rate for the US economy in the third quarter.
There is ample evidence to support the rock solid nature of the US economy heading into the holiday season. Latest data from the US government shows that nearly 200,000 jobs were added to the economy in November, with unemployment falling to 3.7%. Inflation numbers, which had jumped to a record high of over 9% just twelve months ago, have come down to around 3%, without causing a recession. Consumer sentiment is jumping. Retail sales in the US increased by 0.3% in November, an increase of more than 4% year-on-year.
Chris Zaccarelli, an economic expert and chief investment officer of finance advisory Independent Advisor Alliance, recently told news agency Reuters that there was too much hype around the dip in consumer confidence and the chances of a broad slowdown in the economy. Per Zaccarelli, the death of the consumer, as well as the economy, was greatly exaggerated and the much-hyped recession was not going to materialize. He added that the resilient consumer continued to propel corporate profits and the market higher. Economic data backs up the claims made by the market expert.
Investors who want to ride the growth trends without putting too much at risk should consider investing in non-cyclical stocks that are undervalued compared to peers. The benefit of investing in these firms is that they are not heavily reliant on overall economic activity for business growth, and tend to do well in both growth periods and recessions. These firms have solid track records in the dividends space as well. These always-in-demand stocks are one of the best long-term investment vehicles.
Some examples of quality non-cyclical firms include Starbucks Corporation (NASDAQ:SBUX), AT&T Inc. (NYSE:T), and Exxon Mobil Corporation (NYSE:XOM). A deeper look at the future business strategy of one of these firms provides further context. Laxman Narasimhan, the CEO of Starbucks Corporation (NASDAQ:SBUX), recently outlined his plans for reinventing the brand in 2024 to take advantage of strong growth momentum heading into the new year. Narasimhan pledged to elevate the brand through stores and strengthen and scale in digital.
"Looking ahead, we remain fully optimistic about our headroom across the U.S. and internationally, and we see limitless possibilities across all areas of the business. While the global business environment remains uncertain, we are confident in our ability to adapt and innovate to meet evolving consumer needs. We will continue to invest in our partners to expand upon our reinvention and to deliver on our sustainability and social impact initiatives, all while driving long-term growth. We feel very good about the business momentum for next year, the continued strength of the brand, and the opportunity for growth in the years ahead."
Our Methodology
These were picked using the Price-to-Earning (PE) ratios. Stocks that have a PE ratio of less than 15 were preferred for the list. Companies in non-cyclical sectors such as consumer staple goods, food, gasoline, utilities, and healthcare were considered. The analyst ratings of each company are also discussed. Hedge fund sentiment was included as a classifier as well. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to identify the number of hedge funds that hold stakes in each company.
15 Quality Undervalued Non-Cyclical Stocks to Buy Now
A trader at a stock exchange, vigorously watching the stocks' trends in the stock market.
Quality Undervalued Non-Cyclical Stocks to Buy Now
Adecoagro S.A.(NYSE:AGRO)operates as an agro-industrial company in South America. On December 4, Bank of America analyst Isabella Simonato upgraded Adecoagro S.A.(NYSE:AGRO) stock to Buy from Neutral and raised the price target to $14 from $12.5, lauding the solid earnings growth story of the firm.
At the end of the third quarter of 2023, 10 hedge funds in the database of Insider Monkey held stakes worth $179 million in Adecoagro S.A.(NYSE:AGRO), compared to 9 in the previous quarter worth $135 million.
Just like Starbucks Corporation (NASDAQ:SBUX), AT&T Inc. (NYSE:T), and Exxon Mobil Corporation (NYSE:XOM), Adecoagro S.A.(NYSE:AGRO) is one of the best quality undervalued non-cyclical stocks to buy now.
British American Tobacco p.l.c. (NYSE:BTI) provides tobacco and nicotine products. Among the hedge funds being tracked by Insider Monkey, Bermuda-based investment firm Orbis Investment Management is a leading shareholder in British American Tobacco p.l.c. (NYSE:BTI) with 6.7 million shares worth more than $211 million.
In its Q2 2023 investor letter, Broyhill Asset Management, an asset management firm, highlighted a few stocks and British American Tobacco p.l.c. (NYSE:BTI) was one of them. Here is what the fund said:
“In our year-end letter to investors, we explained why we had reduced our investment in Altria and reinvested the proceeds to increase our position in Philip Morris. This quarter, we exited the position completely, swapping our exposure for British American Tobacco p.l.c. (NYSE:BTI), as the valuation gap became too hard to ignore. Investors are rightly frustrated with the stock. In addition to the menthol ban, leadership change, and North Korea kerfuffle. BTI has mountains of debt piled on its balance sheet following the acquisition of Reynolds, which will limit options for capital allocation, namely more buybacks. While we’d love to see new management aggressively repurchasing stock at these prices – shares trade below 7x earnings – we don’t think buybacks are necessary for the investment to work from here.”
Ingles Markets, Incorporated (NASDAQ:IMKTA) operates a chain of supermarkets in the southeast United States. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Royce & Associates is a leading shareholder in Ingles Markets, Incorporated (NASDAQ:IMKTA) with 697,202 shares worth more than $52 million.
AMN Healthcare Services, Inc. (NYSE:AMN) provides healthcare workforce solutions. On December 6, investment advisory JPM Securities initiated coverage of AMN Healthcare Services, Inc. (NYSE:AMN) stock with an Outperform rating and a price target of $85, noting the firm was one of the largest healthcare staffing and technology-enabled workforce solutions companies in the United States.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in AMN Healthcare Services, Inc. (NYSE:AMN) with 329,749 shares worth more than $28 million.
Unilever PLC (NYSE:UL) operates as a fast-moving consumer goods company. At the end of the third quarter of 2023, 21 hedge funds in the database of Insider Monkey held stakes worth $628 million in Unilever PLC (NYSE:UL), compared to 19 in the previous quarter worth $318 million.
ACCO Brands Corporation (NYSE:ACCO) designs, manufactures, and markets consumer, school, technology, and office products. On December 4, investment advisory Barrington maintained an Outperform rating on Acco Brands (NYSE:ACCO) stock and lowered the price target to $7.5 from $8, noting that in the third quarter for the firm sales were impacted by economic conditions but profitability held up.
At the end of the second quarter of 2023, 22 hedge funds in the database of Insider Monkey held stakes worth $43 million in ACCO Brands Corporation (NYSE:ACCO), compared to 21 the preceding quarter worth $38 million.
Black Hills Corporation (NYSE:BKH) operates as a utilities firm. On November 21, Mizuho analyst Anthony Crowdell upgraded Black Hills Corporation (NYSE:BKH) stock to Neutral from Underperform with a price target of $53, noting that the balance sheet of the firm had improved significantly over the past year.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm GAMCO Investors is a leading shareholder in Black Hills Corporation (NYSE:BKH) with 191,991 shares worth more than $9.7 million.
Enova International, Inc. (NYSE:ENVA) is a technology and analytics firm based in Chicago. On December 7, investment advisory JPM Securities maintained an Outperform rating on Enova International, Inc. (NYSE:ENVA) stock and raised the price target to $62 from $58.
At the end of the third quarter of 2023, 25 hedge funds in the database of Insider Monkey held stakes worth $241 million in Enova International, Inc. (NYSE:ENVA), compared to 23 in the previous quarter worth $262 million.
Williams-Sonoma, Inc. (NYSE:WSM) operates as a specialty retailer. On November 17, Telsey Advisory analyst Cristina Fernandez maintained an Outperform rating on Williams-Sonoma, Inc. (NYSE:WSM) stock and raised the price target to $198 from $170, noting the firm was well positioned to gain share and return to growth.
At the end of the third quarter of 2023, 31 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Williams-Sonoma, Inc. (NYSE:WSM), compared to 33 in the preceding quarter worth $1 billion.
Bunge Limited (NYSE:BG) operates as an agribusiness and food company worldwide. In late September, investment advisory HSBC initiated coverage of Bunge Limited (NYSE:BG) stock and with a Hold rating and $122 price target, noting that there were attractive opportunities in US industrials, fueled by energy transition themes with regulatory support.
At the end of the third quarter of 2023, 31 hedge funds in the database of Insider Monkey held stakes worth $210 million in Bunge Limited (NYSE:BG), compared to 30 in the previous quarter worth $229 million.
In addition to Starbucks Corporation (NASDAQ:SBUX), AT&T Inc. (NYSE:T), and Exxon Mobil Corporation (NYSE:XOM), Bunge Limited (NYSE:BG) is one of the best quality undervalued non-cyclical stocks to buy now.
