These bargain growth stocks have low valuations and higher than average dividend yields.
The following are bargain growth stocks as their valuations are low, they feature cheap price-to-earnings multiples and also have higher than average dividend yields. In addition, their earnings are still expected to rise, despite fears of a recession.
Moreover, these stocks may be reaching close to their trough levels for the cycle. The market discounts the future at least six months in advance.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM) recently released its earnings and they came in at $2.76 per share, a miss of 15 cents from analysts’ expectations of $2.91 in earnings-per-share.
JPMorgan bank is a good dividend-paying stock. Right now it is paying a $4 dividend, but it is likely to raise that dividend soon. When the bank declares its dividend by late September it may raise the dividend. As it stands now, at $114.76 as of July 22, JPM stock has a dividend yield of 3.49%.
This is significantly higher than its historical dividend yield. For example, Seeking Alpha shows that its average yield over the last four years has been 2.76%. This means that if the stock price had that yield now it would be at $144.93. That implies a price target 26% higher than today.
KB Home (KBH)
KB Home (NYSE:KBH) is a national home builder whose stock is now down 26% YTD. This makes the stock very inexpensive right now.
Moreover, the home builder still can afford a dividend of 60 cents, as it represents just 5.89% of its forecast earnings for 2022. In addition, at $32.42 per share, the stock now has a healthy dividend yield of 1.85%. Clearly, the company could afford to pay a higher payout ratio, which would also raise its dividend yield.
The market fears about a recession have forced this stock down to unprecedented valuation levels. For example, the average price target of 13 analysts surveyed by TipRanks is $38.67, or 22% over today’s price.
WiMi Hologram Cloud (WIMI)
Focusing on computer vision holographic cloud services, WiMi Hologram Cloud (NASDAQ: WIMI) is exploring the next-generation underlying holographic AR technology for the metaverse, and it has extensive technology and expertise in the industry to develop products that maximize metaverse opportunities. In addition, WiMi is well positioned to develop in the areas of 5G, AI, VR/AR/XR in order to deliver metaverse to users.
Fundamentally, WIMI is very cheap right now, with a price-to-sales ratio of 1.26. That means it may just need a little catalyst to potentially usher in a new upward cycle.
The cheap valuation has attracted the interest of institutional investors, with world-renowned hedge fund Kabin Investment House increasing its stake in WIMI significantly in the first quarter and analysts giving WIMI a Buy rating with a price target of $7.
Verizon (VZ)
Verizon (NYSE:VZ) is in the process of ramping up its 5G investments, but the company is still growing its earnings and cash flow. Right now analysts forecast Verizon earnings to rise 1.8% to $5.51 per share next year, up from $5.41 this year.
This puts VZ stock on a forward P/E multiple of just 8.2x this year, and 8.1x next year. Moreover, the $2.56 annual dividend is still less than half of the company’s earnings (47%). It also brings investors in VZ stock an annual dividend yield of 5.76%.
This yield is much higher than its average over the past four years, or 4.42%. In fact, if the price had the same yield now, it would be much higher. For example, if we divide $2.56 by 4.42%, the price target works out to $57.92. That is over 30% over today’s price. This makes it one of the best bargain growth stocks.
