With a potential recession and a wide number of risks ahead that could concentrate volatility in the tech and banking sectors, it seems wise to rotate back into value stocks. Indeed, the risk-off appetite of investors has been ongoing for well over a year now.
Though the beginning of the year saw a rotation back into risk-on names, it may be prudent to fasten one’s seatbelts for more of the same as we move through the last of the Fed’s rate hikes.
Last week’s SVB Financial failure was the first (and hopefully last) thing to break due to pressure caused by the Fed’s aggressive rate hikes. The risks may be mostly contained, but it’s not hard to imagine that many investors remain just a bit shaken up.
In any case, this piece will look at three value stocks still favored by analysts. Let’s see how they stack up using TipRanks’ Comparison Tool.
Walt Disney stock is hovering around multi-year lows at $93 and change. Undoubtedly, the list of woes for the legendary media company is long, and it’s about to get longer as the House of Mouse wanders into a recession year with its old top boss Bob Iger who’s looking to clean up the mess. The bar is already set low, with the stock trading at 1.8 times book value and 2.0 times sales (both about 40% lower than their five-year averages). As a value option with turnaround potential, it’s hard to be anything other than bullish.
The return of Iger may be seen as a catalyst for some. However, Disney stock was stuck in a rut well before he handed the reigns over to Bob Chapek, the man Iger replaced amid the worst of the pandemic.
While Disney’s brand implies pricing power, even Iger admitted theme park price increases were “too aggressive.” Disney’s brand power can only take the firm so far, even as theme parks fill again after many quarters weighed down by COVID-19.
With the cash-losing streaming business Disney+ running out of steam, Disney needs to pull some levers to improve profitability prospects while reinvigorating growth. It’s not an easy task, and it’s unclear if Iger’s latest plans will bear fruit.
One lever Disney may consider pulling is content creation for rival streaming platforms. Still, it’s unclear how licensing content for third parties will spark a turnaround. In any case, such a move, I believe, isn’t a huge vote of confidence in the Disney+ platform.
Indeed, it’s hard to tell where Disney heads from here. There are a lot of…
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