In regard to the Brexit vote there is reference to discount stocks in the news. If you are looking for a fire sale on stocks because they are clearing out to make room for the next model, good luck. Then what are discount stocks? These are stocks that have been unjustly dragged down by a falling market and are likely to outperform in the short to medium term. A set of examples is offered by USA Today in their reference to a Brexit discount on 13 specific stocks.
The Brexit shock isn’t just making traveling to London a bargain. Savvy investors are looking for big discounts on stocks that were overly punished in the Brexit stock mayhem.
There are 13 stocks in the Standard & Poor’s 500, including cruise operator Royal Caribbean Cruises (RCL), discount brokerage firm Charles Schwab (SCHW) and appliance maker Whirlpool (WHR) that have been overly pummeled relative to analysts’ forecasts, according to a USA TODAY analysis of data from S&P Global Market Intelligence. Each of these stocks were cranked 9.9% or more in the wake of the United Kingdom voting to exit the European union last week. Even so, these stocks are predicted to be worth at least 20% more in 18 months based on average analysts’ price targets. It’s not all speculation, either, as each of these companies is expected to post at least 10% higher adjusted profit this calendar year.
Here is the list along with projected earnings growth for each stock.
- Royal Caribbean, 29.8%
- Delphi Auto, 16.1%
- CBRE Group, 12%
- Citizens Financial, 12.3%
- Lincoln National, 12.1%
- Metlife, 11.3%
- Carnival, 23%
- E*Trade, 40.2%
- Charles Schwab, 23.7%.
- Whirlpool, 18.8%
- Cognizant, 24%
- TE Connectivity, 23.8%
- Priceline, 21.8%
The worst projected price appreciation in this group is Priceline at 21.8% and the best is Royal Caribbean at 45.8%. These so-called discount stocks can be considered bargains at their current discount prices. As always do your own home work before investing.
More Post-Brexit Discounts
The Street quotes the adage buy when there’s blood in the streets as they suggest 10 best post-Brexit stocks.
Before Friday’s bloodbath, the bull market was more than seven years old, with stocks hovering in overvalued territory. In addition, the Dow had already added 336 points on the week. That means scores of inherently strong blue-chip investments that were too pricey are now on the bargain shelf.
You can expect traders to start snapping them up when the markets open on Monday.
Their list includes Disney, Walgreen Boot Alliance, Devon Energy, Wells Fargo, Johnson & Johnson, General Electric, AAPL, MLM, VZ, and D. These are solid stocks that are probably not going to grow hugely but are currently discounted because of the market drop caused by Brexit. Picking up these discount stocks before the market reacts will likely be profitable. And as always do your own homework first.
For other thoughts on the Brexit decision and the likely fallout take a look at two of our recent articles.
How to Invest in British Stocks
How Will the Brexit Vote Affect Your Investments?