US stocks have endured some incredible volatility in recent months. In fact, I’ve become totally accustomed to seeing stocks in my watchlist and portfolio deliver double-digit moves on a daily basis. However, the broader movement has been down as investors attempt to digest President Donald Trump’s trade and economic policies and the potential for a trade war. This has compounded the perception that the economy is slowing and that inflation could return. Now, many of my favourite names are starting to look like cheap stocks.
Five of the best
So, what are the five stocks? Well, there’s a host of companies that I could have chosen, but here’s five that I believe stand out, especially on the price-to-earnings-to-growth ratio.
| Stock | 1-month performance | Forward P/E | Forward PEG |
| Celestica | -38% | 16.9 | 0.57 |
| DXP Enterprise | -24.7% | 14 | n.a. |
| Nu Holdings | -21.7% | 20 | 0.6 |
| Powell Industries | -36.2% | 11 | 1 |
| SkyWest | -25% | 9.6 | 1.1 |
These five stocks have endured a torrid last 30 days, but their metrics have become incredibly enticing. While it can be dangerous to try and catch a falling knife, these companies offer compelling value propositions.
DXP and Powell Industries are particularly intriguing as these stocks, both of which soared on the artificial intelligence (AI) infrastructure boom, are only covered by a couple of analysts. These analysts don’t appear to have adjusted their expectations, which currently suggest stagnating earnings. Recent results suggest that both companies will continue to grow earnings at an incredible rate.
Meanwhile Celestica is another AI play that has surged 200% over 18 months. Nonetheless, shares in this Canadian company have come under pressure, and unduly in my opinion. And then Nu Holdings is one of the world’s fastest growing banks, with operations in Latin America. While it may be expensive compared to UK banks on a near-term basis, the expected growth is exceptional.
Airlines under pressure
Airlines stocks have come under pressure as US tariffs on Mexico and Canada may reduce trade and, in turn, demand for air travel. SkyWest (NASDAQ:SKYW), which predominantly operates within the US, is exposed to this trend, but perhaps less than the 25% drop in the share price suggests.
The stock is now trading at 9.6 times forward earnings, which represents a 48% discount to the industrials sector, but a modest premium to some of its airline peers. However, this premium becomes a discount when we look at projected earnings for the medium term. It’s broadly expected to grow faster than its peers, as highlighted by the 19.5% revenue increase in Q2.
Its fleet of 624 aircraft, including models like the Embraer E175 and Bombardier CRJ series, supports partnerships with major carriers such as United, Delta, American, and Alaska Airlines. Moreover, while it doesn’t hedge fuel, its long-term contracts with major airlines mitigate this risk. All in all, while Trump’s tariffs represent a concern, the stock appears under-appreciated versus its peers.
This post was originally published on Motley Fool
