Two top stocks too cheap to ignore right now? At least that’s what the title demands and gives. And actually, I have two candidates that I want to share with you today that I think deserve that title.
It’s them, by the way alliance (WKN: 840400) and VF Corporation (WKN: 857621). Let’s look at the construction behind the names, the dividend, the valuation and more. Finally, we need to find out how this title can be derived.
Allianz: Top stock, too cheap to ignore?
A first top stock that still exists for me is Allianz. We can already see this cheap valuation by looking at the fundamentals. It is remarkably cheap in DAX. Ignoring it will become progressively more difficult in the search for value opportunities.
Ultimately, Allianz stock now has a yield of 6.46% at a share price of around €167. In addition, the price-to-earnings ratio is below 9, with adjusted earnings per share of around 19 euros. We last saw such a result in 2019, i.e. before the pandemic. Nevertheless: It is possible.
It is also primarily possible because the operative business for the top share is actually running smoothly. After all, management expects an operating profit of 13.4 billion euros during this financial year plus/minus the usual fluctuations. This shows me that adjusted for special effects such as the structured alpha factor and other quibbles, you are quite capable of maintaining a solid business. To me, this is another reason why the DAX stock is hard to ignore.
Dividend and valuation can be one thing. But beyond that, management actually expects moderate operating growth through the middle of the decade, which should even show up in dividend growth. Confident? Your decision. Anyway, I see the top warehouse again, which is so cheap for me that I can hardly ignore it.
VF Corporation: Strong Brands, Aristocrat!
You may not be familiar with VF Corporation stock. Behind the name are brands such as The North Face or Vans. Both account for a large part of sales at the same time. The stock is also a true Dividend Aristocrat. This also indicates a certain quality. Of course, such brands may be less in demand in a downturn. However, this is part of investing in at least latently cyclical consumer goods with more expensive brands and pinch pricing.
The top stock, too cheap to ignore, anticipated some of the pessimism. Finally, with a share price of $40.25, the dividend yield is 4.9%. We also see that the price-to-earnings multiple is currently only 13.2, based on expected earnings of at least $3.05 in fiscal 2023.
Overall, this is also a top stock for me that in some ways is too cheap to ignore. Especially since with a dividend of almost 5%, there is a good chance for a long-term growing, passive income.
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Vincent owns shares in Allianz and VF Corporation. The Motley Fool does not own any of the stocks listed.