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three shares below $ 30 for the long run investor

April
3, 2021

5 min read

This story originally appeared on MarketBeat

This week the S&P 500 crossed the 4,000 mark for the first time and completed a remarkable run. A little over a year ago, the index flirted with the 2,000 level in the depths of its COVID-19 slump.

With US stocks trading at record highs, there aren't many cheap large and mid-cap stocks left for investors. However, there are still some interesting names that might be considered for long-term investors.

Is General Electric Stock Undervalued?

General Electric (NYSE: GE) stock has rallied along with the broader market, but at $ 13.35 per share, it is way behind its 2001 heyday when it peaked above $ 50. Granted, GE isn't the company it was 20 years ago, but it seems on track to restore its reputation as an American icon.

Since the pandemic began, GE, like most industrial companies, has been in a cost-cutting and cash-holding mode. Having managed to be profitable in 2020, it can now focus on some of its key growth opportunities.

GE is no longer just a manufacturer of light bulbs and other electrical products, but operates a well-diversified model these days. The healthcare business has benefited from the demand for COVID-19 products, but should continue to grow in the long term as the world population ages and the range of products grows.

Another positive development is the turnaround in the difficult power sector. The business has become profitable and closed the year with a backlog of $ 80 billion thanks to strong demand for gas turbines. The renewable energy business is not yet profitable, but given the expected boom in clean energy spending, the sale of wind turbines is likely to lead to sustained earnings growth soon. The aircraft engine business could also expand due to improved demand from commercial aircraft and the military.

However, the most compelling (and less discussed) aspect of transforming the company is that the GE of the future will generate roughly half of its revenue from services. General Electric is on the comeback path. Patient investors willing to ride may be rewarded with oversized returns for the next several years.

What is good oil and gas supply?

The energy sector quickly got out of hand in 2021, but there is one name that may have a lot of gas up its sleeve. Devon Energy (NYSE: DVN) is an oil and gas producer that previously traded above $ 100 per share. The stock, now trading in its 20s, is a cheap way to play the turnaround in the energy cycle.

Devon Energy has a portfolio of high quality onshore oil and gas facilities in the United States and Canada. It works on the lower cost end of the spectrum. This year the company plans to produce up to 300,000 barrels of oil per day if global demand returns. Unless the global supply side of the equation weighs on pricing, higher oil prices should translate into strong profitability compared to peers.

Looking ahead to this year, Devon Energy should also see growth through the recent acquisition of WPX Energy. The Oklahoma-based neighbor has attractive oil and gas reserves in the Permian and Williston Basins and is expected to generate significant cost synergies.

Devon Energy's low cost manufacturing profile and solid track record give it a competitive advantage over other E&P companies in the region. It now owns some of the most attractive acreage in the slate-rich Delaware Basin and is sized to rival the big dogs. Mid-cap stock is well on its way back to the large-cap ranks, so it likely won't trade below $ 30 for long.

Is Mattel Stock a Buy?

Mattel (NASDAQ: MAT) is another cheap stock that deserves long-term buy and hold. The classic toy maker's shares cost roughly $ 20 for a Hot Wheels action set. The stock has already doubled its pandemic bottom, but it could double the wheels again and go past its 2013 high of $ 48.48.

As the company behind iconic toy brands like Fisher-Price, Barbie and American Girl, Mattel also sells toys based on popular children's films like Cars and Toy Story. And when it comes to films, Mattel is into filmmaking these days. Rather than just piggybacking on popular Disney films, the company is taking the opportunity to drive higher toy sales by developing its own media offerings.

The subtle but clever move can pay off over time as Mattel's original content resonates with audiences and blends in more with pop culture. Movies, TV shows, and digital games are powerful media these days and can drive the complementary sales of all types of products. Just ask Disney.

Mattel works with Sony, Paramount and Warner Brother to produce their own films. Cartoon programs are also being developed that can be viewed on Netflix. The company's project in the media sector has been well received by the market, but is still at a very early stage.

Mattel's dolls, cars, action figures, and even board games are no longer just a toy company, but are brought to life on screens everywhere. As this storyboard plays, the Mattel franchise could increase in value.

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