The S&P 500 Index has been corrected this month due to Trump’s tariffs, and fears that a recession is on the horizon. This created a number of buying opportunities.
Some of the stocks on the benchmark index are trading significantly below their historic valuations.
You can buy the two best quality stocks at an incredible discount to the average five-year price-to earnings ratio.
Amazon.com Inc. (NASDAQ: AMZN).
Amazon’s stock price has fallen by about 20 percent since February, mainly due to the macroeconomic downturn and fears that AI expenditures could decrease as we move through 2025.
Titan’s price-to earnings ratio is currently 38% lower than its five-year average.
This is one of the reasons why JPM reiterated AMZN recently as its top choice for 2018.
Investment analysts expect Amazon will grow its market share by leveraging low prices, a large selection and the US economy sliding into recession.
Amazon’s financial stability makes it a good investment for this year.
The Nasdaq listed company reported $1.86 per share in earnings for its last quarter on revenue of $187.8 Billion.
Comparatively, analysts were only at $1.49 and $187.3 Billion.
Amazon has been investing aggressively in diversifying its business for many years. In its fourth fiscal quarter, Amazon’s advertising division brought in $17.3 billion.
It’s important to note that JPMorgan’s is not the only bullish analyst on AI. Amazon’s consensus rating is currently “buy”.
Devon Energy Corp (NYSE: DVN)
Devon Energy, based in Oklahoma, is another high-quality company that trades at a significant discount to its historic valuation.
DVN shares are down 30% from their 52-week-high, and the price to earnings ratio is now 33% lower than its five-year average.
Devon is worth investing in because of the company’s financial strength. The NYSE listed firm’s fiscal Q4 saw it earn $1.16 per share, which is well over the $1 expected.
The company also exceeded Street expectations in the fourth-quarter, with a revenue of $4.4 billion.
Devon’s Board also increased the dividend fixed by 9% at the time. This “reflected confidence in the future energy outlook, and DVN’s free cash flow.”
Wall Street has also given a “overweight rating” to Devon’s shares.
The average analyst price target for the stock is $49.48, which represents a possible upside of almost 40% over current levels.
The post Two quality stocks trading below historical multiples could be updated as new information becomes available
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