Hanes and Citigroup have compiled a list of undervalued stocks

Value stocks far outperformed last year’s gains, with the Russell 1000 Value Index down 9% compared to the Russell 1000 Growth Index’s 26% drop.

This does not guarantee that the trend will continue, but many experts note that the late stages of economic cycles usually favor value stocks.

If you’re thinking about investing, here are three stocks that Morningstar analysts say are particularly undervalued.

Celanese, chemical company

Morningstar analyst Seth Goldstein appoints Celanese (CE) – Get a free report narrow moat (long-term competitive advantage). He estimates the fair value of the shares at $160, up from a recent quote of $118.

“Celanese is the world’s largest manufacturer of acetic acid and its chemical derivatives, including vinyl acetate monomer and emulsions,” he wrote in a comment. “These products are used in the company’s specialized end products or sold outside of the company.”

Celanese products are mainly intended for the automotive, cigarette, paint, construction and medical industries.

“The Celanese plant in Clear Lake, Texas benefits from cheap feedstock from cheap U.S. natural gas,” Goldstein said.

“The company plans to expand Clear Lake’s acetic acid capacity by approximately 50%, which should improve the segment’s profitability due to lower unit production costs compared to other regions.”

Hanesbrands, clothing company

Morningstar analyst David Schwartz gives Hanesbrands (HBI) – Get a free report narrow ditch. He estimates the fair value of the shares at $22 compared to the recent price of $7.65.

“Hanesbrands is the market leader in basic clothing (60% of sales in 2021) in many countries,” he wrote in a comment. “We think its key innerwear brands like Hanes and Bonds (in Australia) are reaching premium prices.”

Additionally, “while the firm is facing challenges from inflation, a strong US dollar, declining retail store inventory levels, and COVID-19, we believe Hanes’ leadership in apparel restocking categories puts it in better shape than some competitors.” Goldstein said.

“In May 2021, the company unveiled its Full Potential plan to expand Champion’s global footprint, reclaim growth in lingerie, improve consumer connections (for example, through better marketing and enhanced e-commerce), and streamline its portfolio.”

Citigroup bank

Morningstar Analyst Eric Compton Appoints Citigroup (FROM) – Get a free report without a moat and estimates the fair value of the shares at $75. It recently traded at $48.

“The bank’s most efficient business is its institutional client group, where the bank’s commercial banking and capital markets operations have a scale and a unique global presence that few can replicate,” he wrote in a comment.

“Its truly global footprint sets the bank apart from all its US counterparts, and this broad geographic presence should help Citigroup remain the bank of choice for companies with cross-border needs.”

But “this global presence can be expensive and difficult to maintain, and the bank’s markets department also generates low profits, so this approach also has drawbacks,” Compton said.

The bottom line: “The bank will not be the best in terms of operating performance compared to its peers, but it is simply too cheap,” he said.

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