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In this article, we’ll take a look at the top 10 non-tech stocks to buy right now. You can skip our detailed analysis of the outlook for these stocks for 2021 and some of the key growth drivers, and go straight to 5 best non-tech stocks to buy now.
Analysts and notorious hedge fund managers are becoming unequivocal in their warnings that tech stocks are overvalued and inflate already surging valuations of the market as a whole, stating fears that we could be in a bubble. Billionaire David Einhorn of Greenglight Capital recently said in his letter to investors that tech stocks lacking strong fundamentals are in a “huge bubble”. The billionaire believes the mania we’ve seen in the tech IPO landscape amid the pandemic, huge market caps, skyrocketing valuations, and rising speculative instruments all support his theory that we’re in. a bubble.
10 best non-tech stocks to buy now
There are many warning signs that we may be in a bubble right now. Citigroup’s famous “panic / euphoria” index – index measures include NYSE short interest ratio, margin debt, daily Nasdaq volume, composite average of bullish data from Investors Intelligence and of the American Association of Individual Investors, the put / call ratio, the CRB futures index, gasoline prices, the ratio of premiums to put prices to calls – currently reads its highest value ever recorded.
Tech stocks are starting to face signs of a correction, however. The NASDAQ slipped 3% on March 18, its biggest drop since February 25, as the benchmark 10-year Treasury yield surpassed 1.75% and hit a 14-month high. Tech stocks belong to the category of growth stocks, the value of which declines when returns rise because tech stocks imply earnings far from the future.
One of the most shocking examples of the current market euphoria is the rise in Hertz Global shares after the company filed for bankruptcy in 2020.
Cailin Birch, of the Economist Intelligence Unit, said in a report that investors have started to expect the Fed and Congress “to continue to come to the rescue with ever more stimulus.” However, according to the analyst, these programs only help Wall Street and have “no positive ripple effect for Main Street”.
“The risk of an asset bubble bursting has increased dramatically,” noted Birch.
Amid the market noise, it has become difficult to spot truly valuable and potentially profitable stocks. That’s why in this article, we’ll focus on the non-tech sectors of the market and talk about the 10 best non-tech stocks to buy right now. These stocks have a PE ratio of less than 15, with earnings growing over 10% over the past 12 months.
Rising volatility is causing turmoil in financial markets, hence the warnings of a bubble. Even hedge funds are struggling to maintain their profits. The reputation of the hedge fund industry has been tarnished over the past decade, in which its hedged returns have failed to keep pace with the unhedged returns of stock indexes. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge funds that have outperformed S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26, 2021 , stock selections from our monthly newsletter returned 197.2%, compared to 72.4% for the spy. Our stock picks outperformed the market by more than 124 percentage points (see details here). We were also able to identify in advance a select group of hedge fund stocks that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they have lost 13% until November 16. This is why we believe that hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to get our stories delivered to your inbox.
With that background and the industry outlook in mind, let’s begin our list of the 10 best non-tech stocks to buy right now.
10. FS Bancorp, Inc. (NASDAQ: FSBW)
Number of hedge fund holders: 4 PE ratio: 7.94
FS Bancorp is one of the best non-tech stocks to buy right now. The company operates Washington’s # 1 security bank. The company has 21 full-service branches and seven home loan production offices. The stock has risen 140% in the past 12 months. In January, the company increased its quarterly dividend from 24% to $ 0.26 per share.
At the end of the fourth quarter, 4 hedge funds in Insider Monkey’s database of 887 funds had stakes in FSBW, compared to 5 funds in the third quarter. EJF Capital is the main player in the company, with 162,500 shares valued at $ 8.9 million.
9. Enstar Group Limited (NASDAQ: ESGR)
Number of hedge fund holders: 11 PE ratio: 3.34
Enstar ranks 9th on our list of the 10 best non-tech stocks to buy now. The insurance group offers capital release solutions and specialized underwriting services. Its segments include Non-Life Run-Off, Atrium and StarStone. The stock has risen 115% in the past 12 months. Enstar is part of the portfolio of Chinese billionaire Zhang Lei.
A total of 11 hedge funds tracked by Insider Monkey were ESGR bullish at the end of the fourth quarter, up from 13 funds a quarter earlier.
8. Hibbett Sports, Inc. (NASDAQ: HIBB)
Number of hedge fund holders: 20 PE ratio: 16.50
Alabama-based Hibbett Sports sells athletic shoes and sportswear. The stock has gained 627% in the past 12 months. The strength of the company lies in its huge presence in e-commerce. In the fourth quarter, the company’s comp sales jumped 21.9%, while e-commerce comparable sales rose 44.8%. Digital sales represent 17.1% of the company’s total sales.
According to our database, the number of HIBB’s long positions in hedge funds decreased at the end of the fourth quarter of 2020. There were 20 hedge funds that hold a position in Hibbett Sports compared to 21 funds in the third quarter. The main player in the company is Renaissance Technologies of Jim Simons, with 529,192 shares, valued at $ 24.4 million.
7. KB Home (NYSE: KBH)
Number of hedge fund holders: 28 PE ratio: 14.12
KB Home ranks 7th on the list of the 10 best non-tech stocks to buy now. KBH is a homebuilding company that primarily serves the first-time homebuyers market. KB Home is listed on Fortune’s list of Fastest Growing Companies. KB Home stock has gained 260% in the past 12 months. In February, Goldman Sachs analyst Susan Maklari raised KB Home to Buy from Sell, citing a strong order book. Maklari increased its KB Home price target to $ 51 from $ 32.
Fisher Asset Management is one of 28 hedge funds tracked by Insider Monkey with stakes in KBH at the end of the fourth quarter. The fund owns more than 2.8 million shares of the company.
6. The Michaels Companies, Inc. (NASDAQ: MIK)
Number of hedge fund holders: 33 PE ratio: 11.05
Art and decor firm The Michaels Companies, Inc. is ranked 6th on the list of best non-tech stocks to buy for 2021 and beyond. The company has more than 1,200 stores in North America. The stock has gained 1300% in the past 12 months. Earlier in March, the company said it had agreed to be acquired by Apollo Global Management, Inc. in a transaction that values Michaels at around $ 3.3 billion.
At the end of the fourth quarter, there were 33 hedge funds in Insider Monkey’s database that had stakes in MIK, compared to 38 funds in the third quarter. Contrarius Investment Management, with 8.98 million MIK shares, is the main player in the company.
In one of their letters to investors, Bernzott Capital Advisors highlighted a few stocks and Michaels Companies Inc. (NASDAQ: MIK) is one of them. Here’s what Bernzott Capital Advisors said:
Michaels (MIK): After initiating a position in July 2017, we completed a re-underwriting of the company in December 2019 and concluded that we had made a mistake. MIK faces several structural challenges that we did not have expected: lower margins due to increased competition and pricing; top management revenue, including CEO, executive vice president of supply chain and IT, and vice president -President of Marketing; higher debt costs; and a major business model fulcrum shifting customer focus from seasoned enthusiasts to novices. The position has been sold. “
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Disclosure: None. ten Best non-tech stocks to buy now was originally published on Insider Monkey.
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