Narrowing down the right stocks to buy based on multiple metrics is almost impossible without a solid methodology – which is where InvestingPro comes in.
So what are the best stocks to buy now or add to your watchlist? Harmony Biosciences (HRMY), International Seaways Inc (INSW), Meritage Corporation (MTH), Danaos Corporation (DAC), and KB Home (KBH) have been suggested this month by our InvestingPro AI/Analyst hybrid.
June came and went in a flurry of geopolitical half-surprises, but the stock markets still seem to be cautiously optimistic as we move into July. The previous few months’ market successes still linger in the air and projections of an overall bullish trend persist, painting a favorable backdrop for investors seeking to position themselves strategically as we move into H2, 2024: finding opportunities in robust companies whose shares are still undervalued.
Our Stock-Picking Methodology
These 5 stocks are our top Pro Picks for this month, taken from S&P 500-listed companies that have garnered high InvestingPro health ratings (benchmarked against more than 100 financial factors and indicators from companies in the same sector), as well as from among those trading well under our proprietary fair value estimates (based on 5 overlaid investing models) and analyst assessments.
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The term “undervalued stocks” refers to stocks that are trading at a price below their intrinsic value or growth potential. Investors often look for undervalued stocks because, over the long term, the market will likely recognize the company’s true value, leading to a rise in the stock price and providing profit opportunities.
All of these names have earned InvestingPro health scores of well above 3.00, which for the last 7 years has indicated outperformance vs. the S&P 500. A score this high points to a mix of first-rate financials: excellent earnings, cash flow, and growth vs. peers in its sector.
5 Stocks To Consider In July 2024
| Top July Stock | InvestingPro Health Score |
|---|---|
| Harmony Biosciences (HRMY) | 3.95 / 5 |
| International Seaways Inc (INSW) | 3.80 / 5 |
| Meritage Corporation (MTH) | 3.10 / 5 |
| Danaos Corporation (DAC) | 3.75 / 5 |
| KB Home (KBH) | 3.38 / 5 |
Importantly, all of these stocks are also currently undervalued per InvestingPro’s fair value calculations and favored by Wall Street analysts polled by InvestingPro. They’re also sitting with a current potential upside of more than 20%. So if you’re eager to bulk up your portfolio, these overlooked powerhouse plays are all worth serious consideration.
Harmony Biosciences (HRMY):
- InvestingPro health score: 3.95 / 5.00
- InvestingPro average fair value: $39.38 / 31.7% upside
- Fair value confidence: Medium
- Industry: Healthcare / Pharmaceuticals
Harmony Biosciences Holdings (HRMY), a prominent player in the biopharmaceutical sector, has been generating considerable interest among investors. As of June 26, 2024, HRMY is trading at approximately $29.97 per share. The company, which specializes in treatments for central nervous system disorders, reported a strong first quarter for 2024, with net income rising to $38.33 million from $29.49 million the previous year. Earnings per share also saw a notable increase to $0.68 from $0.49.
With a market capitalization around $1.70 billion, Harmony Biosciences holds a solid financial position, underscored by a healthy balance sheet. The company’s debt-to-equity ratio is modest at 37.46%, reflecting prudent financial management. Additionally, its quick ratio of 2.93 and current ratio of 3.11 indicate strong liquidity, which is crucial for operational flexibility.
Investors should note that Harmony Biosciences does not currently offer a dividend, which suggests that the company is likely reinvesting earnings to fuel further growth. Its price-to-earnings (P/E) ratio stands at 12.3, which is relatively low compared to industry peers, indicating that the stock might be undervalued.
Analysts forecast a positive outlook for HRMY, with potential upside driven by the company’s robust product pipeline and recent FDA approvals. However, investors should also consider the stock’s volatility, as it has traded between $18.61 and $39.27 over the past 52 weeks. This range reflects both the potential for significant gains and the risk of substantial fluctuations.
Overall, Harmony Biosciences presents a compelling opportunity for investors looking to diversify into the biopharmaceutical sector with a company showing solid financial health and growth potential.
International Seaways Inc (INSW):
- InvestingPro health score: 3.80 / 5.00
- InvestingPro average fair value: $75.30 / 25.8% upside
- Fair value confidence: Medium
- Industry: Energy / Oil, Gas & Consumable Fuels
International Seaways Inc. (INSW) stands out as a compelling investment opportunity for July 2024, particularly for those looking to diversify their portfolio with a player in the maritime transportation sector. As of June 26, 2024, INSW’s stock is trading at approximately $59.83. The company boasts a robust market capitalization of around $2.95 billion, reflecting its significant presence in the global shipping industry.
In the most recent quarter, International Seaways reported impressive financial results, with total revenue of $274.4 million and a net income of $144.49 million. The company’s price-to-earnings (P/E) ratio stands at an attractive 5.6, indicating a potentially undervalued stock relative to its earnings.
INSW’s financial health is solid, as evidenced by its debt-to-equity ratio of 39.62%, highlighting a manageable debt load compared to its equity . The company also maintains strong liquidity, with a current ratio of 2.73 and a quick ratio of 2.57, ensuring it can meet its short-term obligations with ease. For income-focused investors, International Seaways offers a compelling dividend profile. The company recently declared a quarterly dividend of $1.63 per share, translating to an annual yield of approximately 9.46%.
The stock’s potential upside is bolstered by positive market sentiment and robust financial performance. However, investors should be mindful of the inherent volatility in the shipping industry, influenced by fluctuating freight rates and global economic conditions.
Meritage Corporation (MTH):
- InvestingPro health score: 3.10 / 5.00
- InvestingPro average fair value: $214.93 / 32.8% upside
- Fair value confidence: Medium
- Industry: Consumer Discretionary / Household Durables
Meritage Homes Corporation (NYSE: MTH) is a compelling stock pick for investors seeking exposure to the U.S. housing market. As of June 26, 2024, Meritage has a market capitalization of approximately $5.94 billion. The company has shown resilience and growth, particularly in the latest quarter, thanks to a robust housing demand and strategic operational efficiencies.
Meritage’s price-to-earnings (P/E) ratio stands at 7.4, indicating that the stock may be undervalued compared to the broader market. The company’s revenue for the first quarter of 2024 was $1.47 billion, with net earnings of $186 million, demonstrating solid profitability. One notable aspect for income-focused investors is that Meritage currently pasy a 1.8% dividend, which suggests the company is reinvesting most of its earnings to fuel further growth.
The company’s balance sheet is strong with a manageable debt level, showcasing a debt-to-equity ratio of 22.3%. This indicates a balanced approach to leveraging, which can provide stability in volatile market conditions. Analysts are optimistic about Meritage’s potential upside, given the continued strength in the U.S. housing market and the company’s focus on affordable entry-level homes, a segment with high demand.
Investors should be aware of potential volatility, primarily due to interest rate fluctuations and economic cycles affecting housing demand. However, Meritage’s strategic positioning and financial health make it a noteworthy consideration for those looking to diversify their investment portfolio with a focus on the housing sector.
Danaos Corp (DAC):
- InvestingPro health score: 3.75 / 5.00
- InvestingPro average fair value: $134.34 / 42.7% upside
- Fair value confidence: High
- Industry: Marine Transportation
Danaos Corporation (DAC) is an intriguing stock pick for July 2024, especially for investors seeking opportunities in the shipping sector. With a market capitalization of $1.82 billion, Danaos is a significant player in the containership market, operating a fleet of 68 containerships. As of June 26, 2024, the company’s stock is trading at approximately $94.13.
Danaos’s financial performance has been strong, with a P/E ratio of 3.1, indicating potential undervaluation. The company reported revenues of $253.45 million and net income of $150.5 million for Q1 2024, reflecting robust earnings and profitability. Their gross profit margin stands impressively at 75.77%, underscoring efficient operations.
Investors will appreciate Danaos’s commitment to shareholder returns, evidenced by a current dividend yield of 3.4%. The company has maintained consistent dividend growth over the past three years. Additionally, Danaos has a low debt-to-equity ratio of 14.35%, highlighting a solid balance sheet and reduced financial risk.
Danaos’s strategic focus on the container segment, coupled with its strong revenue visibility through 2025, positions it well for continued growth. The company’s recent decrease in net debt to $138.7 million and significant liquidity further strengthen its financial stability.
Overall, Danaos Corporation offers a compelling investment opportunity with strong financial metrics, an attractive dividend yield, and a promising outlook.
KB Home (KBH):
- InvestingPro health score: 3.38 / 5.00
- InvestingPro average fair value: $87.11 / 26.3% upside
- Fair value confidence: Medium
- Industry: Consumer Discretionary / Household Durables
KB Home (KBH), a prominent US homebuilding company, is a standout pick for investors seeking opportunities in July 2024.
As of June 26, 2024, KB Home boasts a market capitalization of approximately $5.21 billion. The company’s P/E ratio is a modest 8.6, indicating it may be undervalued compared to industry peers. In the last quarter, KB Home reported robust earnings, highlighting its resilience in the face of economic fluctuations. The dividend, at $0.60 per share annually, offers a yield of about 1.4%, providing steady income alongside potential capital gains.
KB Home’s financial health score is 3.38/5.00, reflecting solid fundamentals and prudent management. However, the company carries a debt-to-equity ratio of 42.5%, indicating manageable but notable leverage. Analysts are optimistic about the company’s future, projecting continued growth fueled by a strong housing market and favorable demographic trends.
Investors should consider potential volatility (with a beta of 1.77), as the housing sector can be sensitive to interest rate changes and economic cycles. Nonetheless, with a fair value calculation suggesting a potential upside of 26.5%, this combination of an attractive valuation, solid dividend, and strong market position makes KB Home a noteworthy candidate for portfolios aiming for growth and income.
Previous Investing Stock Picks for US Markets
If you’re looking for more great opportunities, here is a list of our top stock picks for previous months during 2024.
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The health scores and these stocks’ place on our opportunities list were correct at the time of the original posting month. It’s important for investors to check any updated information, which can be done at the click of a button through InvestingPro.
| Top June Stock | InvestingPro Health Score |
|---|---|
| Tsakos Energy Nav. Ltd (TNP) | 3.33 / 5 |
| International Seaways Inc (INSW) | 3.86 / 5 |
| Meritage Corporation (MTH) | 3.15 / 5 |
| Danaos Corporation (DAC) | 3.87 / 5 |
| CVR Partners (UAN) | 3.33 / 5 |
| Top March Stock | InvestingPro Health Score |
|---|---|
| Xpel Inc (XPEL) | 3.14 / 5 |
| Teekay Tankers (TNK) | 3.71 / 5 |
| Simply Good Foods (SMPL) | 3.02 / 5 |
| United Therapeutics Corp (UTHR) | 3.72 / 5 |
| The Andersons Inc (ANDE) | 3.31 / 5 |
| Top January Stock | InvestingPro Health Score |
|---|---|
| Teekay Tankers (TNK) | 3.81 / 5 |
| Mueller Industries (MLI) | 3.88 / 5 |
| Danaos (DAC) | 3.89 / 5 |
| Medifast (MED) | 3.30 / 5 |
| Daqo New Energy (DQ) | 3.89 / 5 |
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Past performance does not guarantee future success, and trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Trading on margin increases the financial risks. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
