The 3 Most Undervalued Value Stocks to Buy in July 2024

Group 1: Target (TGT) - Target is the sixth-largest retailer in the U.S. and has faced competitive pressure from larger rivals like Walmart and Amazon [2] - The company has successfully reinvested in its operations, particularly in digital initiatives during the pandemic, allowing it to compete effectively [2] - Target generated $3.8 billion in free cash flow (FCF) last year, which increased to $4.6 billion over the trailing 12-month period, trading at 14 times FCF and 16 times earnings [7] - Wall Street expects Target to grow earnings at an annual rate of 18%, indicating potential for multiple expansion [7] - The company must continuously improve its cost structure due to competitive pressures, but it remains a strong cash-generating entity [17] Group 2: Nextracker (NXT) - Nextracker, spun off from Flex in 2023, has seen its stock rise 65% since the separation, although it is only up 9.3% this year [3] - The stock trades at 15 times earnings and 16 times FCF, with analysts predicting a remarkable 40% annual earnings growth over the next five years [13] - Nextracker is the largest manufacturer of intelligent tracking systems, which enhance solar panel efficiency by 25% to 35% [18] Group 3: Brinker International (EAT) - Brinker International, known for its Chili's chain, has benefited from a growing demand for Mexican food, with fiscal third-quarter sales rising 3.8% to $988 million, accounting for 89% of total revenue [14][23] - Despite a 51% increase in shares year-to-date and a 71% rise over the past year, Brinker is still considered an undervalued value stock [19] - The company has achieved growth through menu innovation and value offerings, leading to increased sales and traffic [23]