October was a tough month for stocks, and so far, November hasn’t been much better.
While it has felt like there’s no where to hide with everything falling, some stocks have fallen into bargain territory and are now too cheap to ignore.
Here’s what you need to know about two such stocks.
Micron (NASDAQ: MU)
Micron (NASDAQ: MU) has been battered by investors on edge about the trade war and fears about falling memory chip prices, and the stock is currently down almost -40% from its May highs making it one of the best bargains on Wall Street for investors with strong stomachs.
The company is the fourth largest maker of NAND chips, and third largest maker of DRAM chips worldwide, with 26% of its revenue coming from the former and 70% revenue from the latter. And one reason the stock has been driving lower is that the memory market is cyclical, and both DRAM and NAND prices have slid lower in recent months with Micron’s stock right along with it.
However, the big names in the memory sector have shrunk their manufacturing volumes to stabilize falling chip prices. With chip price stability on the table next year, and the possibility of artificially low supply from the cuts in manufacturing, 2019 could be another banner year for Micron.
And while investor are pricing in the opposite, analysts’ average twelve-month price target for MU is $67.04, indicating possible upside of 67.97%.
Goldman Sachs (NYSE: GS)
Goldman Sachs (NYSE: GS) is down -20% over the last year, and is down -12% just this week alone. But don’t be surprised if the banking giant bounces back quickly.
The stock has been beaten down over the last week after a scandal in Malaysia. The country is demanding that Goldman Sachs refund the $600 million in fees it earned in return for underwriting bonds of the 1MDB multibillion-dollar fraud scandal, claiming the company “cheated” in its dealings with the matter.
“I am personally outraged that any employee of the firm would undertake the actions spelled out in the government’s pleadings,” Goldman’s CEO, David Solomon, said in a voicemail left with employees on Wednesday. “The behavior of those individuals is reprehensible and inconsistent with the good work and integrity that defines work that 40,000 of you do every day.”
But as bad as this scandal has looked, the market has punished the company’s stock by wiping out around 10x the amount of market cap that Malaysia is demanding the company return to it. It’s certainly possible the damage could spread, but the reality is that investment banks find themselves in these types of messes all the time, and usually get by with a slap on the wrist and a payment of fines.
Otherwise, the business is looking good and the company’s strong fundamentals will still be there after the dust settles from this scandal. And after the recent sell-off, GS is trading at just 8x trailing and 8x forward earnings with more than $25 in annual earnings per share, making it very attractive.
The average analyst price target for GS is $286 – that indicates potential upside of 40.37% over the next twelve months.