Buy The Dip: High-Yield Stocks Getting Way Too Cheap

seekingalpha09-17

High-yield stocks have rebounded due to optimism over Federal Reserve rate cuts.However, there remain several high-quality high-yield stocks that have lagged the sector's recovery and remain ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2468824333?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1289941019/image_1289941019.jpg","is_english":true,"pubTime":"2024-09-17 02:42","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2468824333","market":"hk","top_or_hot":-1,"title":"Buy The Dip: High-Yield Stocks Getting Way Too Cheap","media":"seekingalpha","content":"<div>\n<p>High-yield stocks have rebounded due to optimism over Federal Reserve rate cuts.However, there remain several high-quality high-yield stocks that have lagged the sector's recovery and remain ...</p>\n\n<a href=\"https://seekingalpha.com/article/4721412-buy-the-dip-high-yield-stocks-getting-way-too-cheap\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Buy The Dip: High-Yield Stocks Getting Way Too Cheap</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBuy The Dip: High-Yield Stocks Getting Way Too Cheap\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-17 02:42 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4721412-buy-the-dip-high-yield-stocks-getting-way-too-cheap><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>High-yield stocks have rebounded due to optimism over Federal Reserve rate cuts.However, there remain several high-quality high-yield stocks that have lagged the sector's recovery and remain ...</p>\n\n<a href=\"https://seekingalpha.com/article/4721412-buy-the-dip-high-yield-stocks-getting-way-too-cheap\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"MAIN","symbol_name":"Main Street Capital","start_time":0,"source_url":"https://seekingalpha.com/article/4721412-buy-the-dip-high-yield-stocks-getting-way-too-cheap","article_id":"2468824333","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1289941019/image_1289941019.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2468824333","pubTimestamp":1726512153,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"High-yield stocks have rebounded due to optimism over Federal Reserve rate cuts.However, there remain several high-quality high-yield stocks that have lagged the sector's recovery and remain attractiv","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"MAIN":"Main Street Capital","SCHD":"Schwab US Dividend Equity ETF","GBDC":"Golub Capital BDC","BIZD":"VanECk BDC Income ETF","LU2125154935.USD":"ALLSPRING (LUX) WF GLOBAL EQUITY ENHANCED INCOME \"I\" (USD) INC","LU2360032135.SGD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","BK4588":"碎股","BK4585":"ETF&股票定投概念","ARCC":"阿瑞斯","BXSL":"Blackstone Secured Lending Fund","BK4176":"多领域控股","CODI":"Compass Diversified Holdings","LU2125154778.USD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (USD) INC","BK4135":"资产管理与托管银行"},"translate_title":"逢低买入：高收益股票变得太便宜了","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BIZD":1,"US7Y.BOND":1,"US6M.BOND":1,"US5Y.BOND":1,"US3Y.BOND":1,"US30Y.BOND":1,"US2Y.BOND":1,"US12M.BOND":1,"US10Y.BOND":1,"SCHD":1,"MAIN":1,"GBDC":1,"CODI":1,"BXSL":1,"ARCC":1,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6},"content_text":"High-yield stocks have rebounded due to optimism over Federal Reserve rate cuts.However, there remain several high-quality high-yield stocks that have lagged the sector's recovery and remain attractive bargains.We discuss some of them in this article.   z1b High-yield stocks as included in Schwab U.S. Dividend Equity ETF™ (SCHD) have rebounded strongly recently due to growing optimism over Federal Reserve rate cuts. Data by YCharts Additionally, the business development company, or BDC, sector, VanEck BDC Income ETF (BIZD), while it has pulled back somewhat recently, remains richly valued. It includes blue chips like Main Street Capital (MAIN), Ares Capital (ARCC), and Blackstone Secured Lending Fund (BXSL) trading at meaningful premiums to both their underlying NAV and their historical price-to-NAV averages. This is due to general bullishness on the space after several years of elevated short-term interest rates and significant interest in the sector. However, there are some stocks that, despite delivering strong underlying fundamental performance, have experienced stock price disconnects with the broader market, thereby creating opportunities for value investors to acquire high-yielding dividend stocks with quality underlying fundamentals at discounted valuations. This offers attractive risk-adjusted return potential for the foreseeable future. In this article, I will highlight two of these opportunities. Undervalued High-Yield Stock #1 The first one is Compass Diversified (CODI), which grew its pro forma adjusted EBITDA by 27% year-over-year and its adjusted earnings by 36% year-over-year in the most recent quarter. While its industrial businesses have been slumping recently, along with broader industry trends, its consumer businesses are booming. In particular, its Lugano business has generated a remarkable 84% trailing 12-month pro forma adjusted EBITDA growth rate and is currently generating an over 50% EBITDA yield on the total invested capital after being in CODI's possession for only about three years. It is also good to see BOA rebound, returning to growth with 8% pro forma adjusted EBITDA growth and 5% trailing pro forma revenue growth. Beyond that, the company's brand and consumer businesses are mostly struggling, as are its industrial businesses, so it increasingly looks like CODI is being dominated by Lugano. Lugano is also consuming a large amount of CODI's cash flow because of its significant growth. While it offers high returns on invested capital, making this a good place to allocate capital, it is becoming an increasingly dominant part of the business. On a trailing 12-month basis, it now generates over 30% of the company's pro forma adjusted EBITDA. What this means is that eventually, they will likely have to either sell the company entirely or at least pursue a monetization event to keep it from consuming the whole company. Meanwhile, it continues to generate significant value for shareholders and grow aggressively, which is much needed given that most of CODI's other companies are struggling to grow at the moment. The company believes it is in a position to be able to act if any attractive acquisitions were to present themselves, and it is in solid shape to weather an economic downturn. This is because its leading consumer brands are niche and appeal to high-end consumers, who are less likely to see their spending habits impacted by a recession. With a dividend yield of nearly 5% and trading at just about 9x earnings, CODI is very cheap right now. It has an impressive track record of generating strong growth over the long term and is expected to grow its earnings per share at a double-digit CAGR for the foreseeable future. With its fairly well-diversified business model and sound balance sheet, CODI seems to offer attractive risk-adjusted returns, especially if you believe the economy will achieve a soft landing. Undervalued High-Yield Stock #2 The second opportunity is Golub Capital BDC (GBDC), a high-quality BDC that is currently trading discounted to many of its peers. In fact, it was recently listed as one of Oppenheimer's best stock ideas going into the 2024 elections, and for good reason. It has a phenomenal long-term track record of delivering sector-crushing total return performance. Data by YCharts It also has one of the lowest fee structures in the sector among externally managed BDCs and currently trades discounted to its net asset value (“NAV”). Additionally, its dividend is very well covered by net investment income, with a distribution coverage ratio of 123%. GBDC's leverage ratio is also very reasonable, at a mere 1.05x. Moreover, the vast majority of its portfolio—93%—is invested in senior secured loans, with an average position size of just 0.3% in each investment. Additionally, only 1% of its investments are at fair value considered to be underperforming, and overall, credit performance is strong, with only 0.7% of the portfolio considered to be in significant trouble. Nearly 90% of its loans are performing in line with or above expectations. When you combine GBDC's over 10% yield with strong underlying fundamental performance, a solid balance sheet and portfolio, and its discount to NAV (despite historically trading in line with NAV), GBDC looks like a highly compelling opportunity right now, especially given its low expense ratio relative to peers. Investor Takeaway  Stocks like CODI and GBDC offer investors exposure to high yields, quality businesses, solid balance sheets, and underlying fundamental performance at discounted valuations. This positions investors for outsized risk-adjusted returns, especially in a scenario where the Fed achieves a soft landing or there is only a minor and/or short-lived recession. Additionally, diversifying into stocks like CODI and GBDC helps position your portfolio for potential stagflationary environments, making such diversification a prudent move at this point.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2468824333"}