Investors hunting for bargains in the stock market often turn to cheap value stocks – companies trading below their intrinsic worth with the potential for solid returns. These stocks may be overlooked or undervalued due to temporary challenges, but for patient investors, they can present compelling opportunities.
In fact, Bank of America’s equity and quant strategist, Savita Subramanian, is making a strong case for sticking with value plays right now.
“Buy cheap stocks,” she advises. “The ‘Recovery’ regime unequivocally favors Value over Growth. Narrow bull markets led by growth stocks as in ‘99/’00 tend to reverse violently into Value leadership. Inflation came in hot, the Fed might be done as our economists forecast a month ago and Value has generally outperformed Growth in the six months after the last rate cut.”
“In fact,” the strategist added, “Value factors outperformed the index by 6ppt on average vs. just 0.9ppt for Growth. Low P/E fared especially well, generating close to 10ppt of alpha over the subsequent six months.”
Bank of America’s analysts are running with this theme, recommending two stocks that are down sharply in recent months – but still possess sound fundamentals that should attract investors.
We tapped into TipRanks’ database to get the full scoop on these Buy-rated picks. Let’s dive in.
Lightspeed Commerce (LSPD)
We’ll start in the world of online commerce, where Lightspeed operates a unified point-of-sale and payments platform and offers retailers a wide range of digital tools to manage inventory, suppliers, teams, and stores from a unified software platform. The company was founded in 2005, is trusted by users in more than 165,000 retail locations, and has made it possible for its customers to process more than $90 billion in gross transaction volume in the fiscal year 2024, which ended on March 31, 2024.
Lightspeed bills itself as offering retail software that simplifies retail operations at any scale. The company puts its innovative tools in a single system that is easy to use and can be optimized for each user’s unique business—an important feature in the diverse small business landscape. The tools give Lightspeed’s enterprise customers access to data insights and real-time reporting necessary to boost performance across all aspects of a retail operation. And, for users, the whole platform is supported by Lightspeed’s experts, who bring years of experience and 24/7 service to the benefit of their customers. Lightspeed’s platform is available in versions tailored to retail and to restaurants.
Last year, Lightspeed conducted a strategic review of the company’s operations, plans for the coming years, and even whether or not it should remain public or privatize. The results of that review were published earlier this month in conjunction with the fiscal 3Q25 financial results. The company has elected to remain public and to proceed with a transformation plan as the best way to maximize its value for shareholders. One key point in the recommendations from the review involves share repurchases; the review committee recommends a share repurchase program of up to $400 million.
On the financial side, Lightspeed reported slightly mixed results on revenues and earnings. The top line of $280.1 million was up 17% year-over-year, although it missed the forecast by $2.68 million. At the bottom line, the company’s earnings came to 12 cents per share in non-GAAP terms, beating expectations by 2 cents.
We should note here that shares in Lightspeed have been falling in recent months, and the stock is down 28.5% from the peak it reached in November of last year. That share price decline may give investors a chance to buy, however, according to Bank of America’s Koji Ikeda.
The 5-star analyst starts from that premise in his write-up on Lightspeed’s stock and then goes on to look at the stock’s likely forward path. He writes, “We believe the drawdown on the stock following the conclusion of its strategic review in which the company elected to stay public (announced on 2/6) has created a risk/reward too attractive to ignore. Going forward, Lightspeed is focusing on profitable growth, moving the story to adj. EBITDA generation (from revenue growth), where we see upside potential. Driving this is a renewed focus on share gains in its original two key verticals, NA retail and EMEA hospitality. We believe it has been executing its new strategy for several months.”
These comments support a Buy rating on the shares, which Ikeda complements with a $20 price objective, suggesting a one-year gain of 49%. (To watch Ikeda’s track record, click here)
There are 16 recent Wall Street reviews on file for this stock, and their even split—8 to Buy, 8 to Hold—gives the stock its Moderate Buy consensus rating. The shares are currently priced at $13.44, and the average price target of $16.36 implies an upside of 22% for the year ahead. (See LSPD stock forecast)
Bunge, Ltd.(BG)
Next on our list is Bunge, an agribusiness supply company with a key role in producing the world’s foods and animal feeds. The company works with farmers and agricultural businesses around the world to help them produce and deliver essential food items to consumers. Bunge is a world leader in the production and processing of oilseeds, particularly soybeans, rapeseeds, canola, and sunflower seeds, as well as grains such as wheat and corn. The company is directly involved in the purchase, storage, processing, transport, sale, and distribution of agricultural commodities and serves both domestic and export customers. In addition, Bunge provides risk management and logistic services to the agricultural business community.
Bunge’s products are found in a wide range of end uses, from cooking oils and flours to animal feeds, and from infant nutrition to plant-based meat replacements. The company works with farmers to develop efficient crop infrastructure and is a leader in the development of renewable bio-fuel solutions.
The company is based in St. Louis, Missouri, and can trace its roots as far back as 1818. Today, Bunge is a $9.8 billion company, employing more than 23,000 people in some 300 facilities spread across 40 countries around the world.
Bunge has an active strategy of expansion through acquisition, and earlier this year made an important advance on that track. The company received approval from the Canadian government for its merger with the fellow agribusiness giant Viterra. The merger transaction, which was initially announced in June of 2023, is set to be conducted in both stock and cash and is valued at approximately $18 billion in US currency. The move has already been approved in the US and EU, and Bunge is seeking approval from China.
Shares in Bunge peaked last summer, in July, and the stock is down 37% from those high levels. Headwinds have included fluctuations in the supply and demand dynamics of the agricultural sector as well as concerns the Viterra acquisition will be dilutive over the short-term. The last earnings report was disappointing too; for 4Q23, Bunge showed revenues of $13.54 billion, down 9.4% year-over-year and some $160 million below expectations. The company’s bottom line, the non-GAAP EPS, came in at $2.13, missing the forecast by 12 cents per share.
Despite the misses in the earnings report, BofA analyst Salvator Tiano remains sanguine about Bunge, seeing the company in a good position for long-term gains. He says of the stock, “Post-earnings reset we believe BG still offers attractive risk/reward- (1) we have a favorable view of the company’s growth levers, including bolt-on acquisitions (e.g., CJ Selecta potentially adding ~$0.30 to EPS) and organic investments; (2) we remain constructive on the potential Viterra acquisition despite concerns re: near-term earnings dilution; (3) we believe the company’s exposure to South America positions BG well for secular growth, and (4) we view the stock’s valuation (at 8.9x 2025’s guide vs ADM’s 10.6x) as undemanding.”
Tiano gives BG a Buy rating, and he matches that with an $87 price objective, pointing toward a share appreciation of 22% in the next 12 months. (To watch Tiano’s track record, click here)
Bunge has picked up six recent analyst reviews, three to Buy and three to Hold, for a Moderate Buy consensus rating. The shares have a current trading price of $71.26 and an average price target of $88.67, implying that BG will see a one-year upside of 24.5%. (See BG stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
