Investment legend Warren Buffett once wisely stated: "Price is what you pay, but value is what you get."
Locating undervalued stocks with genuine growth potential is always tough. Don't believe us? Ask value investors.
Here are two-such gems trading well below their intrinsic value.
Evansville, Indiana-headquartered Berry Plastics is one of the leading providers of value-added plastic consumer packaging and engineered materials. Its rivals include companies like AptarGroup.
Berry is scheduled to deliver a massive 20.9% annual earnings growth for the next five years, twice the rate of the packaging and containers industry.
Health, hygiene, and specialties net sales rocketed 365% to $567 million. Overall, operating margin rates improved by a sharp 110 bps to 10.9%. Operating EBITDA also improved 44.3% to $316 million. The company issued a guidance for fiscal year 2016 for adjusted free cash flow at $475 million.
Dow Chemical is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells DOW? Learn more now.
Dow Chemical is a giant in the chemicals space. Over the years, Dow has evolved from a one-product enterprise into an innovative science and technology entity. Its massive scale and powerful intellectual property portfolio are standouts.
The Dow-DuPont amalgam would be hugely cash flow positive, as Dow's capital expenditures would be sharply lower post-integration. Significant capacity expansions and focused efforts to achieve cost reduction via consolidation will also play a big role.
Dow's solid economic moat, strong margins and financials are great positives. Further, its market-aligned businesses for vertical integration and the successful asset-light approach for cost competitive solutions has held it rock-steady for years now.
The 13.48-times forward P/E valuation is just too low.
Dow's track record of delivering value to its shareholders and its tremendous growth potential makes Dow Chemical a compelling investment opportunity.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.