The U.S. stock market may be at a fresh all-time high, with the S&P 500 closing in on 6,300, but, as they say, the stock market is a market of stocks. And not every stock has been enjoying new all-time highs. In fact, some names have sat out the S&P’s remarkable second-quarter rally, but it’s these less-appreciated stocks that are well worth a look for investors seeking to stretch their investment dollar a bit further this summer.
Indeed, the first-half winners don’t always end up staying hot in the second half. Some of the time, it’s the first-half laggards with less in the way of expectations that end up leading the charge. And in this piece, we’ll examine three value plays that may have fallen into the bargain basement, just in time for July.
U-Haul
U-Haul (NYSE:UHAL) isn’t exactly a name you think about unless you’re planning a move. Indeed, the company offers very necessary services (not just truck rentals, but packing supplies, dollies, self-storage unit rentals, and some extra help to move that hefty sectional to your new studio apartment) in an industry that’s not overly competitive. As the company expands its footprint in the self-storage scene, while demand for moving equipment looks to march higher (perhaps due to downsizing in today’s challenged economy), I do see some meaningful tailwinds in the second half for the easy-to-understand firm.
Perhaps most notably, several hedge funds have taken an interest in the stock in recent quarters. I guess you could say UHAL stock is one of those smaller hedge fund favorites. In the fourth quarter of last year, Nelson Peltz of Trian Fund Management added to his stake in the company by around 45%. Since then, shares have only gotten cheaper.
Today, UHAL shares are more than 20% off their late-2024 all-time highs and are going for a modest 1.55 times price-to-book (P/B). That’s cheap for an industry leader that may be in for another leg higher.
PVH
PVH (NYSE:PVH) is another relatively small ($3.4 billion market cap) mid-cap that hedge funds (like Mason Hawkins of Longleaf Partners) have been taking a liking to in recent quarters. The company behind such brands as Calvin Klein and Tommy Hilfiger has really been under pressure over the years, and tariffs are doing the battered apparel firm no favors.
In any case, management is doing its best to offset the impact of tariffs while investing to beef up its operating margins. With substantial share repurchases made of late at an absurdly low multiple, I wouldn’t be too surprised if PVH were one of the beaten-down deep-value stocks that could surprise us all in the next 18 months.
The stock is down 55% from its 2018 high, and with a cloudy outlook ahead, investors may be taking a raincheck on one of the biggest bargains in the consumer scene right now. At 6.7 times forward price-to-earnings (P/E), PVH looks deeply undervalued, with not much in the way of expectations going into the second half.
Carter’s
Finally, we have children’s clothing retailer, Carter’s (NYSE:CRI), which has been in an unstoppable tailspin in recent years. Now down 74% from late-2017 highs, the $1.1 billion firm trades at an absurd 6.9 times trailing P/E multiple. With the company running into tariff troubles, management pulled its guidance back in April.
Add a weaker consumer into the equation, and it’s looking like Carter’s return to growth could be delayed for a while longer. In any case, the new CEO, Doug Palladini, could be the right catalyst to justify picking up a few shares for the summer while they’re hovering at multi-year lows. For now, the name remains a comeback play only suitable for the bravest of deep-value investors. And given the brutal consumer climate, perhaps one will need to be patient before their Carter’s investment finally does pay off.
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