It’s hard finding the best stock pickers, especially in a year like 2022. We all know that past performance doesn’t mean future success, which means someone who has succeeded or failed in the past will continue to do that now. It’s worth keeping an eye on what the biggest names in investing are doing, though, and that means you should take a look at these cheap Cathie Wood stocks.
The stock market is very unpredictable, rallying on the day the Federal Reserve raised interest rates by 75 basis points. It is challenging to find cheap stocks to buy while waiting for the rebound.
Cathie Wood implements investment strategies in several different markets and sectors with a focus on disruptive innovation. I tend to prefer value stocks, whereas her emphasis is on growth, so it was a tough task to find three cheap Cathie Wood stocks that met my criteria, but this is what I ended up with.
| COIN | Coinbase | $62.21 |
| DE | Deere & Co | $341.76 |
| TER | Teradyne | $100.59 |
Coinbase (COIN)
Coinbase (NASDAQ:COIN) is a bet on the crypto economy and its future. The cryptocurrency market is still a nascent industry and Coinbase Global can certainly benefit from having a major position in it. Cathie Wood’s ETFs reduced their COIN holdings, but they still have a significant amount.
The stock was trading at around $250 at the start of the year, but it’s down to around $62, and it has a trailing 12-months price-to-earnings ratio of 6.4. If you thought COIN stock was too expensive in early 2022 you were probably right. If you think it’s too cheap now you might also be right. Crypto’s popularity has had a steep fall, but COIN stock might be worth investigating at this price.
After a 75% drop, the bullish story about COIN stock lies in fundamentals. There is strong momentum in earnings per share with the company beating estimates in three out of the four past quarters, along with strong sales growth. In 2020, sales growth was 139.35%, and in 2021, it was 513.66%.
Profitability metrics are very strong, although Q1 2022 was not good by any means. The trailing 12-month price-to-earnings growth of 0.08 signals an undervalued stock and the trailing 12-month price-to-cash flow ratio of 2.1 is 72% lower than the financials sector median value.
The firm is also generating tons of positive free cash flow with a 261.41% increase in 2021. Consider a position in Coinbase, as the price is very attractive.
Deere & Co (DE)
Deere & Co (NYSE:DE) has seen its shares perform well in 2022 and the bullish thesis is that the broader financial performance is very strong. This is a mature firm and a key player in the heavy construction machinery business. EPS growth is robust, beating EPS estimates in three out of four past quarters, and sales growth has rebounded in 2021 up 23.73%.
For a stock to be considered cheap, it’s important to examine the free cash flow trend. Deere has generated $4.83 billion and $5.15 billion in the past two years, making up for the cash burn in the three prior years by far.
The TTM PEG ratio of 0.54, well below 1, signals that the stock is undervalued. The TTM P/E ratio of 17.3 is also not too high, and the forward dividend yield of 1.4% can increase the total return in a rebound rally.
Teradyne (TER)
Teradyne (NASDAQ:TER) stock has fallen 38% in 2022, an early indication it is cheap now. As always, a stock price itself does not tell you much without analyzing the company’s financials.
Teradyne has reported a strong second quarter with revenues and earnings beating estimates, and automotive demand remains strong. EPS momentum is exceptional, beating estimates in the past four consecutive quarters.
The sales growth has been very strong in the past two years — in both years, the firm has increased its net income growth by more than its sales growth.
The company generates a lot of positive free cash flow and is expected to have EPS growth of 7.16% over the next 3-5 years.
In addition to its growth growth, the company’s valuation also seems cheap. TER stock has a TTM P/E ratio of 20.8, 18% lower than the information technology sector median figure.
Teradyne is cheap and has created value for its shareholders in recent years. This is very bullish over the long-term.
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.