I have been doing some reading and thinking how maybe it is time to look for long term value in undervalued out of favour sectors.
I mainly wanted to start this as a discussion on sectors that are out of favour and hence undervalued, but not necessarily in deep trouble. For example, I think that airline stocks and oil explorers are out of favour, but they are also heavily in debt and expected to have low demand for the next few years. That is not quite what I wanted to discuss, I am more interested in starting a discussion on out of favour sectors or companies in which the fundamentals have not really deteriorated that much over the last couple of years, yet the share price has fallen significantly during the period. The examples that have come to my mind after discussions with other investors are: Sectors such as gas pipelines, banks and telecommunications and in terms of countries maybe Russia, although I think there may be good options in Europe.
To give some broad indications, I am looking to discuss sectors, countries or companies with decent fundamentals and acceptable outlooks but low share prices, which could be something along the lines of or example, P/E ratios of under 10 in a normal year (Covid may have slashed the profit due to tightening margins from additional costs, but also depressed the share price), low Earned Value to EBITDA (or EBIT) lets say maybe under 8 or simply a company with valuable assets and no debt, which indicates potential for take overs or selling assets.
If you have a good idea, even if it does not quite fit my suggestions, feel free to mention it. Also, feel free to comment on the sectors I mention and discuss those if you want to .
The more obscure and under-reported the sector or company the better.
I hope that this can lead to some kind of constructive discussion or even “brainstorming”. Collectively we might find some undervalued and good long term value opportunities among the out of favour sectors/companies/markets/countries .