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Although impressive third-quarter corporate earnings, declining jobless claims, and rising consumer spending pushed benchmark indexes to record highs last month, historically-high inflation, the Federal Reserve’s decision to start tapering its bond-buying soon, and ongoing supply chain disruptions have been fostering volatility in the markets as of late.

Because highly-priced stocks could suffer a pullback in an anticipated market correction in the near term, value stocks have of late been gaining investors’ good graces. This is evidenced by the iShares Morningstar Value ETF’s (ILCV) 3% returns over the past month.

Therefore, we think it could be rewarding to bet on undervalued stocks HCA Healthcare, Inc. (HCA), Laboratory Corporation of America Holdings (LH), KeyCorp (KEY), and International Paper Company (IP).

HCA Healthcare, Inc. (HCA)

HCA is a Nashville, Tenn.-based health care services company that operates general, acute care hospitals and offers medical and surgical services, medical education, physician resource center, and training programs. As of Dec. 31, 2020, it operated 185 hospitals internationally.

On Sept. 20, 2021, HCA and Steward Health Care, a physician-owned private health care network, signed a definitive agreement that hands over the operations of Steward Health Care’s five Utah hospitals to HCA. Adding these facilities to HCA’s Mountain division network of hospitals should enable HCA to improve healthcare options and meet the increasing demand for healthcare in the Utah region.

For its fiscal third quarter ended Sept. 30, 2021, HCA’s revenues increased 14.8% year-over-year to $15.28 billion. The company’s pre-tax income came in at $3.16 billion, up from the prior-year period. Its net income was $2.47 billion for the quarter, marking a year-over-year improvement. Its EPS improved year-over-year to $7. The company had $1.03 billion in cash and cash equivalents as of Sept. 30, 2021.

Analysts expect HCA’S EPS to improve 51.7% year-over-year to $17.61 in the current year. A $59.01 billion consensus revenue estimate for the current year represents a 14.5% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock’s EPS is expected to grow at a 15.8% rate per annum over the next five years.

Over the past nine months, the stock has gained 39.3% in price and closed Friday’s trading session at $239.06. In terms of forward EV/Sales, HCA has been recently trading at 1.88x, which is lower than the 6.28x industry average. In terms of forward EV/EBITDA, HCA has been recently trading at 8.79x, which is lower than the 16.78x industry average.

HCA’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a B grade for Value, Stability, Sentiment, and Quality. Click here to see the additional ratings for HCA (Growth and Momentum). Of the 13 stocks in the Medical – Hospitals industry, HCA is ranked #1.

Laboratory Corporation of America Holdings (LH)

LH is an independent clinical laboratory company that offers a range of clinical laboratory tests and procedures used by the medical profession in core testing, patient diagnosis, and the monitoring and treating of diseases. It also offers drug development services and provides a range of drug research and development (R&D) and market access services to biopharmaceutical and medical device companies worldwide. LH is headquartered in Burlington, N.C.

On Nov. 18, 2021, LH agreed to acquire Toxikon, a contract research organization that delivers best-in-class nonclinical testing services. This acquisition should  enable LH to create a strategic footprint by partnering with large pharmaceutical companies and biotechnology firms in the Boston area, bolster its strong nonclinical development portfolio, and facilitate entry into medical device investigational device exemption (IDE) submissions.

For the third quarter ended Sept. 30, 2021, LH’s total revenue increased 4.3% year-over-year to $4.06 billion. The company had $2.04 billion in cash and cash equivalents as of Sept. 30, 2021. Analysts expect LH’s EPS to improve 13.8% year-over-year to $27.25 for the current year. A $15.89 billion consensus revenue estimate for the current year represents a 13.7% rise from the prior-year period. It surpassed the consensus EPS estimates in each of the trailing four quarters.

LH has gained 18.4% in price over the past nine months and ended Friday’s trading session at $283.32. LH’s 2.02x forward EV/Sales is lower than the 6.28x industry average. In terms of forward EV/EBITDA, LH has been recently trading at 7.87x, which is lower than the 16.78x industry average.

LH’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. LH has an A grade for Sentiment, and a B grade for Value and Quality. Click here to see the additional ratings for LH’s Growth, Momentum, and Stability. LH is ranked #5 of 54 stocks in the Medical – Diagnostics/Research industry.

KeyCorp (KEY)

Cleveland, Ohio-based KEY provides retail and commercial banking, leasing, investment management, and banking products and services to individual, corporate, and institutional clients. In addition, the company offers community development financing, securities underwriting, and brokerage services. As of Feb. 25, 2021, it operated through a network of approximately 1,000 branches and 1,400 ATMs internationally.

On July 16, 2021, KEY expanded its branding relationship with Cardtronics, a leading provider of fully integrated ATM and financial kiosk products and services, and an operator at Kum & Go convenience store locations to enhance KEY’s brand visibility and double its surcharge-free ATM access points in Colorado. KEY is looking forward to gaining immediate scale and offering convenient banking services.

For its fiscal third quarter ended Sept. 30, 2021, KEY’s total revenue increased 8% year-over-year to $1.82 billion. The company’s income from operations came in at $643 million. While its net income increased year-over-year to $645 million, its EPS grew to $0.65.

Analysts expect the stock’s EPS to grow year-over-year to $2.54 in the current year. A $7.14 billion consensus revenue estimate for the current year represents a 6.3% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect the stock’s EPS to grow at a 11.4% rate  per annum over the next five years.

Over the past nine months, KEY has gained 21.5% in price and ended Friday’s trading session at $23.37. In terms of non-GAAP forward PEG, KEY has been recently trading at 0.47x, which is lower than the 0.97x industry average. And, in terms of forward Price/Sales, KEY has been recently trading at 3.09x, which is lower than the 3.47x industry average.

KEY has a B grade for Value in our proprietary rating system. Click here to see the additional ratings for KEY (Quality, Momentum, Growth, Stability, and Sentiment). The stock is ranked #3 of 11 stocks in the Money Center Banks industry.

International Paper Company (IP)

IP operates as a paper and packaging company internationally that produces renewable fiber-based packaging, pulp, and paper products internationally. The Memphis, Tenn., company operates through three segments–Industrial Packaging; Global Cellulose Fibers; and Printing Papers. It sells its products directly to end-users and converters and through agents, resellers, and paper distributors.

IP’s net sales for its fiscal third quarter, ended Sept. 30, 2021, came in at $5.71 billion, representing an 11.5% rise from the prior-year period. Before income taxes and equity earnings, the company’s earnings came in at $916 million, indicating a rise from the prior-year period. IP’s adjusted net earnings were $532 million, up from the prior-year period. And its adjusted EPS increased year-over-year to $1.35.

A $4.25 consensus EPS estimate for the current year represents a rise from the prior-year period. Its revenue is expected to improve 4.6% year-over-year to $21.53 billion, and its EPS is expected to grow at a 25.8% rate per annum over the next five years.

Over the past nine months, the stock has gained 1.5% in price and ended Friday’s trading session at $47.58. IP’s 1.19x forward EV/Sales is lower than the 1.85x industry average. In terms of forward Price/Sales, IP has been recently trading at 0.87x, which is lower than the 1.40x industry average.

IP’s POWR Ratings reflect its solid prospects. IP has an A grade for Quality, and a B grade for Growth and Value. In addition to the POWR Ratings grades we have just highlighted, one can see IP’s Momentum, Sentiment, and Stability here. IP is ranked #4 of 11 stocks in the A-rated Industrial – Paper industry.