In late 2024, MarketBeat reported an opportunity for investors to benefit from ultra-low spreads between value and growth stocks, with Goldman Sachs’ chief global equity strategist expecting a selection of risk-adjusted returns to be those with mostly room for growth – as a particularly strong option for 2025. Value stocks offer investors great growth potential while also potentially minimizing downside risk as a result of their relatively low prices.
There are a large number of companies that investors could consider making profitable plays. Three in particular – Conduent Inc. NASDAQ:CNDTCommercial Vehicles Group Inc. NASDAQ:CVGIand Imperial Petroleum Inc. NASDAQ: IMP— stand out in the new year with your potential to provide high profits. Notably, each of these stocks can be categorized as good value for different reasons.
Explorer: improving balance, optimizing operations
Explorer today
As of 01/03/2025 17:22 Eastern
- 52 week range
- $2.96
▼
$4.59
- P/E ratio
- 1.81
- Target price
- US$9.00
Conduent is a business process outsourcing company serving clients in the commercial, transportation and government segments. As of January 3, 2025, it is a small-cap penny stock with a market capitalization of approximately $651 million and a share price of $4.07.
Much of Conduent’s business is focused on transaction processing and customer experience management. For much of 2024, the company engaged in an ambitious divestment program aimed at strengthening its balance sheet. The program was largely successful, as the company generated approximately $780 million after taxes from sales of its casualty claims business and other businesses. Conduent used this cash influx wisely by paying down debt early and repurchasing shares.
With a more simplified structure, Conduent will be able to further strengthen its commercial segment, which has recently outperformed the company’s government business. New partnership with Bank of New York Mellon Corp. New York Stock Exchange: BC could also potentially boost commercial business.
Conduent’s P/S ratio is 0.2, making it a strong buy candidate. The broader business process outsourcing industry is expected to grow, driven by high demand for digital talent and increased outsourcing in some industries. As such, the company is targeting organic growth, although the risk of artificial intelligence as a disruptor to the industry remains.
Commercial Vehicles Group: Optimization Efforts
Commercial Vehicles Group Today
Commercial vehicle group
As of 01/03/2025 17:22 Eastern
- 52 week range
- $2.08
▼
$6.99
- P/E ratio
- 2.28
- Target price
- US$10.00
Commercial Vehicle Group, a manufacturer of systems, components and assemblies for various automakers and industrial firms, represents a profitable opportunity for investors looking to buy shares. CVGI shares are down about two-thirds in the year to Jan. 3, 2025, amid broader troubles in the heavy machinery industry and disappointing earnings results.
Caution is warranted with CVGI stock, especially since the company missed analysts’ revenue expectations and full-year revenue estimates in its latest earnings report. But Commercial Vehicles Group President and CEO James Ray, who has led the company for about a year, is working to cut costs and streamline operations, in part by selling assets. In November, for example, the company sold the assets of First Source Electronics’ warehouse automation business to Woodson Equity for an undisclosed sum.
Analysts at Noble Financial remain optimistic about Commercial Vehicle Group’s prospects given these efforts, maintaining a Buy rating as of end-December 2024 with a price target of $8.00, more than three times current levels.
Imperial Petroleum: strong results despite obstacles
Imperial Petroleum today
Imperial Petroleum
As of 01/03/2025 17:45 Eastern
- 52 week range
- US$2.72
▼
$4.59
- P/E ratio
- 2.49
Imperial Petroleum is a low-cost micro-cap company operating in the oil and petroleum products transportation industry. While the company has strong value metrics, including a P/S ratio of 0.7, its appeal to investors may lie primarily in its most recent earnings report.
In the third quarter of 2024, the up-and-coming oil transportation company posted $11 million in revenue and 142% year-over-year growth in adjusted net income. Notably, the company had zero debt and approximately $200 million in cash at the end of the third quarter. It also has the ability to generate strong cash flow for its size, with operating cash flow of $68 million in the first three quarters of the year.
These are all positive signs, but they are even more remarkable given the significant headwinds Imperial faced in the third quarter. These include low spot rates across the industry, lower Chinese oil imports, lower crude oil exports from the Middle East and lower than normal operational utilization levels due to some minor incidents involving Imperial’s fleet. Putting all this aside, it is likely that the company will perform even better when it no longer faces these obstacles.
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