This Cheap Stock, With Its 4.6% Dividend Yield, Is an Absolute Steal

With the tech-heavy Nasdaq Composite up about 30% year to date, it's increasingly difficult to find great companies with shares trading at good prices. But they're still out there. Investors, however, may have to walk away from the crowd to find them. For instance, there are a handful of opportunities within the financial sector, which has underperformed dramatically this year as investors fret over how rising interest rates will impact loan affordability, lending, and net-interest margin.

One opportunity in the sector looking like a steal today is Ally Financial (NYSE: ALLY). The direct-to-consumer bank has spooked investors since much of its business is tied to car loans, and it's no secret that used car sales have been suffering, and many vehicle manufacturers have been slashing the prices on their new cars to help offset weakening demand. But with the stock now trading well below book value and at just 7 times earnings, these challenges may be already priced into the stock.

As many investors have chased tech stocks like Nvidia, Meta Platforms, and in 2023, Ally has lagged far behind the Nasdaq and most megacap tech stocks, rising just 7% year to date. Furthermore, the stock has fallen 25% over the last 12 months while the Nasdaq rose 9%. This underperformance, however, may be an opportunity for investors willing to be fearful when others are greedy.

Continue reading

Source Fool.com