13 Cheap small/mid-cap buy-rated stocks with higher Beta

Jefferies analysts highlighted stocks that looked cheap during the first half of the year based on valuation, and that had recent upward revisions and higher beta scores.

During the last two elections years, valuation performed well while momentum lagged, according to Steven DeSanctis, SMID-cap strategist at Jefferies, in a note. Also, small-caps and mid-caps saw better than average performance.

Stocks with a high beta value – greater than 1 – are more volatile and riskier. However, higher risk does not guarantee underperformance. A beta score of 1 means the stock price tends to move with the market; a beta greater than 1 means the stock is more volatile than the market.

Here are four stocks within the list analysts highlighted:

• Performance Food Group (PFGC) – “We view the near-term sales/EBITDA guide as realistic with room for upside towards the high-end of each range as F25 progresses, and recent improvements in the demand environment also supportive.”
• Lithia Motors (LAD) – Among the reasons why analysts see the stock outperforming, “new unit profit declines are moderating after Covid “over-earning” and appear to be landing at a higher than pre-Covid level.”
• Alcoa Corp. (AA) – “We expect Alcoa to benefit from tightening aluminum and alumina markets… This stock is under-owned, in our view, and is poised to outperform in 2025.”
• Carnival Corp. (CCL) – Among the reasons why analysts see the stock outperforming, “deleveraging accelerates in a downward bias interest rate environment; 4.2x this year, 3.7x next year and marching on to <2x pre-Covid.”

Here is the whole list of “a baker’s dozen of cheaper buy-rated names”

• Lithia Motors (LAD) – FY2 P/E: 10.7; Beta: 1.63
• Boot Barn (BOOT) – FY2 P/E: 20.5; Beta: 2.16
• Carnival Corp. (CCL) – FY2 P/E: 14.0; Beta: 2.66
• Performance Food (PFGC) – FY2 P/E: 15.3; Beta: 1.45
• Green Plains (GPRE) – FY2 P/E: 30.8; Beta: 1.53
• SoFi Tech (SOFI) – FY2 P/E: 46.4; Beta: 1.61
• Block Inc. (SQ) – FY2 P/E: 16.8; Beta: 2.48
• Tenet Health (THC) – FY2 P/E: 14.3; Beta: 2.15
• Astrana Health (ASTH) – FY2 P/E: 31.7; Beta: 1.24
• Upwork Inc. (UPWK) – FY2 P/E: 13.2; Beta: 1.49
• United Airlines (UAL) – FY2 P/E: 7.2; Beta: 1.39
• XPO Inc. (XPO) – FY2 P/E: 34.6; Beta: 2.10
• Alcoa Corp. (AA) – FY2 P/E: 14.3; Beta: 2.42