Factors like surging COVID-19 cases and rising inflation could keep the stock market under pressure in the near term. As analysts expect a potential market correction early next year, it could be wise to bet on undervalued mid-cap stocks Penske Automotive (PAG), AutoNation (NYSE:AN), KT (NYSE:KT), Mazda Motor (OTC:MZDAY), and Hillenbrand (NYSE:HI). These stocks are expected to outperform the broader market.Increasing concerns regarding the spread of the omicron coronavirus variant and its impact on the supply chain, along with rising inflation, have led to the markets experiencing increased volatility this week. However, Biden’s announcement about the imminent authorization of at-home COVID-19 rapid tests enabled major benchmark indexes to recover from the lows. Given the current macroeconomic backdrop posing a threat to economic recovery, investors and analysts anticipate a significant market correction early next year.
Value stocks are gaining investor attention lately, owing to their ability to hedge the market volatility to a certain extent. Investor optimism in this space is evident from the Vanguard Value ETF’s (VTV) 1.2% gains over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) negative returns.
Thus, it could be wise to bet on fundamentally-sound undervalued stocks Penske Automotive Group, Inc. (NYSE:PAG), AutoNation, Inc. (AN), KT Corporation (KT), Mazda Motor Corporation (MZDAY), and Hillenbrand, Inc. (HI) now. These mid-cap stocks possess significant upside potential.