The US stock market is cruising along near all-time highs. The S&P 500 is up more than 40% over just the last year alone. And it’s now priced higher than it was before the pandemic.
I don’t think a lot of people expected the market to rebound so quickly off of the pandemic crash, but here we are.
Yet a lot of individual stocks within the market have not yet recovered their prior highs. Some stocks are still down significantly compared to early 2020.
That’s even while their businesses have basically fully recovered. Some businesses are doing even better now than they were before the pandemic. Business recovers. Stock doesn’t recover. Yep.
That disconnect could be an opportunity for investors. And that’s what I’m talking about here.
Today, I want to tell you about three high-quality dividend growth stocks that are still priced below their pre-pandemic highs. Ready?
Let’s dig in.
Stock #1 Priced Below Pre-Pandemic Highs: Lockheed Martin Corporation (LMT)
Lockheed Martin is the largest prime defense contractor in the world.
Sovereign defense products and services have always been necessary and always will be necessary. That’s just human nature. Investing in these businesses is almost a total slam dunk over the long run. However, sometimes you’re offered a particularly good opportunity with them, and that could be what you’re looking at with Lockheed Martin.
This stock is currently priced around $385/share. But it was well over $400/share in early 2020.
Get this. Lockheed Martin produced $21.95 in EPS for 2019, so going into 2020 that’s the earnings number. The company has logged $24.78 in EPS over the last 12 months. EPS is up more than 10% compared to early 2020, yet the stock is down more than 10%. That’s the advantageous disconnect I’m talking about.
Lockheed Martin is a very high-quality dividend growth stock.
Fundamentally, the business is excellent. They’ve increased their dividend for 18 consecutive years, with a 10-year DGR of 14%. The stock yields 2.7%, which is very attractive in this market. Lockheed Martin is actually one of my top five stocks for 2021. Even though it’s up more than 8% YTD, it still looks like a bargain.
Stock #2 Priced Below Pre-Pandemic Highs: Pinnacle West Capital Corporation (PNW)
Pinnacle West is a fantastic Arizona-based utility company.
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