Undervalued stocks usually have great upside potential. By purchasing them early, you can see the value of your portfolio grow in just a few weeks.
One of the most common metrics for finding undervalued stocks is the price-to-earnings ratio (P/E). If the stock’s price is divided by its EPS in comparison to its peers, it may be undervalued.
Another method to identify undervalued stocks is the price-to-book (P/B) ratio. It is the stock’s price divided by its book value for each share. A low P/B is usually a sign that it is not properly valued.
You can also use the Discount Cash Flow (DCF) metric method, which estimates the stock’s intrinsic value based on cash flow forecasts. If the DCF is higher than the stock price, it could be a sign of undervaluing.
You can also rely on technical indicators like the Moving Average Convergence Divergence (MACD) and Strength Index (RSI) to find undervalued stocks. Below are some of the most undervalued stocks right now.
1. Monster Beverage Corporation (NASDAQ: MNST)
Monster Beverage Corporation is renowned for its energy drinks. Its stock has had solid returns for over two decades, with a 31% annual return for 25 years.
2. Philip Morris International Inc. (NYSE: PM)
Philip Morris International Inc. specializes in the tobacco industry and controls a large chunk of the sector. By 2030, the company plans to generate more than two-thirds of its revenue from non-smoke products.
3. Constellation Brands, Inc. (NYSE:STZ)
Constellation Brands, Inc. deals in alcoholic beverages and is best known for its Corona brand of beers. The company’s stock has a strong buy rating, with analysts giving it a price projection of $45 higher than the current price of $231.07.
4. Alphabet Inc. (NASDAQ: GOOGL)
Alphabet is an online search and advertising industry. It owns the renowned brands of Google and YouTube. In Q2, the company reported a 7% year-over-year growth in revenue, including a 28% surge in its cloud business. It has a strong buy rating, with a projected 11% revenue growth in 2024.
5. Colgate-Palmolive Company (NYSE: CL)
Colgate-Palmolive Company is a household brand best known for its toothbrushes and toothpaste. CL stock has consistently beaten EPS forecasts in the past four quarters. It has a strong buy rating from analysts, who predict its share price could rise by $14 based on the current price of $73.43.
6. Nvidia Corp. (NASDAQ: NVDA)
Nvidia specializes in the high-end semiconductor industry. It has had some of the most spectacular growth in the past 15 years. In Q2, the company’s growth number rebounded, a sign of recovery in the semiconductor industry.
It posted revenue growth of 101.4% year-over-year, while net income shot up 843.2%. One growth driver has been the rise of generative AI, which has driven up demand for its graphics processors. The strong has a strong buy rating, with a price target of $600.
7. Target Corporation (NYSE: TGT)
Target Corporation is a major American retailer that sells general-use products. It is positioning itself for the US holiday season with games and toys under $25.
8. Altria Group, Inc. (NYSE: MO)
Altria Group, Inc. is one of the biggest names in the tobacco industry. Its stock is amongst the biggest dividend payouts on the S&P 500 index, with consistent dividend growth for the past 53 years.
9. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Keurig Dr Pepper Inc. deals in coffee, soft drinks, and other consumer products. KDP stock has consistently met or beaten EPS estimates in the past four quarters.
10. Meta Platforms Inc. (NASDAQ: META)
Meta Platforms is one of the biggest social media and online advertising players. It owns various platforms such as WhatsApp, Facebook, and Instagram. It is currently working on growing into various under-explored segments like AI technology, the metaverse, and short videos.
Its recent focus on cost-cutting has improved cash flow and reduced risk for investors. Analysts predict it will generate over $30 billion in free cash flow in 2024, providing a huge opportunity for share buybacks. It has a share price target of $350.
Undervalued Stocks Provide a Great Opportunity
An undervalued stock is a great opportunity to make profits above the general market trend. However, always approach each stock market investment by evaluating your risk appetite against the potential reward. Just because a stock’s analysis may signal that it is undervalued does not mean it will be a success.
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