With investors on the hunt for hot deals, undervalued sleeper stocks are seeing a good deal of attention. In fact, of the ones highlighted below, each carries low risk, and the potential for high returns.
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Albemarle (NYSE:ALB) has emerged over the last few years as one of the most important lithium stocks in the United States. It’s also one of the top most undervalued sleeper stocks and is also one of the most volatile. That’s because commodities like lithium are subject to multiple factors that also make their prices highly volatile.
Still, ALB is a good bet because the electric vehicle market isn’t going anywhere. Further, lithium producers, particularly Albemarle, have been identified for their strategic national interest. For example, Albemarle recently received a $90 million grant from the Department of Defense.
es, lithium prices are subdued at the moment. However, there is zero indication that the transition to EVs has changed materially. In other words, lithium is safe. Also, understand that even in a bad quarter Albemarle’s sales still grew by 10%. It’s definitely a steal at this time.
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Pfizer (NYSE:PFE) continues to get hammered for the simple fact that it can’t continue to produce pandemic revenues indefinitely. I wouldn’t necessarily say that Pfizer is a sleeper stock because a lot of people know about it. However, I would say that it is absolutely one to buy because it is very undervalued.
Bearish investors are going to focus on Pfizer’s immediate problems, including a recent earnings miss. The company reported $13.2 billion in revenues, which came in below expectations for $13.3 billion. At the same time, remember, Pfizer won the pandemic competition to produce a Covid-19 vaccine. It’s flush with cash. and has already used some of that to acquire Seagen (NASDAQ:SGEN). All in an effort to revitalize its pipeline. Between Seagen’s strengths in cancer and Pfizer’s plans to launch 20 products in the coming year, PFE continues to be a risk worth taking.
NextEra Energy (NEE)
Undervalued sleeper stocks, like NextEra Energy (NYSE:NEE) haven’t fared very well over the past several weeks. That’s primarily due to the unique market situation that we’re currently facing in which bond yields are extraordinarily high.
The problem is and was that bond yields were very close to or above traditional dividend yields. Therefore, utilities, although seen as very stable and income bearing, simply didn’t stack up to the combination of guaranteed returns bond yields provided.
Fortunately, the situation is shifting some and bond yields are declining to a degree. However, I believe NextEra Energy was a buy even without that factor shifting in its favor.
The reason is because nextera energy is not simply a utility firm alone. It actually operates two businesses, one of which is a utility, and the other of which is a huge green energy business. Each of those businesses is the largest in its respective sector. Further, both continue to grow well. So in summary, NextEra Energy offers the stability of a utility firm along with dividend income, the growth of green energy, and the scale effects of being a leader in both categories.
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The cloud data warehousing firm has shown continued strong growth quarter over quarter and year over year recently. However, It is been weighed down by the Federal Reserve’s battle to fight inflation by raising interest rates. It’s no secret, growth stocks got crushed in 2022 and remain undervalued in late 2023.
It’s also no secret that the Fed is sending strong signals that its rate hike regime may be nearing an end. That puts Snowflake in position to rise quickly. Remember, Snowflake’s stock traded at nearly $400 In November of 2021. It fell precipitously once the markets digested the idea that the FED would soon tackle inflation. we’re now nearing the other side of that cycle. That means that there’s a real chance that Snowflake can rise as precipitously as it fell.
Fundamentally it’s the same strong growth company that it was back then. In the second quarter, revenues grew by 37%, And the company boasted a $142% net retention rate. That means for every customer that the company had, it grows the account by 42%. Beyond that, The company is showing strong machine learning and AI growth.
Johnson Controls (JCI)
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Like so many other Industrial shares, Johnson Controls (NYSE:JCI) is a sleeper stock. Investors just aren’t that interested in the industrial sector because it lacks flash and growth.
The analysts responsible for the valuation of Johnson Controls believe it to be substantially undervalued. For example, the Wall Street analysts covering JCI stock give it a consensus price of $69.63. Gurufocus values its shares at $70.51. It trades for $51 at the time of writing. that doesn’t include the benefit of its dividend which yields 2.9%.
Ultimately, Johnson Controls will need some sort of catalyst in order for the market to appreciate it. What might that be? In my opinion, it’s very simple, the market simply needs to begin talking about the Internet of Things opportunity again. The company has a huge opportunity there as more and more buildings become smart. Johnson Controls provides the services and materials which will help to modernize buildings globally. Building managers will need to exercise greater control over the efficiency of their assets in the coming years and decades. Johnson Controls is a primary provider of those products and services that will help to connect buildings to the Internet and become smarter.
Duke Energy (DUK)
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Duke Energy (NYSE:DUK) Is one of those undervalued utility stocks that I alluded to earlier when discussing NextEra Energy. However, Duke Energy is much more of a traditional utility company than NextEra Energy.
Another one of the top undervalued sleeper stocks, Duke Energy is pursuing green energy goals it is what most investors would consider to be a traditional utilities firm. provides electricity and natural gas to 8.2 million electricity customers and 1.6 million natural gas customers throughout the Mid-Atlantic, Southeast, and Midwest states.
There’s not that much to note about Duke Energy that is particularly important or interesting. instead, I would simply note that it’s a steady investment and the company projects five to seven percent EPS growth through 2027. At the same time, its dividend is yielding 4.65% right now. The company last reduced that dividend in 2007 so it’s relatively safe. Utilities firms essentially operate as regulated monopolies and that serves to keep them very stable. thus, Duke Energy is a reasonably safe bet that is currently providing strong income.
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Investors routinely overlook Cisco (NASDAQ:CSCO) despite its position as a dominant Silicon Valley firm. Cisco provides networking services and thus is a very basic, unsexy firm relative to Google (NASDAQ:GOOG,GOOGL) Nvidia (NASDAQ:NVDA), and the other rapid growers in Silicon Valley.
But that’s how investing goes, you have to look at the market in slightly different ways in order to find the real hidden value. Anyway, Cisco Systems offers a lot to investors seeking to capitalize on modern shifts. The company is focused on networking as it relates to cloud, software, security, and AI. In other words, Cisco Systems will have a lot of opportunity in the coming years as enterprises increase their investment in networking those respective areas within their firms.
In fact, that’s already underway. The company saw its revenues grow by 11% in fiscal year 2023, Reaching nearly $57 billion. That led to record net income levels while the company also returned $10.6 billion to shareholders. In other words, investing in Cisco Systems is a great way to expose oneself to income opportunities that take advantage of ongoing secular trends that are expanding the technological footprint especially within the U.S.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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