雅虎香港財經 7 Underappreciated Stocks With 25% Return Potential in 2024
Whether investors refer to them as undervalued or hidden gems, underappreciated stocks are always worth considering. Investors have made fortunes, large and small, by identifying underappreciated shares and investing their capital.
In this article, I’ve identified seven such stocks with 25% returns or greater per consensus forecast. I’ve also filtered for shares with more than five analysts covering the equity. The result is that most of these opportunities are relatively well-known names with relatively well-established underlying businesses.
In other words, these investments are lower risk overall, yet have the potential to outpace broader indices. These underappreciated stocks are definitely worth a look for investors seeking opportunities just outside the largest and most well-known stocks. They’re relatively safe at the same time.
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Adobe (ADBE)
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Adobe (NASDAQ:ADBE) stock is primarily known for the underlying company’s suite of creative software products. The company is a creative cloud platform heavily leveraging artificial intelligence.
One of the primary reasons to consider investing in Adobe lies in the strength of the software vertical. Generally speaking, software stocks are known to trade at expensive multiples. Adobe’s current P/E ratio is just above 45. That is substantially higher than the industry median but also lower than the company’s median P/E ratio of 53 over the past decade. Investors have to be willing to pay more for quality firms. The fact that Adobe’s PE ratio generally runs higher suggests there’s value to be had at the moment.
What I also like about Adobe is its forward P/E ratio is much lower than its current P/E ratio. In other words, analysts believe earnings will rise in the future.
Baidu (BIDU)
It’s very easy to find information suggesting Baidu (NASDAQ:BIDU) stock is an underappreciated investment at the moment. Metrics-based stock screeners like GuruFocus suggest it should trade nearer $137 than its current price of $99.Other screeners suggest an even higher consensus price, perhaps above $162. It’s clear that Baidu has the potential to provide 25% returns in 2024.
Beyond that, famous fund managers notorious for identifying profitable trends believe in Baidu. I’m referring to Michael Burry, made famous in “The Big Short,” who is the fund manager for Scion Capital. Three Chinese stocks, including Baidu, currently make up more than 20% of his company’s portfolio.
The Chinese economy still suffers from some inherent weaknesses evident in financial statements. The recent earnings report from JD.com (NASDAQ:JD) showed that ad revenue growth remains relatively flat at 3%. That’s indicative of what’s going on in the Chinese economy at large: The general economy is relatively stagnant. However, internet companies like Baidu and JD are expected to outpace the general Chinese economy in terms of growth. There’s certainly growth to be found within China, and it looks like the country’s internet companies are one such example.
Bristol-Myers Squibb (BMY)
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Bristol-Myers Squibb (NYSE:BMY) is a pharma stock that many investors like for a variety of reasons. Primary among those reasons is the fact that Bristol-Myers Squibb is a dividend growth stock. It was recently highlighted for that reason in this Morningstar video posted on YouTube.
So, it’s a strong investment for those seeking income growth opportunities. And it’s a steady investment, as shown in its most recent earnings report, with 5% top-line growth. The company beat consensus estimates in that regard but still posted a loss during the quarter. In response, it announced cost-cutting efforts including 2,200 layoffs.
What I like about Bristol-Myers Squibb, aside from its income stability, is one particular growth opportunity. BMY is working hard to develop its overall AI capabilities. The company is working with Exscientia (NASDAQ:EXAI) to accelerate the discovery of small molecule candidates. The firm is also collaborating with Insitro to better understand disease models. Bristol-Myers Squibb is working with Owkin to enhance clinical trial success strategies. All of those companies substantially leverage AI in their operations.
Autodesk (ADSK)
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Autodesk (NASDAQ:ADSK) stock has underperformed in 2024, which is why it remains underappreciated. At the same time, plenty of clues suggest share prices will rise moving forward.
The company’s forward P/E ratio is roughly half of its current P/E ratio. Again, that suggests that analysts largely anticipate earnings will rise substantially moving forward. In turn, investors will no longer look at the company as an underperformer and its shares should rise in kind. That’s the narrative to follow at the moment and the general reason investors should consider buying Autodesk shares.
The company is heavily involved in trending areas like the metaverse as one of the leaders in 3D modeling and design engineering. That means the company is probably exposed to trends, including the Internet of Things as it relates to building design. The company is also heavily exposed to the gaming sector, which relies heavily on 3D modeling provided by software companies — including Autodesk.
Global Payments (GPN)
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Global Payments (NYSE:GPN) is an underappreciated payments, or fintech stock, currently offering a lot of value to investors. The company released its earnings report for the first quarter on May 1. That report showed the company beat guidance for revenues and earnings per share. The guidance beat was modest but a beat nonetheless.
Global Payments provides software and hardware across the payments space. That includes payment terminals as well as multiple software services covering accounting, risk management and tax compliance — to name a few areas.
The payments space isn’t particularly strong at the moment. A few years ago that wasn’t the story. Instead, payments and fintech were very hot. Sectors tend to ebb and flow, and when things are lower, opportunities arise. That’s essentially what’s going on with Global Payments at the moment. The company is doing well from a fundamental perspective, however, investors aren’t high on the industry right now. That’s the opportunity for investors.
Medifast (MED)
Source: THICHA SATAPITANON / Shutterstock
Medifast (NYSE:MED) is a weight loss and weight management platform company and stock worth understanding. I’ll get into the company’s products and services in a minute, but it’s best to start with its most recent earnings report.
That report showed solid earnings of 76 cents per share. Medifast has more than $156 million in liquidity and zero debt on its balance sheet. There’s good news and bad news to be taken from that report. Revenues did decline substantially, but the company still maintained profitability. It also has zero debt, and that is particularly important in today’s high-rate environment.
The real opportunity for Medifast lies in GLP-1 inhibitors. That includes popular weight loss drugs such as Zepbound, Mounjaro and Wegovy. The company is working to incorporate such drugs into its weight loss coaching platform called OPTAVIA. The opportunity could dramatically spike revenues from its coaching platform, which suffered so much during the first quarter. Medifast is certainly worth considering as a company looking to leverage the massive weight loss drug opportunity.
Corpay (CPAY)
Source: Shutterstock
Payments stock Corpay (NYSE:CPAY) has remained flat in 2024. While the overall stock market thrives, it has stagnated.
The reason to consider investing in Corpay lies in its most recent earnings report. Revenues were slightly lower than anticipated, and the company’s earnings came in as expected. The combination of lower revenues and on-guidance earnings suggests strong operations overall. The company is proving capable of operating efficiently — which is a positive.
Otherwise, consider Corpay as one of many payments stocks currently underappreciated at the moment. In other words, it continues to offer value overall. Shares currently trade around $265, but the consensus expectation is that they will rise in value above $340.
The company recently began a planned acquisition of Paymerang. The latter expects the acquisition will create jobs in the former. That acquisition is expected to close sometime this quarter and will open up new verticals for the company. In turn, it’s reasonable to anticipate it could move share prices higher.
On the date of publication, Alex Sirois did not hold (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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