- More than just companies that have suffered steep losses in the market and these undervalued stocks feature relevant businesses that could eventually pick back up.
- Kinross Gold (KGC): Although highly risky, KGC is easily one of the most undervalued stocks due to the underlying asset’s relevance.
- China Petroleum & Chemical (SNP): Geopolitical rumblings have kept SNP stock from popping higher, making it a potential deep value play.
- ACCO Brands (ACCO): Makers of the world’s top business products, the return to the office makes ACCO one of the surprising undervalue stocks to buy.
- Kratos Defense & Security Solutions (KTOS): The success of drones in the war for Ukraine makes KTOS a compelling speculative idea.
- Netflix (NFLX): Despite steep losses, it’s possible that Wall Street is going overboard with the NFLX selloff.
- Qualcomm (QCOM): While the technology space has taken it on the chin, the world needs to keep moving forward, bolstering QCOM stock.
- General Motors (GM): If I’m right about the return to the office, GM could be an enticing name among undervalued stocks to buy.
As the dust settled from a tumultuous ending to the month of April, it’s not too difficult for investors to find supposed discounted deals in the equities sector. However, the concept of undervalued stocks to buy goes beyond merely the price tag. Instead, these higher-risk but higher-reward ideas feature fundamental reasons to believe in a comeback, making them perfect for contrarians.
But given the circumstances that we’re in right now, undervalued stocks could be worthwhile for some conservative investors too. Mainly, if the underlying economy suffers a recession, several companies that have been fan favorites may be vulnerable to sharp losses. However, if a market idea is already undervalued, it’s quite possible that the air has mostly left the tire. In other words, circumstances might improve from here.
Another reason to consider undervalued stocks to buy is that the investment community may not be paying attention to the forward implications of the underlying companies or industries. While the headline print typically commands the most attention, if you’re reading about a market development on the news, it might be a lagging indicator. Thus, undervalued ideas may be waiting underneath the radar, waiting to be picked up.
Of course, every investment category features risks. And for beaten-down securities, nothing guarantees them from falling even further. However, these undervalued stocks feature meaningful businesses that could enjoy a comeback later this year.
|SNP||China Petroleum & Chemical||$50.96|
|KTOS||Kratos Defense & Security Solutions||$16.28|
Undervalued Stocks: Kinross Gold (KGC)
If I’m being perfectly honest, gold has been one of the most frustrating asset classes. And I’m not just saying that because I own some precious metals bullion. Rather, gold has long been a hedge against inflation and has performed well in prior fear-trade cycles. Well, there’s a lot of fear and a lot of inflation in the system, yet companies like Kinross Gold (NYSE:KGC) suffer.
To be fair, Kinross is a precious metals mining firm, which means that it may not always share a strong correlation with the underlying asset. While the firm is tied to the precious metal, it’s primarily a business. Therefore, other factors could come into play that could impact the equity valuation.
Still, the year-to-date (YTD) loss of 11% is a bit much for KGC stock shareholders. With the money stock accelerating in an unprecedented manner, Kinross should arguably be among the market leaders. Instead, it’s one of the undervalued stocks to buy, though that suits contrarians just fine.
Combining geopolitical tensions, economic warfare and stubbornly high prices, KGC stock seems poised to swing back up later this year.
China Petroleum & Chemical (SNP)
If you’ve been paying attention to the news cycle in China, you may understand why many folks are hesitant to seek out undervalued stocks to buy there. With the government adopting a draconian zero-coronavirus-cases policy, major economic hubs like Shanghai have been artificially rendered ghost towns. And at a surface level, that’s not helpful for companies like China Petroleum & Chemical (NYSE:SNP).
I’m not going to sit here and tell you that SNP is without risks because that would be completely reckless. Despite shares being up 9% on a YTD basis, that’s not great compared to other publicly traded companies tied to the petroleum industry. Unfortunately for SNP stakeholders, China is again embroiled in controversy, first for its ongoing rivalry with the west and its traditional ties to Russia.
But one factor that could again tip the scale in favor of SNP stock is that the Chinese are largely playing with a full deck. Perhaps shocking to some, U.S. relations with China warmed in part to act as a counterweight to the Soviet Union. A similar situation could play out again, meaning you should keep close tabs on this company.
Undervalued Stocks: ACCO Brands (ACCO)
When people think about undervalued stocks to buy, ACCO Brands (NYSE:ACCO) might fit most folks’ perception of this investment category. Just to get everyone on the same page, ACCO is a manufacturing company, specializing in some of the world’s most iconic academic, consumer and business products.
If you were in school during the analog era, then you’ve surely used ACCO products. The same goes for the worker bees that remember the regular in-office days. And that provides an excellent segue as to why ACCO might be one of the more intriguing undervalued stocks to buy.
I hate to break it to you, but it’s quite possible that work from home is coming to an end. A major problem for managers is that they can’t be expected to suspend disbelief for much longer. Workplace data indicated that prior to Covid-19, employees were wasting more than two hours daily, translating to billions of dollars wasted.
Thus, with a return to office, ACCO stock stands to benefit — making it a top undervalued stock to consider.
Kratos Defense & Security Solutions (KTOS)
When mentioning defense-related undervalued stocks like Kratos Defense & Security Solutions (NASDAQ:KTOS), you’re probably thinking that I’m going to mention the crisis in Ukraine. And you would be absolutely correct. The thing is, Kratos — to my knowledge — doesn’t have a direct connection to the Russian invasion of Ukraine. That could partially explain why KTOS is down nearly 16% YTD.
Because of the sharp volatility, it’s worth mentioning that Kratos is well on the speculative side of undervalued stocks to buy. However, if you have a longer-term perspective, you’re going to want to keep KTOS stock on your radar.
If you’ve been following Russia’s invasion of Ukraine, you’ll know that the Ukrainian resistance has proven rather resourceful, using relatively cheap drones and unmanned aerial vehicles to impose devastation on Russian tanks and other military assets. In turn, the conflict may have proven that a paradigm shift has occurred in modern warfare.
If so, Kratos — which specializes in unmanned vehicles — could be a very interesting idea to pick up on the cheap.
Undervalued Stocks: Netflix (NFLX)
For the extreme speculator, the downfall of streaming giant Netflix (NASDAQ:NFLX) has got to be exciting on multiple levels. Technically speaking, the red ink spells a discount for those that have regrettably stood on the sidelines as NFLX kept moving higher and higher. But losing 66% YTD — and most of the crimson stain coming from the trailing month due to a heinous earnings report — presents a time-capsule opportunity.
Now, let’s be fair — there’s a reason why NFLX stock plummeted. In its dismal earnings report for the first quarter, Netflix disclosed that it lost 200,000 paid subscribers, marking the first loss of subs in over a decade. If that wasn’t bad enough, management expects to lose another two million in the second quarter. Naturally, investors ran for the exits as if the house was burning down.
Still, an argument could be made that the core fundamentals — compelling original content — has not changed. If anything, it’s gotten better. Additionally, management aims to close some fiscal gaps, such as preventing password sharing. It’s ugly, yes, but the content-addicted customer just might come back.
Just as the world was recovering from the Covid-19 pandemic, Russia made the unsettling decision to invade Ukraine, sparking turmoil in global affairs. Once again, supply chains have become victimized, impacting certain industries like the automotive sector especially hard. And that’s going to affect semiconductor firm Qualcomm (NASDAQ:QCOM), which has recently pivoted to developing processors for innovative solutions such as advanced driver assist systems.
Given how desperate many industries are for normalization, it’s understandable why QCOM has suffered. On a YTD basis, shares are down 19%, almost reflecting the same performance as the Nasdaq index, which has shed 17% of value over the same frame. Since it might take some time for some semblance of stability to arrive, speculators of undervalued stocks should gird themselves for volatility.
Nevertheless, QCOM could do wonders for the patient. Qualcomm is an essential components developer, critical to the rollout of the 5G mobile network and the broader Internet of Things. In addition, the company undergirds several smart devices thanks to the dominant footprint of the Android platform.
Undervalued Stocks: General Motors (GM)
For those seeking high-risk, high-reward undervalued stocks, the auto-manufacturing industry seemingly tempts with its “cheap” offerings. For instance, American icon General Motors (NYSE:GM) is close to where shares last traded before the Covid-19 pandemic hit. By logical deduction, that means GM came down at an almost alarming clip, shedding nearly 30% YTD.
But then, it’s fair to ask if GM is more of a value trap? With inflation digging into consumers’ purchasing power, they might not be willing to fork over the money for a new car. I’m not about to present a deceptive narrative. Betting on GM stock is a speculative endeavor, there’s no doubt about it.
At the same time, some cynicism could come into play for General Motors. If work from home is truly over as I mentioned earlier, then many people are simply going to have to purchase new vehicles. As the Wall Street Journal noted, Americans are keeping their cars for longer. But that also means that once they break down, a replacement may be necessary.
On the date of publication, Josh Enomoto 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.