Be fearful when others are greedy and greedy when others are fearful. It’s an investment philosophy made famous by the market’s most well-known value investor Warren Buffett. And right now, Wall Street is running scared. But where are those buy decisions best directed? In undervalued stocks capable of producing out-of-this-world returns. Right?
Saying it is the easy part, of course. Execution on the right undervalued stocks is another matter, especially in a market where dirt cheap companies are seemingly offered to buyers like fish in a barrel.
Not to knock the Oracle of Omaha’s stock picking prowess, but even his single largest holding, tech giant Apple (NASDAQ:AAPL), wouldn’t make the cut for the type of undervalued rocket fuel we’re after. That requires something extra.
Below are three companies whose shares offer a strong blend of heavy discounting, off and on the price chart. Additionally, they have higher octane sales growth that’s bound to make others take notice and deliver sizzling profits for today’s undervalued stock buyers.
Here are three undervalued stocks to buy that could take off in 2022:
| Ticker | Company | Price |
| TYL | Tyler Technologies, Inc. | $351.61 |
| ROKU | Roku, Inc. | $89.44 |
| AMD | Advanced Micro Devices, Inc. | $98.60 |
Undervalued Stocks to Buy: Tyler Technologies (TYL)
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Tyler Technologies (NYSE:TYL) is the first of our undervalued stocks with revenue growth capable of propelling shares strongly higher.
TYL stock is a less well-known and profitable $14.23 billion large-cap software company focused on the public sector. Tyler Technologies saw stronger-than-forecast sales of $456 million grow by 55% in the first quarter (Q1) and organic growth coming in at its best in five years.
Analysts at Morningstar see business momentum as continuing and priced for upside of around $445 for buyers of this undervalued stock. That amounts to a premium of roughly 27% from today’s market price.
Admittedly, that’s not extraordinary rocket fuel for TYL stock’s burly-sounding growth. However, consensus forecasts of a median price target of $495 and range high of $600 situated 70% above this undervalued stock’s market price does sound worthy.
Technically, this undervalued stock has formed an inside monthly doji off Bollinger and layered Fibonacci support dating as far back as 2010. To ensure fair value doesn’t become further stretched from reality, waiting for a buy signal from an oversold stochastics and breakout of TYL stock’s downtrend is prudent.
Roku (ROKU)
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Roku (NASDAQ:ROKU) is the next of our undervalued stocks with sales growth in its DNA, setting up investors for big-time returns.
The streaming giant grew total revenues over the past year by 55%. Gross profits have climbed 74% year-over-year. ROKU is also cashflow positive and shares of this undervalued stock have one-time growth darling Cathie Wood’s Ark Invest as an active investor.
That last item, of course, may not sit well with some investors, with Ark’s ETFs taking a beating over the past fifteen or so months. Nevertheless, the investment manager has still been busy buying shares in recent weeks.
Compared to Ark’s cost average of around $250, at a current share price at the time of writing of $92.37 — that’s roughly 80% removed from last July’s all-time-high — conditions are shaping up for this undervalued stock.
And with shares set inside May’s doji and in between ROKU’s March 2020 Covid-19 candle and lifetime support, a doable rally retracing 38% of the decline is possible. This is because it matches consensus views of $240 and gets Cathie Wood back toward breakeven. Investors could buy this undervalued growth play for huge profits.
Undervalued Stocks to Buy: Advanced Micro Devices (AMD)
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Advanced Micro Devices (NASDAQ:AMD) is our final undervalued stock, offering a special blend of growth and overblown distress that’s buyable for big-time gains.
The top semiconductor play continued to wow Wall Street last month after blasting top- and bottom-line estimates and issuing upside and above-views guidance. Business is also booming, as evidenced by across-the-board double-digit sales growth in all of AMD’s product lines.
In the wake of the report, broker Piper Sandler raised shares of this undervalued stock to “overweight” from “neutral.” Additionally, they lifted their price target to an above-the-market $140, as prior PC and acquisition concerns failed to play out as anticipated.
About a month later, shares of AMD have confirmed a monthly chart pattern stationed off Covid-19 and long-term Fibonacci and trendline support after getting cut nearly in half from last November’s all-time-high.
With an oversold stochastics bullishly-aligned and massive volume accompanying the reversal formation, $140 looks like a good start toward a more rocket-worthy Street price target high of $230 inside the next 12 months.
On the date of publication, Chris Tyler holds long positions in Advanced Micro Devices (AMD) and Ark ETFs (ARKK, ARKG) (either directly or indirectly), but no other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
