The overarching purpose of investing in undervalued stocks and cryptos is to find the diamond in the rough. That’s a surefire path to reaping strong returns. The stocks and cryptocurrencies below all look to be trading below where they should based on their intrinsic values and other factors. Granted, 2023 has started off with a lot of fear and unexpected shocks. However, there is reason to be optimistic. The Federal Reserve may or may not raise rates again in May with current trends favoring another down-to-the-wire decision as inflation cools. In either case, stocks should continue to inch upward as the majority of the hikes have passed.
It’s difficult to imagine that a leading company like Salesforce (NYSE:CRM) will see its stock held low for much longer. The customer relationship management firm is the largest player in the space and benefits from a leading market share. The company has had its share of troubles but the other leading industry names collectively control about as much market share as Salesforce.
Size matters as does the fact that Salesforce is coming off of a strong earnings period. Full year revenue increased by nearly 18% with Q4 growth of 14%. Salesforce gave guidance that it expects roughly 10% top-line growth overall in its fiscal year 2024. While that may not be a stellar number, there are a few things to note. The company’s cash flow increased by 19% meaning more money in than out. The company could be waiting for an opportunity to spend soon, potentially increasing growth. In any case, Salesforce is going to be receiving attention because of cooling inflation and fed rate hikes which will bring growth back into focus and investor capital inflows.
Tyler Technologies (TYL)
One of the clearest arguments favoring Tyler Technologies (NYSE:TYL) as an undervalued stock has to do with trajectory. Share prices of the public sector software provider are below where they were just prior to the onset of the pandemic. But Tyler Technologies is roughly twice as large as it was back then based on revenues.
That has to matter. The company is expected to report approximately $1.95 billion in sales in 2023. That’s a significant increase over the $1.09 billion in sales from the company in 2019. However, the firm is expected to see a sales contraction during the current quarter which doesn’t exactly favor the stock. That probably explains why shares have fallen recently but realistically the company is still far bigger than it was in early 2020 when it traded for more. In short, it has nearly twice the revenues and trades for less than it did then. I don’t see why it should continue to go lower, quite the opposite.
Kellogg will name its new snacking business Kellanova to focus on the growth in that business by separating it from its slower-growing parent. The strategy is similar to what Kraft (NYSE:KHC) did by spinning off newly created Mondelez a decade ago.
Basically, Kellogg wants to do what Kraft did by focusing on snacking growth that would have otherwise been inseparable from the larger firm. The new firm even follows naming conventions that leverage the use of Latin words. What’s important is the fact that Kraft’s Mondelez strategy was successful and shares have more than doubled in the last decade. Kellanova could very well evolve into a similar story when Kellogg separates the snacking business as Kellanova later in 2023.
Cryptocurrencies such as Cardano (ADA-USD) are much more difficult to characterize as undervalued or overpriced than stocks. Crypto is still very much nascent and pricing mechanisms remain much more tenuous and underdeveloped. That said, Cardano appears to be one of the low-priced blockchain-based assets that may indeed be very, very cheap. Again, it’s very difficult to do much more than say that a given crypto once traded for much more and is building something that could become important and valuable.
As that applies to Cardano, it was worth several dollars a few years ago. Crypto crashed. Now it’s worth $0.45 but has appreciated rapidly in price in 2023 after beginning the year at $0.25. Cardano may indeed be building something valuable. Most crypto watchers are still busy in 2023 trying to make sense of the somewhat nebulous blockchain/crypto world. But Cardano could truly create a viable long-term project out of the chaos simply because the parent firm strictly adheres to a scientific approach in developing the platform. No trendy dog breeds and no wild origin stories, just computer science applied to an emerging technological field.
ASML (NASDAQ:ASML) stock raises an important question for the markets. What price can you put on the shares of a company that produces something no other firm can in a vitally important industry? The answer for ASML is that the market currently values it at $665 but analysts believe it is much more valuable, at $755.
As I mentioned, ASML is one of one. No other company on earth can make the EUV lithography systems it does. It is the only firm that has the technological know-how to fabricate the extreme ultraviolet systems used by leading global firms to fabricate leading-edge semiconductors. That has led some to dub ASML the world’s most important company since everything in our world relies on chips. No one else can afford to make the machines which require inputs from roughly 5000 different suppliers. Scarcity often creates overpriced assets but ASML is the rare chance to get the opposite.
XRP (XRP-USD) is a story of an undervalued crypto that will continue to be retold throughout this year. Until the court case against the firm from the US SEC is settled there will be a clear opportunity at hand. The SEC’s case against XRP stem from its contention that XRP was offered as a security and thus subject to SEC oversight. As time has gone on it has become apparent that the courts are leaning heavily in favor of XRP and parent company, Ripple. Current indications are that a verdict favoring Ripple could come soon, perhaps next month if not later in 2023.
That news certainly suggests XRP prices could rise quickly in the near term. That makes it very undervalued given the overwhelming expectation that it will emerge victorious. The case, like most prominent court cases, harbors greater ramifications for the legal landscape. If XRP prevails that will send a massive positive signal rippling across all of crypto that the regulatory bodies won’t be able to control crypto as they hoped.
VeChain (VET-USD) is another cryptocurrency that is arguably undervalued. Unlike XRP, its future potential has little to do with regulators. Instead, VeChain is full of potential exactly because it is one of many cryptos attempting to solve the problem of traceability.
VeChain assigns unique identifiers to products which are then tracked during each step during said products’ journey throughout the supply chain. The company has successfully proven that its technology increases efficiency and traceability of products. Therefore, it’s evident that VeChain can provide real world utility that leverages blockchain ledger technology to improve business outcomes.
The other inherent application for VeChain is in transparency with all kinds of NGOs and nonprofits seeing real utility in humanitarian efforts like human trafficking, smuggling, and so on. But at the same time, the success of the company and VeChain is a question of adoption. VET currently trades for $0.02 indicating that there’s a lot more to be done. As long as the company continues to develop real logistics-based solutions the potential for growth remains clear.
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.