Analysts are hopeful that holiday shopping news will bode well for the economy after retail sales increased 0.3% in November. This moderate growth for the economy eased economist’s outlooks on a looming recession. This also point to the potential to find some undervalued Russell 2000 stocks.
The labor department reports that unemployment claims have fallen 19,000 in the past week, underscoring the strength of the labor market. This means that the economy is looking strong right now, with room for growth in 2024. As the economy is on track for a positive start to 2024 Investors will want to be on the look out for undervalued stocks. Here are three undervalued stocks from the Russell 2000 index.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) is an information technology company that provides important hardware that is necessary for AI chips.
SMCI reported strong financials for its latest quarter. Despite net income decreasing year-over-year (YOY), the company posted revenue of $2.12 billion. This beat expectations by $60 million and was an increase of 14.6% YOY. Management has reaffirmed its guidance for net sales in FY24, ranging from $10 billion to $11 billion.
While the company has struggled with its limited number of suppliers and high cost of sales, SMCI’s technology offerings make it a critical enabler of advanced data capabilities. Its multitude of strategic partnerships mean the company will continue its benefit from the AI race. This is backed by SMCI’s broad product portfolio, another major strength of the company. All things considered, SMCI is in a strong position to ride the AI wave, and is still strongly undervalued.
Celsius Holdings (CELH)
Celsius Holdings (NASDAQ:CELH) is a global consumer packaged goods company whose main product is a pre-exercise supplement drink.
CELH in the most recent quarter, revenue grew by 75.72%. Their price-to-earnings ratio reached 103.90, EBITDA growth also increased by nearly 2,720.12%. These metrics show that CELH is profitable and is growing at a fast yet stable rate making it perfect for buyers.
Celsius continues to dominate the market through superior advertisement and innovation. Recently, CELSIUS ESSENTIALS debuted and was targeted towards devoted athletes trying to take their performance to the next level. The company advertised selectively when health trends were on the rise and even as these trends faded, Celsius remained a regular in many people’s lives.
Option Care Health (OPCH)
Option Care Health (NASDAQ:OPCH) is the largest independent provider of infusion therapy services in the nation. For over 40 years, they’ve delivered cutting-edge infusion medications, nursing support and seamless transitional care for patients of all ages in their homes and at conveniently located sites.
Financials are faring well for Option Care. Revenue of $1.09 billion increased by 7.06% YOY which beat analyst expectations by 0.31%, and net income grew 25% to $56.3 million. Option Care’s diluted EPS of 31 cents also beat analyst expectations, further displaying how Option Care has been continually growing its financials over the years.
Option Care is in the middle of a buyback that it anticipates completing by the end of the quarter. It also approved an increase to its share repurchase program from $250 million to $500 million. These share repurchases indicate that Option Care believes its stock is undervalued. This could potentially lead to an increase in demand for OPCH stock. Its EPS might also get enhanced by the reduction of the number of outstanding shares through share buybacks. Investors should buy this stock before everyone realizes how undervalued this stock is.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
