3 Nasdaq Darlings With Hidden Upside Potential


  • The following undervalued Nasdaq stocks look interesting as investors pay careful attention to prices.
  • Starbucks (SBUX): Howard Schultz commented after a rough quarter, but will the legendary founder and boomerang CEO need to make another return?
  • Adobe (ADBE): The creative innovator knows exactly what it stands to gain and lose in the generative AI race.
  • Apple (AAPL): The massive $110 billion buyback and a decent quarter have investors piling back into the stock.
undervalued nasdaq stocks - 3 Nasdaq Darlings With Hidden Upside Potential

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As the stock market starts to pick up where it left off before running into April turbulence, value investors should be willing to give undervalued Nasdaq stocks a look. Some are cheaper after the latest round of earnings season, which was met with mixed results across the board.

In any case, don’t bet against the tech-heavy Nasdaq 100 now that it’s regained most of the ground it has lost in an ugly April. As the bull market commences, the following undervalued Nasdaq stocks are worth adding to the watchlist as tech momentum and Fed jitters ease. At the same time, quarterly earnings take a front-row seat.

The following undervalued Nasdaq stocks are among the timelier bets on the market, even if the latest earnings “bump” causes some investors to depart.

Starbucks (SBUX)

the Starbucks (SBUX) logo on a sign outside of a coffee shop
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It was really hard to get over just how terrible the latest quarterly earnings results were for Starbucks (NASDAQ:SBUX). The firm lowered full-year sales and earnings expectations while clocking in a sudden drop in profits. It was not only a bad showing by its new CEO, Laxman Narasimhan, but it seems like the Starbucks growth thesis is broken as we know it.

Legendary Starbucks founder and ex-top boss Howard Schultz recently commented on the matter, noting that its locations need a “maniacal focus on the customer experience,” Indeed, it appears Narasimhan has been doing his best to improve things at the store level (he’s taken shifts at Starbucks), but to no avail.

You can’t fault Starbucks entirely for the rough patch, though. The broader quick-serve restaurant scene has been rocked lately, with consumers responding to widespread price increases by putting away their wallets. Starbucks has just felt the industry hit a bit harder.

I think Schultz, a notable “boomerang CEO,” may need to make another return to the helm if Starbucks’ latest crisis worsens. The stock has now shed around 42% of its value from its 2021 highs. That’s some serious underperformance that perhaps only Schultz may know how to solve. Either way, the stock looks super cheap right here.

Adobe (ADBE)

Adobe logo on the smartphone screen is placed on the Apple macbook keyboard on red desk background. ADBE stock.
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Adobe (NASDAQ:ADBE) seems to be in an enviable position to monetize emerging generative artificial intelligence (AI) technologies as it brings its creative suite user base to this new era. That said, the stock hasn’t been booming of late compared to most other companies looking to tap into AI to jolt sales growth. The stock is down 15% year to date, while most other AI stocks have been gaining.

Indeed, it’s hard to be enthused about Adobe’s AI capabilities when incredible AI image generators Midjourney and OpenAI’s Dall-E may find themselves nipping at Adobe’s heels over the coming years. Despite this, I view Adobe as a Nasdaq darling and AI underdog that could have plenty of surprises up its sleeves as it continues rolling out new AI innovations.

More recently, the firm made a big splash in the realm of AI video generation and editing. From text-to-video to AI-assisted video editing in Premier Pro, it’s clear Adobe wants a big piece of the AI creative market.

Apple (AAPL)

Apple (AAPL) logo brand and text sign on entrance facade store American multinational boutique corporation dealership shop. Apple Layoffs
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Apple (NASDAQ:AAPL) stock recently shocked investors with a historic $110 billion buyback announcement. The big buyback news and some better-than-expected quarterly numbers were enough to propel AAPL stock around 7%.

It will be interesting to see where Apple goes from here as it moves on from its two-year period of relative sluggishness. The stock is currently trading at 28.26 times trailing price-to-earnings (P/E) — not exactly cheap for a firm that’s run into a bit of a growth slump.

AI rumors could certainly pick up traction as we inch closer to the second half. But could we be looking at a buy-the-rumor, sell-the-news situation regarding AI?

As always, only time will tell. It’s becoming increasingly difficult to value Apple shares here, with Warren Buffett recently announcing that Berkshire Hathaway (NYSE:BRK.B) had slashed its stake by 13%.

On the date of publication, Joey Frenette held shares of Apple, Berkshire Hathaway (Class B) and Starbucks. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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