Forget the million-dollar lottery ticket. The real path to wealth could be hiding in plain sight: undervalued stocks. These are millionaire-maker companies with solid potential trading at a price below their true worth. Imagine scooping up shares of a future giant before everyone else catches on. The key is finding these hidden gems.
None of the stocks discussed below are unknown, so others have caught on. While these may not be hidden gems in that sense, they are still growing. From that perspective, they are hidden gems.
The essence of investing is trying to identify stocks that are undervalued in anticipation of share price appreciation and the future. It certainly looks like the companies discussed below can look forward to price appreciation.
The stocks discussed in this article are concentrated in the technology sector. They touch upon two important trends — artificial intelligence (AI) and electric vehicles (EVs). Let’s take a look at these undervalued millionaire-maker stocks.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) stock, believe it or not, is very likely undervalued at the moment.
By now, we mostly know the story about Advanced Micro Devices: It represents the value offering in the booming AI chip space. AMD provides what are perceived to be the second-best AI chips. It’s a relatively strong position to be in. The company does not face the same scrutiny as Nvidia (NASDAQ:NVDA). Yet, AMD benefits from the massive influx of investor capital into AI chip stocks. Meanwhile, it always has that outside chance to somehow usurp Nvidia’s position as the dominant chip maker for AI applications.
So, why do I think AMD is undervalued at the moment? The answer really comes down to earnings. AMD’s annual earnings declined in 2022 and 2023. Earnings are expected to increase by more than 500% in 2024 and continue growing rapidly for the next several years — at least.
That makes it very easy to argue AMD stock is underpriced at $157. The consensus opinion is that AMD shares are worth $195 and range as high as $265.
BYD (BYDDY)
BYD (OTCMKTS:BYDDY) stock is maturing and finding profitability in the process, which is why I believe it is undervalued.
The stock benefits from margins above the 20% level. In that regard, BYD is better than Tesla (NASDAQ:TSLA). BYD outshines Tesla in another important way. It is actually the biggest producer of EVs globally. It produced more than three million vehicles in 2023. That was the second straight year in which it outpaced Tesla by that measure.
High gross margins suggest strong internal economics at the company. Those sales volumes speak for themselves. The combination of the two is powerful. It is also a reason to believe that BYD continues to be undervalued overall.
That’s an opportunity for investors. EV stocks are generally maligned at the moment, although BYD’s shares have appreciated in price this year. The company is extraordinarily well-positioned. I believe it represents the best of EV investing and one of the better opportunities overall at the moment.
Snowflake (SNOW)
Snowflake (NASDAQ:SNOW) stock continues to trade at multiples last seen in 2020. The current price-to-sales ratio of 14.2 is nearly as low as it has been in the past decade.
Those ratios fell dramatically when it was announced in late February that CEO Frank Slootman would step down. It’s a curious case because Snowflake’s material prospects haven’t eroded as a result of the management changes.
The most recent earnings report is pretty much on par with what we’ve come to expect from the company: Snowflake continues showing strong top-line growth, reaching 34%, and the company has strong revenue retention rates from its customers. It all suggests that Snowflake is pretty good at serving its customer base.
Perhaps the exit of the former CEO provided a good excuse for worried growth investors to exit Snowflake. After all, rate cuts have yet to materialize and growth stocks continue to suffer because of it.
Whatever the case, there are compelling reasons to believe Snowflake represents an undervalued opportunity at this time.
On the date of publication, Alex Sirois did not hold (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.
