Last week’s market plunge could be a great opportunity to put new money to work. It may be difficult to tell what stocks will be in for next. However, if a recent downturn in a name tempts you, don’t let all the fear, panic, shock and horror expressed by pundits on television scare you from buying undervalued stocks.
Some stocks are bubblier than others. But you don’t need to pull the trigger on the worst-falling knives in the market, as they continue falling far faster than the rest of the stock market.
We will examine a few seemingly undervalued stocks that may have been unfairly dragged down over these past few weeks, primarily due to market-wide jitters. With recession worries picking up after the latest unemployment numbers, it’s an uneasy time to be an investor. However, worrisome times tend to offer some of the best deals. These are the top undervalued stocks to consider right now.
Apple (AAPL)
Apple (NASDAQ:AAPL) was one of few Magnificent Seven companies that didn’t induce anxiety when it reported quarterly results this summer. With AAPL stock finishing Friday’s freaky session up 0.7% (it was actually up way earlier in the day), it seems like Apple is more of a safe haven trade, even as the rest of tech wobbles.
Undoubtedly, Apple Intelligence is a compelling catalyst. And if personalized AI is the real deal and not just a trendy gimmick to convince those with aged iPhones to upgrade, I think Apple could be one of the better performers of the Magnificent Seven moving over the next 18 months.
Indeed, the former AI underdog has a real opportunity to lead the pack higher as we head into the next inning of AI: personalization and processing on the edge (or on local devices). In the meantime, Apple should continue demonstrating its relative resilience amid the July-August sell-off.
Atlassian (TEAM)
Atlassian (NASDAQ:TEAM) makes productivity software for software developers, project managers, quality assurance analysts, team members and other project participants. Given the switching costs of moving to a rival, the Atlassian ecosystem has a pretty sizeable economic moat surrounding it.
Many software professionals are already well-versed in Atlassian’s tools and technologies. So, unless there’s something markedly superior out there (there isn’t, in my opinion), a transition isn’t worth it, especially as Atlassian continues innovating on AI.
A wide moat won’t protect the firm from industry weakness, though. With so many layoffs sweeping through tech in recent quarters, it should come as no surprise to see TEAM stock fall under pressure after the release of some disappointing quarterly results.
The stock cratered more than 17% in a day following a weak quarter and guide. The recent post-earnings slip is a buying opportunity for investors seeking entry into one of the best behind-the-scenes names in software.
Moderna (MRNA)
Moderna (NASDAQ:MRNA) stock has been crashing violently of late. Just last week, the stock imploded more than 28%. If that’s not a vicious sell-off, I don’t know what is. Undoubtedly, the mRNA vaccine superstar has recently been a rough ride for investors as demand for COVID-19 vaccines fell rapidly.
With the RSV vaccine falling short of efficacy expectations, Moderna needs something else to give its stock a booster. For now, an updated COVID-19 shot isn’t going to cut it.
In any case, I find the $33.3 billion mRNA innovator trading at a nice discount after last week’s crash, partially induced by its full-year sales guidance cut. At around 7.1 times price-to-sales (P/S), the stock looks oversold and potentially undervalued, especially after clocking in some decent second-quarter earnings overshadowed by the reduced guidance.
On the date of publication, Joey Frenette held a long position in Apple The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
