Finding stocks with a margin of safety can offer more stability and set you up for a great upside. Undervalued stocks have been largely ignored by stock market participants thanks to negative news, obscurity, and other factors.
Some undervalued stocks don’t remain undervalued for long. For instance, Supermicro (NASDAQ:SMCI) used to trade at a 16 P/E ratio in the middle of 2023. That same stock has now skyrocketed and become the most popular AI stock. Not every undervalued stock has that type of turnaround, but there are many undervalued investments that won’t stand still for long. These are some of the top undervalued stocks to buy in March 2024.
Alphabet (GOOG,GOOGL)
Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) offers high-profit margins, exposure to multiple growth verticals, and an attractive valuation. Many investors have fixated on recent AI missteps, but Alphabet is still a leading in that industry. Data is the foundation of artificial intelligence, and Alphabet is sitting on a lot of it.
Even if the company doesn’t deliver on the AI front, its search engine and cloud platform are doing just fine. Those two segments helped the firm achieve 13% year-over-year revenue growth in the fourth quarter of 2023. Net income increased by 52% year-over-year as the company continued to reduce costs.
Severance packages have partially impacted 2023 financials but will be minimized in the years ahead. The company’s cloud platform also turned a profit after generating a net loss in the same period next year. Alphabet has the potential to surprise investors in the same way Meta Platforms (NASDAQ:META) did in 2023.
GOOG shares trade at a 26 P/E ratio and have a projected 20% upside from current levels.
Deckers Outdoor (DECK)
Deckers Outdoor (NYSE:DECK) is an athletic apparel company that offers sneakers under brands like Ugg and Hoka. The company regularly reports double-digit year-over-year revenue and net income growth. The athletic firm didn’t disappoint in the third quarter of fiscal 2024. Revenue increased by 16% year-over-year while net income jumped by 40% year-over-year.
The stock currently trades at a 32 P/E ratio and has plenty of fans on Wall Street. DECK has a “Strong Buy” rating among 16 analysts. The highest price target of $1,150 suggests the stock can gain an additional 27.5% from current levels.
Deckers Outdoor has a solid runway for its athletic products. The company’s P/E ratio is also in line with Nike’s (NYSE:NKE) valuation despite the latter reporting year-over-year revenue growth below 2% for the past two quarters. Nike has also reported lower net income in a few of its recent quarters.
This comparison makes Deckers Outdoor look more attractive. You can also look at DECK’s long-term performance for more persuading. Shares are up by 120% over the past year and have gained 536% over the past five years.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is a semiconductor corporation that didn’t catch onto the AI wave as soon as its peers. However, investors are now optimistic about the company’s generative AI technology.
Many stocks have soared after incorporating generative AI into their business models or producing chips that address the technology. Qualcomm has been finally gaining momentum based on its 54% rally over the past six months.
However, the stock still looks attractive at current levels. It speaks to Qualcomm’s ability to grow and how undervalued shares have been. Qualcomm only trades at a 25 P/E ratio and that relatively low valuation has resulted in a 1.85% dividend yield. The firm even hiked its dividend by 6.7% in 2023, so there’s respectable dividend growth available for long-term investors.
Qualcomm endured headwinds in 2023, but it looks like those challenges have subsided. After multiple quarters of declining financials, Qualcomm delivered financial growth in the first quarter of fiscal 2024. Revenue increased by 5% year-over-year while net income was up by 24% year-over-year. Renewed strength and excitement about the company’s AI solutions can lead to more gains for investors.
Nvidia (NVDA)
While Qualcomm is gaining momentum without as much fanfare among the AI stocks, Nvidia (NASDAQ:NVDA) has captured headlines from the start of the AI boom. The company is still outpacing the market with a 78% year-to-date gain. Shares are also up by almost 2,000% over the past five years.
It’s easy to argue that a stock is overvalued just because it has reported incredible gains in a short amount of time. While this argument is valid in many cases, Nvidia has matched the gains with soaring revenue and net income.
Nvidia’s Q4 FY24 results highlight once again why the AI giant is in a league of its own. Revenue increased by 265% year-over-year while GAAP net income soared by 769% year-over-year.
Those financials explain why the stock was able to climb 274% over the past year without being overvalued. Nvidia stock currently trades at a 36-forward P/E ratio. Artificial intelligence tailwinds will eventually slow down, but it seems like Nvidia has several quarters left where it can report otherworldly numbers. Even after the boom concludes, Nvidia still looks like it’s in a position to generate consistent double-digit revenue and earnings growth rates.
JPMorgan (JPM)
JPMorgan (NYSE:JPM) is the top big bank stock. The firm outpaces its peers and is in a good position to capitalize on any regional bank closures. Jerome Powell hinted that some regional banks will fail due to commercial real estate losses.
Once the company has significant losses, a large bank like JPMorgan will acquire them for pennies on the dollar. Customers at other regional banks may get nervous and opt to put their money into big banks like JPMorgan. This scenario played out last year and JPMorgan capitalized on the opportunity.
Shares only trade at a 12 P/E ratio which is in line with other big banks that aren’t performing as well. The stock also offers a 2.25% dividend yield for new investors.
JPMorgan has generated impressive returns for a bank which should also get investors excited. The stock is up by 43% over the past year and has gained 77% over the past five years.
Walmart (WMT)
Walmart (NYSE:WMT) is the largest American retailer and has established itself as a solution for people who want lower prices and quality goods. It’s hard to replicate what Walmart has built, and while Target (NYSE:TGT) is currently trying, it’s unlikely that it will surpass the giant box retailer.
Fourth quarter results from fiscal 2024 highlight why Walmart still looks like an enticing long-term stock. The retailer reported 5.7% year-over-year revenue growth but exhibited high growth rates from its most exciting segments.
Walmart’s e-commerce sales jumped by 23% year-over-year as it continues to compete with Amazon for digital sales. The company’s global advertising business was another bright spot that grew by 33% year-over-year. The company’s recent acquisition of Vizio should accelerate advertising revenue growth rates in the future.
Walmart stock trades at a 32 P/E ratio and offers a 1.40% dividend yield. Shares are up by 32% over the past year and have gained 85% over the past five years. The company’s affordable products put it in a better position to resist recessions than many publicly traded corporations.
Texas Roadhouse (TXRH)
Texas Roadhouse (NASDAQ:TXRH) is an American steakhouse chain that is spread across the United States. The corporation has 647 restaurants, which cover 571 cities in the U.S.
The restaurant chain has a $10 billion market cap and a 33 P/E ratio. The firm also carries a 1.65% dividend yield. An 11% dividend hike in 2024 makes the yield look even better. While there are other restaurant chain stocks that have received attention thanks to impressive growth rates, many of those same picks have high valuations.
Texas Roadhouse investors don’t have to worry about an excessive valuation. However, the stock does have solid financial growth. The steakhouse chain reported 15.3% year-over-year growth and 21% year-over-year net income growth in the fourth quarter of 2023. Those results brought profit margins to 6.22%. The firm also opened 30 company restaurants and 15 franchise restaurants in the full year 2023.
It’s one of the more reasonably priced restaurant stocks that can potentially become a giant within the industry. The stock is up by 44% over the past year and has gained 148% over the past five years.
On this date of publication, Marc Guberti held long positions in GOOG, DECK, and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
