Underestimated stocks present a tricky narrative. On one hand, it’s always possible to find hidden gems that the Wall Street suits ignored. But on the other hand, those moments are relatively rare. After all, these folks are paid to find such opportunities. Usually, they do a good job.
Nevertheless, humans are humans – even the smartest and most educated iterations. And that means they make mistakes or overlook certain ideas. Further, everybody has their own bias and that slanted mentality could eschew certain concepts over others. It’s not fair but that’s life.
Given the lack of perfection among experts, sometimes, it can be profitable to call an audible at the line of scrimmage. That’s what we’re doing here. Hopefully, we won’t get sacked with these underestimated stocks to buy.
BlackLine (BL)
Headquartered in Woodland Hills, California, BlackLine (NASDAQ:BL) provides cloud-based solutions to automate and streamline accounting and finance operations worldwide. Per its public profile, the company offers financial close management solutions, such as account reconciliations that provides a centralized workspace for users to collaborate on account reconciliations. Since the start of the year, BL gained almost 10% of equity value.
On paper, BL seems a risky enterprise. Currently, analysts rate share a consensus hold with a $60.60 average price target. That implies more than 6% downside potential. Further, the most pessimistic target warns about BL falling to $50. Still, BlackLine could rank among the underestimated stocks to consider.
Financially, the company has been hitting it out of the park. It’s not only profitable but its average positive earnings surprise clocked in at 56.28% last fiscal year. For 2024, experts anticipate earnings per share of $2.07 on sales of $645.23 million. That’s much better than the year-ago print of $1.96 per share on sales of $590 million.
DocuSign (DOCU)
Falling under the application software segment, DocuSign (NASDAQ:DOCU) provides electronic signature solutions. With its product, the company enables the sending and signing of agreements on various devices. As well, it provides various digital certifications and authentication protocols to better mitigate improper access concerns. Since the start of the year, DOCU gained more than 4%.
Despite an okay start to the year, analysts rate DOCU stock as a consensus hold. Frankly, it’s not that surprising. Back during the worst of the Covid-19 crisis, DocuSign emerged as one of the most relevant enterprises. Essentially, it facilitated contactless transactions. However, with fears of the SARS-CoV-2 virus having practically faded into nonexistence, experts see little upside potential.
Nevertheless, DOCU could rank among the underestimated stocks to consider. In fiscal 2024, the company’s average positive earnings surprise came out to 20.48%, an impressive performance. For the current fiscal year 2025, analysts believe EPS may reach $3.24 on sales of $2.93 billion. However, the high-side estimate of $3.52 on revenue of $2.98 billion could be more realistic based on the prior print.
Paymentus (PAY)
Based in Charlotte, North Carolina, Paymentus (NYSE:PAY) provides cloud-based bill payment technology and solutions. Per its corporate profile, Paymentus offers electronic bill presentation and payment services, enterprise customer communication and self-service revenue management to billers through a Software-as-a-Service (SaaS) technology platform. Since the start of the year, PAY stock is up 30%.
Not only that, in the trailing one-year period, PAY has gained almost 168% of market value. While it’s on the run, analysts have a dim view on its forward prospectus. They rate shares a consensus hold with an average price target of $19.50, implying more than 14% downside risk. If that wasn’t enough, the highest estimate calls for $20, which still implies a 12% warning to the southern direction.
However, Paymentus could be one of the underestimated stocks to consider. Following a blistering performance in the second quarter of last year, the second half saw an earnings surprise of 91%. That’s incredibly impressive. For fiscal 2024, experts believe EPS will hit 37 cents on revenue of $735 million.
Last year, the company posted earnings of 32 cents on sales of $614.49 million.
On the date of publication, Josh Enomoto 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.
