While the market continues to impress – most recently thanks to another robust jobs report – the usual suspects appear overpriced, which brings us to undervalued stocks. Yes, it might seem like every idea is overbought. However, there will always be enterprises that don’t grab the spotlight.
It’s just a matter of mathematical realities. Right now, investors can choose from thousands upon thousands of publicly traded assets. We’re not just talking about individual stocks but also baskets of securities, also known as exchange-traded funds. Add in commodities like gold and silver and now you’re really competing for people’s attention (and limited dollars).
Granted, some ideas are ignored because they should be. Arguably, that’s not the case here. Below are undervalued stocks you should carefully examine.
MGM Resorts (MGM)
I’m not going to beat around the bush. MGM Resorts (NYSE:MGM) is a risky idea for undervalued stocks. As a world-famous resort and casino operator, the brand enjoys social cachet, no doubt about it. However, MGM stock is also dependent on a viable consumer economy. So far this year, shares have gained a bit over 2%. That’s not exactly an encouraging sign.
However, it’s possible that while the revenge travel sentiment has faded into the background, consumers in the post-pandemic cycle have learned to prioritize their vacations. If this dynamic continues to hold true, MGM would be an intriguing idea to consider. Right now, shares trade at 14.72X trailing-year earnings. That’s noticeably below the sector median print of 20.68X.
Interestingly, MGM enjoyed an outstanding performance in fiscal 2023. Its average positive earnings surprise clocked in at 107.3%, an impressive statistic. For fiscal 2024, though, analysts are looking for a slight decline in earnings per share to $2.44 (compared to 2023’s $2.67).
Still, if the aforementioned prioritization materializes, the high-side EPS estimate of $3.41 would possibly be on the table. Therefore, it’s one of the undervalued stocks to consider.
Bumble (BMBL)
A controversial idea in my opinion, dating app Bumble (NASDAQ:BMBL) started off with high hopes. Here, we have a woman-founded and led organization that aims to change social behaviors. Essentially, for traditionally oriented relationships, women must make the first move. In Bumble’s eyes, this directive encourages parity in relational power structures. It’s also a really stupid idea that frustrates roughly half of the target audience.
Notably, new Bumble CEO Lidiane Jones has basically acknowledged that the idea is indeed stupid. Don’t get me wrong: I think it’s important for people to challenge hegemonic ideologies and frameworks. At the same time, you can’t use a business to shove an agenda down customers’ throats, especially if they don’t want to play along. Bumble might finally be hearing this message loud and clear.
If so, BMBL stock is trading at attractive multiples. We’re talking about 1.55X trailing-year revenue and only 0.84X book value. For the latter, this stat basically means Bumble is worth less than the sum of its parts.
With a simple and important pivot, BMBL’s ridiculously discounted price won’t last. It’s one of the undervalued stocks to watch.
Academy Sports and Outdoors (ASO)
For my last idea on this list, I’m going to go the speculative route with Academy Sports and Outdoors (NASDAQ:ASO). From the name, it sounds like some European soccer club’s youth academy program. In reality, it’s a sporting goods and outdoor recreational retailer. Now, this industry faces pressure due to headwinds working against discretionary consumer spending. However, Academy Sports sells guns and ammunition.
Why is that important amid the scourge in firearms-related violence in this country? Mainly, if the Democrats win big in 2024, they may push for draconian gun control measures. Naturally, this dynamic could spark a buying panic. Combined with the inflationary pressures of a still-robust jobs market, this political catalyst appears to be an underappreciated one.
Right now, shares trade at a measly 9.07X forward earnings multiple. That’s lower than nearly 87% of the cyclical retail space. Here’s the counterpoint: analysts only project very modest sales growth for the current fiscal year. They’re also forecasting a decline in earnings.
Still, if Democrats win out, ASO would certainly be a name to watch. For speculators, it belongs on the list of undervalued stocks to put on the radar.
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.
