As inflation remains increasingly sticky, finding undervalued stocks to buy has become increasingly difficult. Meme stocks like GameStop (NYSE:GME) continue climbing despite rapidly approaching market saturation, which could leave retail traders holding the bag when the music stops.
Even if inflation cools consistently, goods and services remain significantly higher than two years ago. This discrepancy arises because inflation measures ongoing price growth rather than actual price levels, resulting in persistently low consumer confidence despite inflation rate trends. So, we’re looking at a spiraling situation in which companies pull profit from higher pricing rather than internal optimization, which seems destined for correction.
The bottom line is that meme stocks are back on the menu, and tech stocks are becoming prohibitively expensive for the average retail investor. Both conditions make undervalued stocks an attractive option in today’s market. Affordably priced, these stocks offer an opportunity for investors to accumulate shares at reasonable prices. These undervalued stocks to buy are poised for rapid growth due to favorable circumstances and bullish momentum, laying the groundwork for their future success.
Palantir Technologies (PLTR)
Palantir Technologies (NYSE:PLTR) saw a per-share pricing dip in recent weeks, but it’s tough to discern why. The losses appear to result from general inattention and cooling sentiment after a stellar earnings report initially sent shares soaring. Although this might not represent a true dip, the stock is down enough to be worth buying before the next potential surge.
That upward movement could happen sooner than expected, given some unusual options activity suggesting hefty expectations for the stock within the next month. While options flow isn’t always definitive, a purchase order for 17,000 call options expiring on May 17th with a price target of $26.50 is certainly notable.
Historically, Palantir’s stock has traded within a tight range before surging and settling at or near a new floor. For a long time, that floor hovered around $15. Strong earnings pushed the per-share price to $25 before it settled into today’s lower limit of approximately $20. If the company’s earnings trajectory continues, this may be one of the last opportunities to buy Palantir at its relatively undervalued pricing.
Titan Machinery (TITN)
Small-cap agriculture and construction equipment value stocks like Titan Machinery (NASDAQ:TITN) might not enjoy the same level of recognition as larger counterparts like Deere & Co (NYSE:DE), but Titan’s robust fundamentals speak volumes. Titan Machinery recently released its fourth-quarter and year-end reports, surpassing expectations with a 25% annual sales increase and nearly a 10% rise in yearly earnings despite rising supply chain and fuel costs.
Despite these strong fundamentals, Titan Machinery is undeniably undervalued, trading at just 0.19x sales, 4.8x earnings and 0.80x book value. This undervaluation is particularly stark given the company’s 79% income growth over three years. With a conservative outlook for 2025, projecting single-digit gains across its segments and a slight dip in year-end earnings, surpassing these modest forecasts could lead to a surge in Titan’s stock value. At current prices, this small-cap value stock is an easy buy.
Cricut (CRCT)
The do-it-yourself set may love Cricut (NASDAQ:CRCT), but the undervalued stock doesn’t get nearly the investor attention it deserves. Although revenue dipped slightly in its most recent earnings report, net income climbed 116% year-over-year, boosted by a 54.7% gross margin expansion. Cricut benefits from improving consumer sentiment, especially as buyers look for stay-at-home activities to save money and manage household budgets.
In 2024’s first quarter, overall sales dropped 8%, offset by higher paid subscriber rates and increased machine sales. This means more people kickstarted their Cricut journey in recent months, and investors can expect a corresponding sales boost as new users restock and replenish crafting supplies.
Now is the time to consider buying into this undervalued stock, as management announced a special one-time dividend of $0.40 in the earnings report. Shareholders of record on July 2nd will receive the distribution on July 19th, so there’s still time to take advantage of this opportunity.
Medifast (MED)
Medifast (NYSE:MED) hasn’t yet caught the wider weight loss wave affecting many pharma stocks. Still, there is long-term potential for this nutrition and weight loss company to expand its product sales across various platforms, including multi-level marketing.
Medifast reported a solid $0.76 earnings per share in the first quarter. The company’s balance sheet is strong, boasting a $150 million cash reserve with zero debt, which is crucial in today’s high-rate environment. Additionally, executives are striving to differentiate Medifast from larger weight loss competitors.
Management is shifting toward a more comprehensive and holistic approach to customer management, including guided habit development and personalized coaching. Earnings statements indicate that “2024 will be a year of investment for future growth.” While this may impact the sustainability of today’s 20% dividend yield, it does not diminish the undervalued stock’s long-term upside potential.
Garrett Motion (GTX)
Garrett Motion (NASDAQ:GTX) may be the most objectively undervalued stock on this list, trading at just 7x earnings and 0.5x sales while remaining an overlooked player in the green tech and sustainable driving sector. The company manufactures various automotive parts that enhance emission reductions and support zero-emission technologies, including alternative fuel engines and turbochargers for gasoline and diesel vehicles.
While pure EV plays like Tesla (NASDAQ:TSLA) are currently losing favor due to declining consumer interest, evidenced by the surge in hybrid and gasoline vehicle sales, Garrett Motion provides a bridge for investors seeking long-term sustainability while acknowledging that global EV adoption is a long-term goal.
The recent dip in Garrett Motion’s stock followed an earnings report showing a 6% drop in quarterly sales; however, its annual sales remained stable, and the company maintained healthy margins and free cash flow. This stock is underappreciated and undervalued as investors chase more prominent growth opportunities. As automakers revise their EV planning timelines, expect Garrett Motion to become a major small-cap value stock in the future market.
GigaCloud Technology (GCT)
Globalized, direct-to-consumer eCommerce continues to soar in popularity, as demonstrated by giants like Amazon (NASDAQ:AMZN) and Alibaba (NYSE:BABA). GigaCloud Technology (NASDAQ:GCT), a lesser-known but rising eCommerce force, targets the massive B2B market by creating a comprehensive platform for businesses to source products and manage all associated logistics.
Medium-sized businesses often struggle with product and inventory management, sourcing and payment processing. GigaCloud addresses these challenges by providing a complete suite of scaled B2B eCommerce solutions, including an active vendor marketplace, shipment and freight management, warehouse storage, AI-powered fulfillment and secure cross-border payment processing.
GigaCloud’s financial metrics are particularly impressive. With a low price-to-earnings ratio of just 13.9 — well below the tech sector average of 36x — the undervalued stock doubled its earnings per share over the last few quarters and has robust free cash flow despite trading at (relatively) bottom-barrel pricing.
Sirius XM Holdings (SIRI)
When Warren Buffett vouches for a stock, pay attention. This focus makes Sirius XM Holdings (NASDAQ:SIRI) stand out as a remarkable choice among undervalued stocks, especially given the billionaire’s investment. Even as Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) appeared more inclined toward selling than buying, his $167 million investment in Sirius XM signals a positive indicator for value investors. Given the wider market skepticism, it’s an even more noteworthy play. Sirius XM remains one of the most heavily shorted stocks today at 21% short interest. So why is Buffett optimistic about this stock?
Buffett’s interest in Sirius XM goes beyond planned corporate realignment; he views it as a top-notch value investment. Despite trading at low multiples, Sirius XM has a promising future. The company is a cash-generating powerhouse, with EBITDA margins exceeding 30% for the last four years and maintaining a free cash flow of over $1 billion. Additionally, Sirius XM offers a solid dividend yield of 4.69% with a payout ratio of 31%, demonstrating efficient cash management by its leadership in rewarding shareholders while strategically adjusting its market presence.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
