Some thin trading activity could be ahead for the broader markets but don’t count out the red-hot momentum plays, many of which could continue to inch closer to a breakout. Of course, July isn’t exactly the most action-packed month for stocks, especially as many investors, traders and other market participants look to take some much-needed time off while it’s hot.
With artificial intelligence (AI) on the minds of many growth-hungry investors, perhaps the companies with less-appreciated AI stories can stay hot even as trading activity cools down just a bit. Also, let’s not forget other stocks in this market are faring well without the tailwind of AI.
In this piece, we’ll examine three underpriced stocks (and perhaps even slightly undervalued) that may be in a spot to make a run for new heights in the coming weeks. Though lacking in timely catalysts, the following seem like worthy additions to the mid-summer radar.
Corning (GLW)
Corning (NYSE:GLW) was still a relatively underpriced and under-the-radar AI beneficiary when I first highlighted the name back in early June. After reporting an incredible quarter, the Gorilla Glass and optical cable maker is now in the hot seat, soaring more than 16% in the last week on the back of better-than-expected demand.
With raised guidance for the second quarter (revenue expected to come in at $3.6 billion, up from $3.4 billion) and new innovations that could solidify the company’s positioning in the data center boom, GLW stock seems to have enough wind at its back to power even more big beats over the coming year.
As builders of data centers continue buying the latest Corning equipment, perhaps the second-quarter sales guide raise will prove too conservative. Either way, I’d be unsurprised if Corning shares break out to new 10-year highs as soon as this month. The stock is less than 3% from the level.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) stock has already broken out in a big way, with shares now up over 7% from highs hit back in July 2021. Indeed, AMZN stock is a tad later than its Magnificent Seven peers to break out to new highs. Still, I view Amazon as having more than enough growth drivers (notably in AI) to continue powering the latest surge.
More recently, the $2 trillion e-commerce and cloud giant pulled the curtain on its latest semiconductor innovation: the Graviton4 CPU. The chip, based on the Arm Holdings (NASDAQ:ARM) architecture, makes considerable performance gains over its predecessor and could help Amazon lower its dependence on third-party chipmakers in the data center.
As Amazon continues innovating on AI-capable software and hardware, I find it tough to pass on shares as they look to extend the massive bull run that started in January 2023.
Teradyne (TER)
Teradyne (NASDAQ:TER) stock has been a huge winner so far this year, with the stock up an astounding 43% year-to-date. With Goldman Sachs (NYSE:GS) recently adding the industrial automation solutions provider to its “conviction list,” investors may be looking for a summertime breakout for the name. Specifically, Goldman noted that the firm may be on track to enjoy a “sales inflection.”
At writing, TER shares aren’t too far off from new highs, down just over 6% from its January 2022 peak. Even at more than 60 times trailing price-to-earnings, TER stock stands out as an intriguing breakout candidate with numerous underrated catalysts that could help power a move.
The company’s new industrial-focused autonomous mobile robots (AMRs), like the MiR1200 pallet jack, are helping advance the robotics boom in the warehouse. For such impressive innovations, you can expect to pay a rich premium. Arguably, the current premium may not be rich enough.
On the date of publication, Joey Frenette held shares of Amazon. 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 held a long position in AMZN.
