The benefit of investing in undervalued stocks below $5 is the opportunity for outsized gains. However, these stocks are often high beta stocks. This means their price action is not highly correlated with the broader market. Sharp moves in one way or another are common.
Indeed, undervalued stocks can be part of a long-term investment strategy if you have the patience to wait for the return.
One way to evaluate the growth possibilities for undervalued stocks is to look at the company’s industry or sector. In 2023, that can point investors to themes like commodities, clean energy, and the ongoing rollout of electric vehicles and its charging infrastructure.
Kinross Gold (KGC)
Kinross Gold (NYSE:KGC) stands out as a solid choice. The mining company is already profitable and demonstrating the ability to increase revenue and earnings on a year-over-year (YoY) basis.
Although gold can be a polarizing asset class, a recent event suggests an investment in the precious metal may shine brightly.
On August 22 in South Africa, the BRICS (Brazil, Russia, India, China, South Africa) alliance kicked off a meeting to formulate a plan for a new gold-backed currency as an alternative to the U.S. dollar.
This is a financial website, not a political one. Creating a single currency among these five countries will be neither easy nor quick. However, it’s important for investors to understand an overlap. The mere discussion of a gold-backed currency is bullish for gold. Buying stock in mining companies is a solid alternative to buying physical gold.
Kinross Gold is a financially stable company that is trading at a forward P/E ratio of around 12x. Earnings are projected to rise over the next 12 months and analysts are bullish on the KGC stock price. The company even pays a small dividend.
Uranium Energy (UEC)
Clean energy is one of the hottest investment themes of 2023. That is stoking interest in nuclear power and, by extension, uranium stocks.
For investors looking for single uranium stocks, Uranium Energy (NYSEAMERICAN:UEC) is a good choice when it comes to undervalued stocks under $5.
When you’re looking at mining stocks, location matters. UEC currently operates in the U.S. and Paraguay. The latter gives the company exposure to the world’s highest-grade and largest undeveloped ferro-titanium deposits.
UEC stock is up 17% in the last 12 months, which is comparable to the performance of the Global X Uranium ETF (NYSEARCA:URA). The company’s revenue is growing YoY, but the company is unprofitable.
Uranium Energy is not highly covered by analysts, but the ones that do unanimously give the stock a consensus Strong Buy rating.
Wallbox (WBX)
Wallbox (NYSE:WBX) is a play on our nation’s need for electric vehicle (EV) charging solutions. A recent study by JD Power found that EV owners are unhappy with the time it takes to charge a vehicle and the operability of available chargers. This is particularly true for EVs not from Tesla (NASDAQ:TSLA).
Wallbox manufactures EV charging solutions under the Combined Charging Standard 1 (CC1). The company says its charging solution is compatible with every EV on the market. The company has sold more than 1,000 of its Supernova DC fast chargers, which are available in 33 countries.
WBX revenue jumped over 100% in the last year, with the forecast for 200% growth in the coming year. Wallbox is not profitable yet, but it’s expected to hit that goal by 2025. Wallbox has competition from Tesla, which has its own CC1 plug adapter. However, at this point, the market appears to be big enough for multiple competitors.
On the date of publication, Chris Markoch 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.
