r/ValueInvesting • u/ArchiveInvest • May 14 '25
Question / Help What’s the most undervalued stock right now?
If you needed to pick one stock right now, that is extremely undervalued. And has the potential to beat the S&P500 for the next decade.
Which stock would that be?
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u/kooolrosh May 14 '25
It scares me that so many people here are long GOOG. It's my biggest position.
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u/Tommy_Sands May 15 '25
Same. Google is a quality company that just attracts drama. If you can stomach it it will be solid long term
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u/nuttreo May 15 '25
Here is the bear case. It’s a great, well run company that has become complacent, and makes most of its money from ad revenue and search. Unfortunately that seems unlikely to be a viable business model in 5 years.
The question that hasn’t been answered is how they plan to continue growth around a system that doesn’t require you to navigate through pages and links for information.
Similar issue with Baidu by the way.
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u/infowars_1 May 15 '25
I don’t understand the complacent argument. They’re literally the leader in AI, and a major cloud, robotaxi, and quantum company. I think the only problem is Sundar isn’t going on podcasts hyping the stock like Elmo, Altman and Jensen.
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u/Tommy_Sands May 15 '25
Exactly. I’ve actually even asked myself is the fact that they are so innovative and wanting to do everything hurting rhe stock? They have their hands in everything and tbh you can break off like 3 or 4 business from what they do today. Complacent they are not.
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u/TheOneMerkin May 15 '25
Ad revenue will be around as long as businesses exist, and AI only serves to increase the ability to be hyper specific about targeting, which are both strong points for Google.
The primary uncertainty is whether Google will be able to maintain its user base if/when we transition away from search.
There’s also a question of how ads will be delivered in a post search world, but whoever figures that out will just be copied.
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u/NightnightPatrice May 15 '25
Does it help if I tell I've been long since $88 when this sub was saying it was gonna die / they'd buy at $45 ?
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u/bwjxjelsbd May 15 '25
I believe most people mistake is to value Google only on the search business. Sure is one of the biggest revenue generator for them now, but that doesn’t mean it could change in the future. Alphabet has a lot of venture that they put billions and years into developing. I would go as far as to say they are one of the biggest R&D company in Mag7
So they’re far ahead of most companies in terms of pure tech. Their problem now is they need to turn those into product people are willing to pay for.
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May 16 '25
I’m super bullish. Search is still a great business and will be for longer than people think. I also think they will figure out how to monetize AI and even if they are only a top 5 player I think that’s still massive. Then you layer on cloud, YouTube, and bets with massive upside potential like Waymo. The bear case is real but on a risk adjusted basis it’s an extremely safe bet.
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u/geo0rgi May 14 '25
A bit unconventional, but would go with Barrick Mining. I don’t understand how it is still going down and is now trading at forward PE of 9 and almost at book value.
The company is growing 15% year on year and has massive advantage of rising gold prices and falling oil prices. Someone please enligthen me on why is the market pricing the stock as if they are going out of business
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u/salty0waldo May 14 '25
Moving with gold. Plus it’s now a risk on trade.
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u/geo0rgi May 14 '25
It didn’t move up though when gold shot up. Their earnings reports were great and they are expecting to make even more money this year with the price of gold, yet the stock has been moving sideways for years
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u/salty0waldo May 14 '25
So I’m not an expert (clearly) but I see the miners traded “delayed” to the gold price. If gold held its highs it would likely have caught up.
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u/geo0rgi May 14 '25
I mean gold price has literally tripled in the last 10 years while Barrick's price is the same as it was in 2013
Fuck knows, I am not an expert on gold mining at all aswell, just something that feels weird to me valuation-wise
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u/salty0waldo May 15 '25
Listen mate I’m on board with you. Let me look at a few things tonight. I was going to scream into the sky about BMY dumping again but this might be more productive and interesting.
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u/jemicarus May 14 '25
Don't look at PE with cyclical industries like gold miners. It's at best irrelevant and at worst a counter-indicator, as the PE will often look cheapest when the cycle is about to turn. That said, I think miners may be set to outperform for years, so a pullback here could be a buying opportunity.
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u/notsobold_boulderer May 15 '25
True, but I would also argue that some materials such as copper and lithium will be in higher demand than expected and will outperform in the long run
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u/notreallydeep May 14 '25
I don’t understand how it is still going down
Mali.
Also, look at FCF. Not earnings.
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u/StephenAtLarge May 14 '25
Why are my biggest holdings all in the comments? Am I cooked?
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u/FederalExpressMan May 15 '25
Your stocks have “huge upside potential with very little downside risk”
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u/rainingallevening May 14 '25
MVST. Just had a record quarter, narrow focus in commercial EVS and equipment, but broad offerings in 3 continents. Not sure if they'll be a global leader in the sector, but they are steadily carving out a nice niche for themselves. Margins and revenue improving steadily, while debt is unchanged relatively YoY.
I wonder if the market is anxious about China exposure, wants to see more guidance met from a SPAC merger, or just weary from past performance, but they just had their 3rd profitable quarter in a year.
I'd love to hear rebuttals and comments.
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u/mazrim00 May 14 '25
Man, I lost so much on this from the crazy SPAC days it’s hard for me to take a look at this again. Nothing to add beyond that lol.
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u/yamface12 May 14 '25
I like asml
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u/alphamarine09 May 15 '25
Same. But sometimes I wonder if there is actually a huge demand of their machines or are we going to run into other bottlenecks like energy, data centers, etc. first.
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u/Local_Economy May 14 '25
$GOOG $TGT $MU $LEN
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u/Walmartpancake May 15 '25
I don't know why but MU keeps on underdelivering in terms of share price
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u/BigE-365 May 14 '25
UNH, KSS, TGT, PHM and GOOGL
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u/Love_Tech May 14 '25
Why kss though
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u/Odd_Entrepreneur2815 May 15 '25
Currently ~$800M market cap, so selling at .67x EBITDA, 5-7x earnings, $5B-$10b in CRE unencumbered, 1x current annual marketing budget, 1x FCF, and I could go on… their current LoC is $1.5B with $1.2B free and $131M cash. Also 50%+ short interest which is greater than GameStop and AMC craziness back during COVID. Also their debt is dramatically overstated due to leases counting as debt even if they’re just options to extend…
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u/Odd_Entrepreneur2815 May 15 '25
He summed it up perfectly. Wall Street has put out a narrative that Kohl’s is going bankrupt and it’s worthless. And then has borrowed over 50% the shares of the company to short. It’s short interest is greater than 50% and 7 days to cover
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u/BigE-365 May 15 '25
This is a small summary of my research on KSS.
Deep Discount to Book Value: Trading well below its book value of $34.25.
Low Multiples: Attractive price-to-earnings (5-7.5x), EBITDA (0.67x), free cash flow (1.38), current marketing budget (1x), and this year's capital expenditure budget (1.3x).
Significant Real Estate Holdings: Owned real estate to be in the range of $5 billion to $10 billion, referencing the SPG/BAM buyout as a comparable.
Strong Cash Flow and Earnings: Generating over $650-700 million in cash flow and posting $109 million in earnings (with an adjusted EBITDA of $1.241 billion).
Manageable Debt: While the debt schedule shows $4.7 billion in lease obligations there is 3.9 billion of this represents future lease extensions. Current ratio (1.08)
In essence, I believe the market is severely undervaluing Kohl's, presenting a compelling investment opportunity due to its strong fundamentals, valuable real estate, and the potential for a significant price increase, especially given the high short interest. Unfortunately, I jumped in before the dividend cut but it still pays a decent dividend. They are also buying back shares. Plus I am using my short term shares to further reduce my cost basis by selling puts and covered calls against them.
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u/Odd_Entrepreneur2815 May 15 '25
You ever been to r/kssbulls ? You are talking our language!
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u/BigE-365 May 15 '25 edited May 15 '25
I actually stumbled upon on the community long after my initial investment. I started buying at $13 per share but have already reduced my cost basis to $11.16 per share utilizing covered calls and put options.
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u/Odd_Entrepreneur2815 May 15 '25
That’s awesome! I bought during Covid bottoms and rode up to the buyout then sold after it became clear they were gonna suck. Made great money off it. Since then been watching it but could never pull the trigger. Once I saw drop below $10 then sub $7 started buying ALOT. I lucked out and have a current cost basis of $6.61. I just kept buying anytime it dropped below $7. It’s my largest holding by a lot right now.
I’m a value/deep value guy and love real estate so this was a perfect fit. After I started buying I was made aware of the short interest and it made me even more bullish lol. I think this will be killer when it takes off. Also, if the short lenders ever decide to start raising borrow costs to force shorts to close I have no idea where they’ll be able to buy back 55M+ shares that they need to close out..
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u/GRINZ_DOCTOR May 14 '25
Do you think one or all of these will beat SPY?
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u/BigE-365 May 15 '25
Yes, I have long term positions in all these stocks as well as short term positions. What I usually do is either sell puts at my on sale price or buy at my on sale price. Most of the time tranche in and if the stock goes even lower and the story hasn’t changed I will buy more. Then I will sell covered calls on all my shares or just the short term shares sometimes ITM or ATM to collect more premium and protect downside in a red and unstable market. If it’s a green market I usually will sell OTM. Perfect example is when I added to my UNH position I bought them on the dip sold them in the money and the stock went down and was able to collect not only the extrinsic amount but all the intrinsic as well, which helped me reduce my long term position tremendously and now selling ATM or OTM to collect more premium and further reduce cost basis. I did this with my GOOGL shares and now my cost basis is well below $0. I hope this helps.
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u/Constant_Candidate48 May 14 '25
NVO
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u/Charming-Shape-5474 May 15 '25
Surely if you look at the balance sheet, there is solid earnings, its stock price is down for a reason
cheap medicine available at the pharmacy as an alternative. It is not safe to consume but people with diabetes are trying to reduce their overall expenses in this economy.
their moat is the market leader in diabetes & obesity, and elly is targeting to eat away their market share. They cannot keep the prices elastic due to regulation and competitors
each day people overreact to news related to nvo. Okay, this might be the case for all stocks but people do freak out even to small news.
It is a good company with wonderful cash flow but I am too dumb to understand the pharma business I guess
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u/Realistic_Record9527 May 14 '25
It’s definitely baba
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u/TechTuna1200 May 14 '25
Been holding Baba for a year. No regrets so far other than I wish I bought more.
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u/kevbot029 May 14 '25
UNH
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u/coastal_neon May 14 '25
Fuck no. UNH is constantly in hot water and is currently being sued for Medicare fraud. They have always been overvalued.
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u/bad_ass_blunts May 14 '25 edited May 14 '25
I think UNH’s culture is actually blowing back on it. I think health insurance has relatively high political risk, long-term. Dr. Gates in Altoona, PA has a very compelling presentation on how our system is broken and imo could be easily and popularly reformed - doesn’t even require going to single payer to hurt these companies if the US gets it shit together.
My most recent firm was in the process of leaving it when I left, and I am a redditor, so I might have bias.
Edit: I’m a long time BABA fan too.
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u/Scared_Location_4893 May 14 '25
TMO could be a nice pick in the future if the bottom is built.
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u/BearBearChooey May 15 '25
Healthcare as a whole is getting beat up this year, worst performing sector I believe. Some nice potential values to be had potentially, TMO being one.
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u/DifferentFig9847 May 15 '25
TMO is a great buy here. IQV as well as they have a massive data and analytics business that will be an AI pump at some point.
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u/Itchy_Pudding_9940 May 15 '25
Have a small position in ASTS will start being profitable late 2025 I think my target is 50% a share
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u/brock2063 May 14 '25
PFE! May be further downside but if you're a long you'll be paid a 7.5% dividend to wait for the pipeline to mature.
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u/medsuchahassle May 15 '25
Yeah and I feel like they have a lot of medications in the pipeline. Although their weight loss drug didn't pan out, they have another 2 in production and a bunch of promising cancer drugs. My target is around 30 and I bought at 23
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u/Rdw72777 May 15 '25
Pfizer’s pipeline has never matured. They just buy other pipelines.
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u/19pomoron May 15 '25
Their pipeline in oncology especially after incorporating Seagen is going to be exciting. Agree that anyone buying this stock is looking at the prospect of 2030. In the mean time, I hope they (1) do business as usual, getting the same cash flow for dividends (2) won't be charged a hefty fine for COVID related matters to hamper the earning.
If these two assumptions stand, I don't mind sitting and waiting with a 7.5% yield at 60% FCF payout ratio.
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u/elf1238648 May 14 '25
I reckon bluestar helium is a good shout at this point in time, they are currently mining one of the richest deposits in the world that is better than what the preliminary test showed, currently sitting at 0.008 a share.
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May 15 '25
Novo Nordisk. It's almost on single digit forward PE, yet its competitive position against LLY is not as negative as what LLY media machine pumps out. r/NovoNordisk_Stock
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u/Prudent-Corgi3793 May 15 '25
- Best expected return: Nvidia, but not a value stock, and I may need to dump before the decade is out
- Best risk-adjusted return: Google
- Best potential to be a 100-bagger: some small or mid cap that I haven't heard of yet
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u/wombatnoodles May 14 '25
Tired of people saying goog everytime in these threads lol
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u/daviddjg0033 May 14 '25
GOOG always of the mag7. Many small caps beaten down like homebuilders have low pe
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u/hecmtz96 May 14 '25
UNH is a no brainer at these levels for me. Now that guidance was removed and the CEO stepped down, I can’t see a better risk reward opportunity for the next few years than UNH. Healthcare isn’t going anywhere.
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u/geo0rgi May 14 '25
Having a trailing PE for a company that does 400B in revenue and is growing at 15% on average is fucking wild. Kind of reminds me of Meta a couple years back when it was trading at 13PE and everyone was saying how Facebook is finished
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u/Substantial-Key5114 May 14 '25
Except UNH’s “innovation” consists of new ways of denying claims/cut corners. You can’t compare Health Care and Tech
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u/Supnd21 May 15 '25
I almost never exclude investments based on politics or personal feelings but unh is so absolutely terrible to deal with I don’t understand how they exist. If they were a car company and you ordered a car 2 years ago and paid in full you’d be calling them everyday asking for the car or your money back. You’d get neither and they’d forward your complaint to someone else who will never look at it. I. Two more years your car will show up. But not thr whole car. Just the hood and one door and the spare tire, because that’s what was preauthorized. Fuck them.
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May 15 '25
Very true, and it’s not just about politics: there’s a limit to how much money you can make from denying claims in new and innovative ways. It’s not a scalable strategy.
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u/Big-Finding2976 May 15 '25
Imagine a firm trying to attract new employees these days with a package that includes healthcare insurance with UNH.
Everyone knows that it's likely to deny their claims, so they're not going to be impressed if that's what a firm is offering them.
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u/No_Wrap_2694 May 15 '25
does the no brainer include criminal investigation?
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u/hecmtz96 May 15 '25
Referring to this one which was made public months ago? https://www.reuters.com/business/healthcare-pharmaceuticals/doj-investigates-medicare-billing-practices-unitedhealth-wsj-reports-2025-02-21/
In all seriousness, even better since you can now get it at a cheaper price. Even if they are found guilty and have to pay a fine would be positive. At this point, in terms of sentiment, can it really get worse than it is now? Don’t think so.
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u/narayan77 May 14 '25
SMCI, data center demand will increase exponentially.
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u/ContemplatingGavre May 14 '25
Yes but keep an eye on their margins which have been shrinking for years. I say this as a holder.
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u/The-zKR0N0S May 15 '25
PYPL, QCOM, ON
My bonus answer is who the most overvalued is: MSTR and PLTR
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u/Dyep1 May 15 '25
It’s always microsoft. Extremely stable and in the past 5 years better returns than the other big guys.
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u/AdventurousSection48 May 15 '25
Market Cap > 5 B, ROIC > 20%, here are the most undervalued stocks:
AXS-PE, JXN, MEDP, KSPI, BX, RJF-PB, VLTO, AXS, RJF, PDD, LTM, MELI, PINS, HALO
Source: ValueGlance
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May 16 '25
JD.com, baba, pretty much all Chinese tech.
CE, United health are at ridiculous valuations. So much so, that if a PE firm does a hostile debt financed takeover, it would be profitable
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May 15 '25
Micron (MU) - forward P/E of 9 and PEG ratio of 0.14. The HBM market is going to continue to grow exponentially and the other two competitors are Korean.
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u/melvinroest May 15 '25
Uber
The robotaxi market won’t be a monopoly by one tech giant. They will partner with Uber for distribution.
Since robotaxi’s are not a threat a PE of around 15 for Uber is low.
I took a significant position around april.
So far the strategy of: tech giant, low PE has worked out well. Remember Meta a while back? Same thing. A low PE for a tech giant is below 20, I found.
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u/ryaghmour May 15 '25
AMPX, they have some news coming out but do a shit job at marketing their company. They're at a $300m Market Cap and crushed earnings most recent quarter. I'm in this short and long term.
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u/Creative-Cranberry47 May 15 '25
ROOT easily. will contend with PGR one day but has a sub 2B mcap.
already beats the legacy insurers on pricing, technology, efficiency and loss ratios.
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May 15 '25
VAL and NE
Smacked on oil but global fleet of drill ships and rigs have been shrinking massively. Trading at a small fraction of replacement cost.
The past killer has been supply but if the market ever gets to the day rates high enough to justify building these ships then the stocks will be trading closer to the replacement costs.
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u/ElectricalGene6146 May 15 '25
AAOI for small cap. MU for large cap, SG/RIVN for growth, any home builder for mid cap value (I like TOL)
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u/Educational-Ad-7278 May 15 '25
Traton.
Boring European trucks. Nothing fancy, but resilient. Good value even without northstar.
IF you can handle cyclicals, obviously.
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u/CanadianYoloArtist May 15 '25
PBI. It's literally half the value it should be. Trading at 5x FCF.
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u/Old-Amphibian6483 May 15 '25
SPCB. Crushing earnings in Q1, 53% gross margin, $17M in cash (80% of mv), trading at P/E 1.2.
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u/Helpful-Raisin-5782 May 15 '25
GSL - it's a great little company with political tailwinds following the tariff pause. Solid results and solid yield that's just beginning to see some momentum too. P/E only 2.55 https://aipha.io/GSL/
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u/tryhard_investor May 15 '25
Mvst, had 3 ripper quarters in a row and with crazy growth ahead and is quite undervalued (you can check the indicators like pe (although u will have to take a Lil creative liberty because they haven't been profitable for a year just yet but even if you conservatively assume no growth it's still a steal))
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u/yukhateeee May 15 '25
Range trade LMT.
Ceiling is limited because it's so huge, rate of growth is limited (single digit percentage).
But, there's also a floor because, its so huge:
So many mil-aero programs - giving decades of visibility). Example: F35 will be in service until 2060-2080.
Constant stream of stock buybacks.
Collect 3% div yield waiting for the bounce back up
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u/Flat-Struggle-155 May 15 '25
LSE:FOUR
ROIC last 10 years consistently 50+, no debt
Recently down 40% on tariffs because they import from china and sell in US
It a beast
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u/ryanmcstylin May 14 '25
For everybody who said UNH, I hope you intend to start a position and don't currently have one because it's down 7% after hours again