The current economic landscape is fraught with peril, as the prospect of a recession looms large. With the Federal Reserve steering towards a soft landing, high-risk stocks are teetering on the edge. However, wise investors can seek refuge in undervalued stocks with Buy recommendations. These stocks not only promise substantial growth potential, providing a cushion when the market rebounds, but also present an enticing contrarian opportunity.
By zeroing in on stocks with a potential upside of at least 50% based on analysts’ high price targets, we can uncover undervalued treasures waiting to be seized.
ADT Inc. (ADT)
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ADT Inc. (NYSE: ADT), a leader in smart home and small business security, stands out as an attractive choice for consumers. Its innovative and sustainable solutions cater to a wide range of needs, encompassing the sale and installation of solar systems, residential security, and automation systems for small businesses.
ADT’s recent quarterly results signal a turning tide, with a substantial improvement in net loss and a noteworthy 3% increase in recurring monthly revenue (RMR) to $350 million. Moreover, the company’s earnings per share (EPS) witnessed an impressive 250% surprise. Notably, ADT has garnered a corporate ratings upgrade from Moody’s, underscoring its robust debt repayment capacity.
Furthermore, ADT has bolstered shareholder value through a 57% dividend hike and the commencement of a $350 million share buyback program. The stock’s estimated high price of $10 within the next 12 months serves as the proverbial cherry on top, cementing ADT’s position as a compelling undervalued stock.
DXP Enterprises (DXPE)
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DXP Enterprises (NASDAQ: DXPE), a premier distributor of pump solutions and rotating equipment products, has been strengthening its foothold in the industrial sector. Its expertise spans across technical proficiency, logistics capabilities, and innovative pumping solutions, thus catering to the diverse needs of industrial customers.
The company’s recent acquisition of Kappe Associates is a strategic move to fortify its position in the water and wastewater treatment market. In the quarter gone by, DXPE recorded impressive sales growth of 8.2%, along with an uptick in gross profit and net income. Supported by a 31% year-on-year surge in diluted EPS and a robust 28.3% increase in adjusted EBITDA, DXPE has proven its mettle.
Considering analysts’ bullish projections, which forecast an upside of over 60% in the next 12 months with a high target of $55.00, DXPE stands out as a compelling prospect among undervalued stocks, poised for an imminent breakout.
United Airlines Holdings (UAL)
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United Airlines Holdings (NASDAQ: UAL) has etched itself into the fabric of air travel, serving various global destinations. The company’s recent announcement of a $2.6 billion terminal renovation project in Houston underscores its commitment to expansion and enhancing passenger experience, indicative of its robust growth trajectory.
The company’s latest quarterly report has been a revelation, with total operating revenue spiking by 9.9% year over year to $13.63 billion. Posting an adjusted diluted EPS of $2.00, surpassing expectations, UAL has navigated through adversity with resilience. Coupled with the procurement of 110 additional aircraft from 2028 onwards, UAL is evidently charting a trajectory of sustained growth.
Analysts are painting a rosy picture for UAL, projecting a potential upside of more than 120% in the next 12 months, with a high target price of $98.00. Bolstered by its ongoing growth strategies and a bullish fair value estimate from analysts, UAL emerges as a shining beacon among the undervalued stocks.
On the date of publication, Rick Orford 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.
