The tumultuous journey of the stock market, akin to a rollercoaster ride, continues to hit new record highs almost weekly. Sectors like semiconductors and AI are soaring high, promising unlimited growth potential.
But amid this bustling market, are there still diamonds in the rough waiting to be discovered? Fear not, for there are hidden treasures yet to be unearthed. Here are seven undervalued stocks that are currently shining brightly. According to the analysts at Morningstar, these seven stocks are rated 5-stars, indicating substantial upside potential in the coming weeks and months.
The Resilience of Estee Lauder (EL)
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Estee Lauder (NYSE:EL) may have lost some of its luster lately. As one of the leading cosmetic companies globally, it historically enjoyed double-digit annualized earnings growth. However, in the past 24 months, a downward slide has plagued the company. The initial surge following economic reopening has fizzled out in the cosmetics sector, leaving retailers with an excess of inventory. The Asian cosmetics market, in particular, has presented challenges for Estee Lauder.
With EL stock plummeting up to 75% from its peak, there’s been a remarkable turnaround as earnings have started to improve. Morningstar sees this downturn as a temporary blip, valuing EL stock as 29% undervalued today, with potential upside reaching $210 per share.
JD.com (JD): The Phoenix Rising
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The Chinese business landscape is currently mired in a slump, with pandemic-related closures and fluctuating international trade posing challenges. Amidst the general pessimism, Chinese tech stocks like JD.com (NASDAQ:JD) have faced significant headwinds.
However, beneath the surface, JD’s story is quite different. The company has witnessed staggering revenue growth, soaring from $67 billion in 2018 to an estimated $150 billion by 2023, alongside considerable profitability improvements.
Trading at less than 10 times forward earnings, JD shares are currently presenting a compelling entry point into the realm of Asian e-commerce giants.
Revival on the Horizon: Sensata Technologies (ST)
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Sensata Technologies (NYSE:ST) focuses on electronic sensors for vehicles, especially in the auto industry. A recent slowdown in the auto market, exacerbated by challenges in the EV sector, has impacted the company’s fortunes.
Despite the rough patch, there are signs that sentiment may be reaching a turning point. Both JP Morgan and Bank of America recently downgraded ST stock, potentially signaling the low point for the firm’s prospects. Priced at just eight times forward earnings and with future earnings growth in sight, Sensata appears poised for a significant rebound when the auto market picks up.
Morningstar’s William Kerwin sees Sensata as one of the most compelling 5-star stocks presently, estimating the stock’s true value at $69 per share, suggesting a staggering 100% upside potential from current levels.
Pfizer (PFE): A Pillar of Strength
