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Jumping on the bandwagon of short-lived stock crazes can be tempting. However, the allure of quick gains can often lead investors astray. Riding a stock at its peak risks crashing down with it if the rally falters. To steer clear of such pitfalls, it’s wise to set your sights on the long game.
Investing for the long haul evens out the erratic market waves. Over time, stock prices stabilize based on sound company performance and earnings growth. Investing buddies here at InvestorPlace have sifted through the financial landscape and unearthed three undervalued stocks poised for a 5-10 year soar.
DocuSign (DOCU)
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DocuSign (NASDAQ:DOCU) offers software that simplifies digital signatures for its customers. This facilitates swift document approvals and streamlines processes. While the stock has gained over 5% in the last year, Yahoo Finance analysts forecast a one-year price target of $64.83, well above the current price of around $58.80.
Despite misconceptions suggesting DocuSign lost its appeal post-pandemic, its digital solutions remain relevant in the work-from-home era. With a customer base exceeding 1 million and over a billion users, the company continues to hold substantial value.
This stock, flying under the radar, trades at attractive valuations. Its price-to-earnings (P/E) ratio stands at 20.25x, notably below the sector median of 22.50x. While seemingly insignificant, contrast this with the stock’s five-year average P/E of 164.96x. This undervaluation positions the stock favorably for discerning investors.
General Motors (GM)
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General Motors (NYSE:GM) stands tall as a leading automotive manufacturer spearheading the electric vehicle (EV) revolution. With the stock climbing over 20% in the past year, Yahoo Finance analysts envision a one-year price target of $50.20 – a notable rise from the current $43 mark.
Riding the EV wave, the company plans to inject over $35 billion from 2020 to 2025 into EV production. Given the rapid growth in this sector, GM’s earnings trajectory is bound to ascend. Forecasts predict a 16.39% year-over-year earnings surge for the fiscal year 2024, projecting an earnings per share (EPS) ascent to $8.94 by year-end.
Crucially, the burning question is whether now is the apt time to enter the GM fray. With an outstanding P/E ratio of 5.91x, well below the sector median of 14.65x, the stock presents ample room for growth upon a reversion to the mean. Investors should duly mull over this opportunity.
