Undervalued stocks that no one wanted to touch in 2020 have become some of the best in 2021. Of course, the past year has certainly been mixed for the stock market. Various stocks with hypergrowth rose, meme stocks and other short-squeezed favorites soared and then fell, and a number of value sectors began to recover.
Whether this momentum will be able to continue in 2022 remains to be seen. However, it is clear that investors are now looking for value more than ever. Investors are increasingly targeting a series of undervalued stocks. Accordingly, it is clear that there is momentum among these names, at least in the near future.
It is not clear now how wide this market sell-off will be. For now, investors seem to be spinning out of growth and into value. Of course, there is the potential risk of growth catching a cold and passing that on to value. However, we haven’t seen this game yet.
Value stocks are those with better fundamentals and more established cash flows. Many of the world’s best investors continue to focus on value because of the predictability of these companies ’cash flows.
Let’s take a look at the seven most undervalued stocks (in terms of their equivalents). Many of these companies are in high-growth industries, but with much better fundamentals. Accordingly, those looking for growth at a reasonable price may want to consider these stocks after their recent sell-offs.
- Pinterest (NYSE:PINS)
- Zoom video communication (NASDAQ:ZM)
- Qualcomm (NASDAQ:QCOM)
- Boeing (NYSE:BA)
- Modern (NASDAQ:MRNA)
- Alibaba (NYSE:GRANDMA)
- PayPal (NASDAQ:PYPL)
Most undervalued stocks: Pinterest (PINS)
Pinterest shares have been hit hard in the last six months. Shares of this social media platform have fallen 59,10%. As people began to step into the real world, Pinterest saw a sharp decline in its monthly active users in 2021. That’s not good.
Accordingly, there are many growth investors who question the feasibility of Pinterest’s business model. The company, which grew impressively during the pandemic, is unclear whether these catalysts will continue to operate. The decline in monthly average users, albeit from a high base, is accelerating the bearish argument for this stock.
However, there is room for hope. Pinterest’s new shopping feature and Pinner products, unveiled in the world’s seven largest markets, could make 2022 a bull year.
According to the latest companies quarterly reportfor Pinner products there was interest in searching twice compared to the same period last year. Searches of the Gen-Z population (7–24 years) increased by almost 200%. With the success of this shopping function, revenue increased by 43% compared to the same period last year. $ 632.9 million in the third quarter.
Despite the fall of MAU, this image-sharing platform still has 444 million users. With such a wide range of customers, Pinterest may depend on the constant demand for advertising and the ability to leverage this user base to increase margins and improve earnings over time.
Accordingly, I view this company as a company with a relatively sound foundation, despite what opponents claim for this company. For those looking for value stocks in the social media space, Pinterest is currently a great choice.
Zoom Video Communications (ZM)
Zoom is another company that flourished during the pandemic, only seemingly failing when investors returned to normal.
This video conferencing platform was among the fastest growing stocks in 2020. However, the company’s growth rate slowed last year, prompting some bears to hint that the company’s business is over.
It is usually very dangerous to call the bottom of any stock. There is always room for more weaknesses. In this market with rising interest rates, there is little appetite for owning a company like Zoom.
However, it is good to look at destroyed shares also in terms of relative value. In the case of Zoom, if we look at the numbers, this is a company with attractive upward potential.
The company’s share price fell by almost 70% from the top. However, the company continues to increase its revenue at an impressive rate. Through the latest Zoom earnings reportt, the company recorded 35% revenue growth over the same period last year, to $ 1.05 billion. Of this total revenue, international sales accounted for only one third of the total. Accordingly, there are many investors who point to the fact that this is a company that has a lot of room for growth this year.
The rise of the Omicron version also brings another potential short-term catalyst for Zoom. As the economy continues towards a hybrid model of working from home, Zoom should benefit.
Most undervalued stocks: Qualcomm (QCOM)
After a year of ups and downs, Qualcomm is currently trading close to its value high. As Wall Street slowly catches up with the growth that investors have valued in this semiconductor company, Qualcomm remains the best choice for many investors in growth.
This is not to say that there is no fundamental value argument for this company. Far from it. Qualcomm’s 63% revenue growth exceeded analysts’ expectations. The company generated $ 8 billion compared to estimates $ 7.58 billion. This is not a small pulse.
Qualcomm’s contribution to mobile devices, especially Apple and other wireless products, culminated in 2021. Accordingly, many believe that this stock, which recently broke its highest values, could mark the end of the company’s growth story. I think this is an exaggerated idea.
But the digital world is experiencing a 5G revolution. Accordingly, Qualcomm’s wireless technology will open new doors for the company to become a leader in the industry. With my involvement in the fast-growing 5G industry, I am optimistic about where QCOM shares are heading.
Boeing, the second largest manufacturer of aviation and space in the world, is an interesting company that needs to be considered now.
This is because this company has experienced a major decline since the beginning of the pandemic. The decline in demand for aircraft and promises of militaristic cuts by the Democratic Party have made Boeing’s earnings forecasts for the future look rather bleak.
Since 2019, when they peaked, Boeing shares have also fallen after two fatalities 737 crashes and supply chain problems. These strong winds persist even today, resulting in a stock price that remains 50% below the 2019 peak.
Now Boeing is a world-class company that more than doubled its share price three years ago for a reason. Sales of the company’s 737 Max are growing.
Many reputable airlines have placed large orders for 2022 and Boeing seems ready to catch up. If this growth continues in the medium term, Boeing is a stock with the potential to return in a relatively short time. Accordingly, this is the company I have on my radar for 2022.
Most undervalued stocks: Moderna (MRNA)
Another broken stock I’ve been critical of lately is Moderna. This vaccine manufacturer, which focused on the production of MRNA vaccines (hence the symbol of the label), was a big winner due to the pandemic.
Additional incentives should increase the company’s cash flow prospects in the medium term. Accordingly, investors concerned about the threats posed by the omicron variant to the economy may view Moderna as a safeguard against this market volatility.
However, concerns among bears generally focus on the lack of other products that Moderna currently has. Yes, the company has many future medicines in the pipeline. Given the success of Modern Covid-19, some expect these products to hit the market sooner or later.
However, this is a relatively young company in a market full of experienced competitors with deep pockets. To what extent Modern can be a disruptive force in a large Pharma space remains to be seen.
Nevertheless, it is worth considering the latest financial results of Moderna. This company has brought almost $ 12 billion in revenue last year and has about $ 8.9 billion in ready-to-use inventory. Modern as a hedge against a pandemic is a stock that can now provide value to any portfolio.
Alibaba, China’s largest e-commerce company, is what many investors would call a game of deep value. As far as stock growth is concerned, Alibaba’s valuation has become extremely tempting. This is because the share price of this company lost 45 percent of its value last year alone.
A series of regulatory barriers has destroyed China’s technological inventories as a whole. For Alibaba, this recent technology-related crackdown has directly affected this company.
Alibaba was not only publicly criticized by the government for its antitrust conduct, but was also subject to a $ 2.8 billion fine in a fierce investigation. The much-anticipated IPO of Ant Group was canceled and its financial arm was forced to disintegrate and partially transform into a government holding company.
Discovered company founder Jack Ma has been forced into early retirement.
However, many investors have argued that Alibaba’s strong winds are currently more than affordable. The company continues to increase revenue by about 30% annually. However, Alibaba shares are currently being traded 18 times earnings. For stocks as fast as this one, this is amazing value.
Most undervalued stocks: PayPal (PYPL)
Last but not least, we have PayPal.
This fintech superstar had the year 2021, which many would call. PayPal peaked in July, then fell 40% from its peak. For those looking for value among growth stocks, PayPal certainly offers an interesting thesis at these levels.
As the world moves towards fintech solutions that would normally be dealt with by the traditional banking sector, PayPal should continue to grow at an impressive rate.
Despite its impressive size, PayPal was able to report double-digit (13%) annual revenue growth, $ 6.2 billion last quarter. This is certainly impressive and is worth considering for growth investors looking for value.
The company’s balance sheet remains strong, with $ 20 billion in cash and cash equivalents in the books. In addition, PayPal’s debt burden is manageable at $ 8.9 billion. So those looking for growth stocks with core values will love the way PayPal is currently positioned.
At the time of publication, Chris MacDonald did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are the subject of InvestorPlace.com Guidelines for publication.
Chris MacDonald’s love of investing has led him to pursue an MBA in finance over the past 15 years and to take on a number of leadership roles in corporate finance and venture capital. His past experience as a financial analyst, along with his zeal in finding undervalued growth opportunities, contribute to his conservative, long-term investment perspective.