As we look forward to the winter season (and Q3 earnings reports), the hottest products that the market offers right now are still brought to us through AI-related advancements. The rally never quite ended, as it turns out.
As investors, it’s typically more prudent (and more popular) to identify stocks with high trading volume and price movement rather than focus on stocks that aren’t performing in obvious ways.
Some stocks, however, can surprise us. For example, a stock may show inconsistency under normal conditions only to excel when chaos ensues. We should always, within reason, keep an open mind.
Under-the-radar stocks are alluring for their upside potential, and while some are overlooked for a good reason, there are always opportunities that will thrive with some patience…
General Motors Co (GM)
Firstly, while it may only be me, consider giving General Motors (GM) and its stock some thought. While it may not immediately come to mind as a profitable investment, compelling reasons exist to explore GM. There’s only been a slight decline in the stock’s value since the year began, and GM still holds substantial potential to add wealth to one’s portfolio. GM, smartly, has been embracing EV (electric vehicle) technology for its iconic car brands, including even the once-prestigious Corvette. In contrast to a certain unnamed competitor known for uninspiring and occasionally eccentric designs, GM offers excitement and innovation. GM shows profitability and pays an honest dividend in relation to its bargain pricing.
Down year-to-date by 3.21%, GM is trading around the bottom of its existing range and shows a lot of upside potential as a result. With a 1.63x PEG (price/earnings to growth) ratio, GM has a P/S (price to sales) ratio of 0.27x and a P/B (price to book) ratio of 0.63x. For Q2 2023, GM beat analysts’ projections on EPS and revenue by 3.98% and 5.61%, respectively, and also reported year-over-year growth in revenue (+25.13%), net income (+51.65%), EPS (+60.53%), and net profit margin (+21.14%). For the current fiscal quarter, GM is expected to post $41.8 billion in sales at $1.64 per share, with a 3-5 year EPS growth rate of 15.4%. GM has a 1.11% annual dividend yield and a quarterly payout of 9 cents ($0.36/year) per share. With a 10-day average volume of 9.51 million shares, GM has a median price target of $44.50, with a high of $95 and a low of $33; this suggests a potential price increase of more than 191% from where it is now.
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Alibaba Group Holding Ltd (BABA)
One that you could call a “sleeper stock” for sure would be Alibaba Group Holdings (BABA). Currently flying under the radar and doing so cautiously, BABA is worth considering before making investment decisions. With uncertainties surrounding the Chinese economy and consumer base, BABA has provided modest returns year-over-year and year-to-date. However, this e-commerce and tech giant could benefit from any positive catalyst to help it take off again. Overall analyst sentiment suggests potential for future success, but it’s important to remain careful with BABA due to China’s sluggish economic growth.
BABA is slightly up year-to-date by 2.14%, is trading around the middle of its existing high-low range, has a beta score of 0.70, a PEG ratio of 1.01x, and a healthy D/E (debt to equity) measure of 16.17%. For its Q2 earnings report, BABA exceeded analysts’ expectations on EPS and revenue by margins of 20.10% and
4.11%, respectively; it is projected to hold a 3-5 year EPS growth rate of 6.6%. BABA also posted year-over-year growth in critical areas like revenue (+13.91%), net income (+51.12%), EPS (+56.84%), and net profit margin (+32.67%). With a 10-day average volume of 13.06 million shares, BABA has a median price target of $139.83, with a high of $186.30 and a low of $78.32; this suggests the potential for a price jump of more than 107% from its current trading position.
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Qualcomm Inc (QCOM)
Qualcomm Inc. (QCOM) exists in an area of the marketplace that is extremely competitive right now, and it’s important to keep that in mind. While the tech innovator may not hold up to certain scrutiny, QCOM is still a compelling investment option. Despite facing challenges in the chip manufacturing industry due to consumer slowdowns in smartphones and PCs, QCOM is still very much a specialist in wireless
semiconductors. While it’s shown modest gains year-to-date compared to the Nasdaq’s 35% increase, QCOM is worth a closer look. Notably, Wall Street analysts overwhelmingly rate QCOM as a “Strong Buy.” Let’s not forget that the standards it faces aren’t exactly easy for any company to live up to.
QCOM is down year-to-date by 3.23%, and is trading near the very bottom of its existing 52-week range, which leaves space for its value to grow. With a 1.10x PEG ratio, QCOM, for Q2 2023, reported EPS of $1.87 per share vs. $1.81 per share as expected, making for a 3.35% defeat over analysts’ projections. For the present fiscal quarter, QCOM is expected to post $8.8 billion at $1.94 per share, with a 3-5 year EPS growth rate of 33.4%. Boasting a TTM (trailing twelve-month) free cash flow of $7.15 billion, QCOM has a 3.01% annual dividend yield and a quarterly payout of 80 cents ($3.20/year) per share. With a 10-day average volume of 6.8 million shares, QCOM has a median price target of $140, with a high of $167.70 and a low of $95; this indicates potential for a price jump of over 57% from where it trades currently.
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