5 undervalued stocks ready to explode

Albemarle Corp. NYSE: ALBIonis Pharmaceuticals Inc. NASDAQ: IONSInsulet Corp. NASDAQ: PODDHess Corp. NYSE: YES and Wynn Resorts Ltd. NASDAQ:WYNN they are among the undervalued stocks that beat analysts’ earnings forecasts.

Undervalued stocks trade below their intrinsic value, based on underlying fundamentals such as earnings, asset value, growth prospects and cash flow.

A stock is considered undervalued when its market price falls below its intrinsic value.

This presents an opportunity for investors to buy at a discount, but value stocks haven’t exactly been favored recently, as growth stocks like Nvidia Corp. NASDAQ:NVDAAdvanced Micro Devices Inc. NASDAQ:AMD and Meta Platform Inc. NASDAQ: META they were the undisputed leaders of the market.

Why consider stocks undervalued?

The reason for owning undervalued stocks goes back to the oldest investing premise: buy low and sell high.

Undervaluation can occur for several reasons, including a market overreaction to a poor report or unusual event, temporary setbacks by a company, or a business that the market is mispricing.

By identifying fundamentally sound companies trading at discounted prices, investors can take advantage of market inefficiencies.

Is there still a valuable prize?

The concept known as the value premium refers to situations in which stocks with lower valuation metrics, such as a low price-to-earnings or price-to-book ratio, have outperformed stocks with higher valuations over the long term.

Clearly, this has not been the situation over the past 15 years, as growth stocks have outpaced value.

The value premium may not be applicable to large asset classes, at least for now. However, it is certainly possible to sift through the market and identify individual undervalued stocks that appear to have the fundamental strength, competitive positioning and potential catalysts to move higher.

Albemarle’s earnings are expected to recover

The world’s largest lithium producer reported declining earnings in the past two quarters and a decline in revenue in the most recent quarter. Wall Street expects earnings to decline 79% this year, to $4.69 a share.

The culprit is lower demand for electric vehicles, along with share price dilution as the company has raised capital through convertible shares which, when converted into common stock, would dilute shareholders’ positions.

Where is the value here? Analysts expect the stock to stabilize as earnings growth returns in 2025. Plus, there’s a carrot for income investors in the form of Albemarle’s 1.30% dividend yield. It is unlikely to be reduced, as the company has a 29-year history of increasing shareholder payouts.

Waiting for revenues from Ionis Pipeline

Ionis is a leader in RNA-based therapies to treat disease by targeting specific genetic mechanisms. It has a successful product with the spinal muscular atrophy treatment Spinraza, marketed by licensing partner Biogen Inc. NASDAQ: BIIB.

The chart of Ionis Pharmaceuticals shows that the stock is down 11.70% this year as investors wait for drugs in the company’s pipeline to generate revenue. As with other pharmaceutical and biotech stocks, Ionis stocks can be reckless, depending on the results of clinical trials.

Wall Street sees the stock’s fortunes on the rise; MarketBeat’s Ionis Pharmaceuticals analyst forecast shows a consensus view of “moderate buy” with a price target of $53.77, an upside of 20.37%.

Insulet clogged with diabetes medications

Insulet develops and manufactures tubeless insulin delivery systems for people with diabetes. Before the advent of diabetes drugs from companies like Eli Lilly & Co. NYSE: LLY and Novo Nordisk A/S NYSE: NVOInsulet’s profits were growing at triple-digit rates.

Earnings growth is expected to be just 9% this year, rising to 30% in 2025.

Sellers may have been panicking about the company’s future prospects. Morningstar analyst Debbie Wang, in a Feb. 26 note, said Insulet’s Omnipod system “is inconspicuous and easy to use and has so far been very successful among patients who have never used insulin pumps. These patients represent great growth potential, as an estimated 60% of Americans with type 1 diabetes still rely on daily insulin injections.”

He also said Insulet could be an acquisition target for larger medical device makers like Medtronic PLC New York Stock Exchange: MDT or Abbott Laboratories NYSE: ABT.

Is it time to get Hess stock before it gets acquired?

In 2023, Chevron Corp. New York Stock Exchange: CVS said it would acquire Hess in a deal valued at $60 billion, even though Exxon Mobile Corp. NYSE:XOM and China’s Cnooc say they have pre-emptive rights to acquire Hess.

There’s a lot going on behind the scenes right now as Hess shares continue to consolidate neatly below a potential buy point near $168.

Hess earnings data from MarketBeat shows the company handily beating sales and profit forecasts, although both earnings and revenue growth have slowed. This is not a company-specific development at Hess; the energy sector as a whole has shown slower earnings growth over the past year.

Analysts expect a takeover to be likely, meaning investors may still be able to get a premium from Hess shares.

Wynn Stock: Does earnings growth signal a win is near?

The Wynn Resorts chart shows a stock forming a cup-and-handle base below a $108.76 buy point.

The casino and resort operator has topped net income and revenue views in each of the last four quarters, as you can see using Wynn Resorts earnings data from MarketBeat.

Wynn’s undervaluation is quite clear: the lockdowns due to Covid in the United States, but especially in China, have decimated revenues, which in fact began to slow down in 2019.

The tide is finally turning, with analysts predicting triple-digit earnings growth in the latest quarter, the first time since 2018 that earnings have been rising.

China is expected to be the engine of growth. According to CFRA analyst Zachary Warring, “We expect Macau to continue growing through 2024 as WYNN’s US properties experience little to no growth.”

Before you consider Abbott Laboratories, you’ll want to hear this.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Abbott Laboratories wasn’t on the list.

While Abbott Laboratories currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here