With the S&P 500 (SPX) index delivering a robust year-to-date rally of over 24%, the bullish market conditions create a favorable opportunity to consider investing in undervalued stocks. That is because these stocks are currently trading at a lower price relative to their earnings, thus offering room to grow in 2024. Investors may take a look at PayPal (PYPL), Verizon (VZ), Archer Daniels Midland (ADM), NextEra Energy (NEE), and Albemarle (ALB), as their price-to-earnings ratios are trading at a steep discount to their five-year averages.
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Let’s take a closer look at these stocks.
What is the Prediction for PayPal Stock?
PayPal is a digital payment platform that enables secure online transactions and money transfers. The robust momentum in the digital payment industry and the improving consumer spending trend keep PYPL well poised to grow in 2024. Also, the stock is trading at 18.4 times earnings, which reflects a discount of about 65% from PayPal’s five-year average of 52.57x.
Overall, the stock has a Moderate Buy consensus rating based on 20 Buys and 13 Holds. The average PYPL price target is $74, implying an upside potential of 19.7% from current levels. Year-to-date, shares of the company have declined by about 13.2%.
Is Verizon a Buy, Sell, or Hold?
Verizon is a telecommunications company offering wireless services and internet connectivity to consumers and businesses. The company’s efforts to expand its presence and strengthen customer relationships bode well for long-term growth. Interestingly, VZ shares trade at 7.6x earnings, which is below its five-year average of 11.2x.
With five Buy, six Hold, and one Sell recommendations, Verizon has a Moderate Buy consensus rating. Further, analysts’ average VZ stock price target of $39.41 implies a 5.1% upside potential from current levels. The stock is up about 2.2% year-to-date.
Is ADM a Good Stock to Buy?
Archer Daniels Midland engages in the procurement, transportation, storage, and processing of a wide range of agricultural commodities, including soybeans, corn, wheat, and cocoa. It currently has a P/E ratio of 10x, which is below the five-year average of 14.63x.
Out of the nine analysts covering the stock, six recommend a Buy, and three recommend a Hold, giving it a Moderate Buy rating. The average ADM stock price target is $93.44, implying 30.8% upside potential. ADM stock is down 21.3% year-to-date.
What is the Future of NEE Stock?
NextEra Energy is a clean energy company focused on generating and distributing electricity, particularly through renewable energy sources like wind and solar power. NEE’s strong balance sheet supports investment in infrastructure and growth projects. Also, the rising demand for clean energy makes the prospects of NEE stock look bright.
It trades at 15.8 times trailing earnings, reflecting a 56.3% discount from its five-year average of 36.11x.
Overall, NextEra’s Moderate Buy consensus rating is backed up by 14 Buy, three Hold, and one Sell ratings. The average price target of $69.88 points to a 17% potential upside in the next 12 months. NEE stock is down 26.5% in 2023 so far.
Is ALB Stock a Good Buy?
Albemarle is a specialty chemical-producing company. It’s strong balance sheet position and efforts to expand lithium production capacity reflect well on future growth potential. The stock is trading at 5.3 times earnings, 87.6% lower than its five-year average of 43.03x.
Albemarle stock has a Moderate Buy consensus rating based on 13 Buys, four Holds, and two Sells. The average ALB stock price target of $179.37 implies a 19.5% upside potential. Shares of the company have declined 30.2% so far in 2023.
Ending Note
All five above-mentioned stocks present an attractive opportunity for value-focused investors. The bullish market sentiments, coupled with their respective growth opportunities, keep these stocks well poised for growth in 2024.
