5 of the Top Undervalued Stocks of 2021

When we talk about undervalued stocks we mean that the current price of a specific company’s stock has not reached its maximum potential. Most people and institutions that trade this stock have not  taken it to the price it could potentially hold.

The first thing that makes a stock undervalued is the potential it holds in the market. For example, if the predicted future cash flows are extremely positive, it means that no matter what price the stock may have now, it can grow even further. But in the majority of cases, “undervalued” literally means that people are not paying it enough attention.

A good way to detect an undervalued stock right now is to take a look at both its past and future. If the price used to be let’s say $100 and it dropped to $50, it’s a pretty good reason to call this stock undervalued. If it had reached that potential in the past, it’s likely to do so again depending on what future predictions say.

In 2021, it is likely for a lot of stocks to be undervalued due to the damage they took during the 2020 pandemic and continue to take that damage in 2021 as well. For example, in the case of 2021 stocks, many companies lost their stock prices in 2020 for a very clear reason, the pandemic. Therefore, as we slowly come out of lockdown, these stocks have nothing standing against them to reach the prices they once had.

In this guide, we will further discuss the most undervalued stocks of 2021.

Start Trading in 10 Minutes

Apply everything you’ve learnt on a real trading account with up to 1:1000 leverage, negative balance protection and outstanding support.
Get Started

Some of the most Undervalued Stocks 2021

Sometimes cheap stocks can be the best possible option to invest in the stock market. We all know that in 2020 almost all financial markets have experienced a big crisis, so it is not surprising that there are a lot of stocks that lost their intrinsic value during the year.

In this guide, we will take a look at the companies that are trading with very low valuations in 2021 and with very cheap P/E ratios. However, they may still have a lot of potential to grow in the future, over the long term period.
We will talk about the companies from various sectors. These companies are:
  • Alibaba
  • eBay
  • Hilton
  • Carnival Corp
  • Intel

Alibaba (BABA)

According to 2021 data from NASDAQ, the Alibaba stock has been down by almost 6% percent which is the lowest it has been since 2020. However, this company achieved great success in 2020 when the number of annual Alibaba users reached one billion people. However, analysts say that this stock is going to grow by 8% in 2022 and by 3.6% in the next five years due to increased commerce between China and the rest of the world once everything stabilizes.
The overall revenue of the Alibaba group reached 28.6 million dollars in the US which is an increase of 64% over a year.
Even though this company is not performing well in 2021 analysts say that Alibaba will need a little time to rebound. The Chinese government imposed an 18.2 billion dollar fine on the company which influenced a great deal on the overall market performance of Alibaba Group. Without this fine, they would have been able to generate 10.6 billion RMB.
This is probably the reason why Alibaba is considered to be the best undervalued stock investment of 2021. Their P/E ratio, as well as the stock price, has a good possibility to increase in 2022 and over the next five years so buying this stock right now might be one of the best possible options in order to generate a greater return in the future.

eBay (EBAY)

The important thing to note about eBay is that it had some changes in the payment system recently which means that they are making it cheaper for sellers to sell on the platform which they think will drive more users to eBay. However, the major concern of the company is its stagnating growth. Investors are also skeptical about their competitive advantage while they are unable to compete with the leading giant Amazon.
If we look at the four biggest model numbers including revenue, EPS(earnings per share), free cash flow, and the book value, it can be said eBay has been doing an unsatisfactory job for most of the investors. If we look at the revenue growth for the last 10 years on average on a per-share basis it has only been 4%.
While talking about eBay’s undervalued growth of stocks it should be noted that If we compare the operating margin of the company to the rest of the industry we can see that eBay is doing a good job at 26% with the average. Besides, their gross margins are also very strong at over 70% consistently, and their free cash flow margin strong at 18%. Their P/E ratio is 7.96 which means the company is cheap compared to the industry average of 23.
Considering the fact that the analysts expect the eBay stock to grow significantly over the next few years, buying this undervalued stock may be a good investment opportunity.

Hilton (HLT)

The market capitalization of Hilton is 29.6 billion dollars. In 2021 the future of hospitality seems more prosperous than ever. The Hilton revenue has remained relatively flat at just 2% average growth. Besides, the company had a very impressive earnings-per-share growth increasing from 81 cents to 2.5 dollars a share and representing a 49% of growth.
Despite the fact that their revenue is stagnating we can see that the management team has focused on returning higher profits to shareholders. Besides, Hilton’s return on equity is incredible, averaging 25%. While we try to recognize an undervalued stock, it should be noted that Hilton has foregone its growth phase and is now focused on improving its profitability. When looking at stocks during a pandemic it is important to assess their debt. At this point, the company has 10.6 billion in long-term debt however this does not mature until 2024. It means that there is plenty of time for Hilton to recover and experience huge growth in the near future.

Carnival Corp (CCL)

While people want to buy undervalued stocks they should take into consideration Carnival Corp stocks. This is a company that has experienced big volatility. it goes for big runs to the upside and the downside. In 2020 it dropped significantly and has not recovered yet. Considering it is a cruise ship stock, it means that once everything is open they are gonna grow very fast. 2020 was a really bad year for this industry in general because of the pandemic and global restrictions. However, 2022 is promising us to be brighter and while the vaccination process has already started, there is a high probability that Carnival Cruise will experience a great deal of growth in the next few years.
The price of the company share is 25.12 USD which is up by 1.37%. The market capitalization of the company is 27.9 billion dollars. According to the latest updates, cruises will be able to function again by mid-July which means that there is a high probability that Carnival Corp’s share price will go much higher in the near future. So we can freely say that this company could be one of the best undervalued stocks to invest in, especially in this industry.

Intel (INTC)

Intel has been making some major changes in the management recently. The stock has a 13.86 forward PE ratio which is pretty low compared to most of the undervalued tech stocks in the industry. However, the company has planned a huge manufacturing expansion worth 20 billion dollars. Net revenue of the company declined a little bit with 19,8 million dollars in march 2020 and 19.6 USD in march 2021.
Intel has planned to have a more powerful position in the market and take advantage of the increasing growth in the industry. However, one thing to keep in mind is that their revenue was forecasted to be down in 2021 compared to 2020. The gross margin level is significantly down compared to the same quarter last year.
On the other hand, the company’s R&D is expected to increase as Intel is gearing up to try and be a growth leader once again. The revenue rebound is also expected until the end of 2022. All this information indicates that this company has the resources to be aggressive and get back to strong growth. So a lot of professional investors have suggested that buying undervalued stocks of Intel and waiting for the new reinvestments into the business to pay off in the form of capital gains. Besides, investing in Intel may not be risky with the potential of its upside, so increasing the position size at an appropriate price is probably one of the best decisions when it comes to Intel stock.

Start Trading in 10 Minutes

Apply everything you’ve learnt on a real trading account with up to 1:1000 leverage, negative balance protection and outstanding support.
Get Started

Undervalued Stocks Right Now - Key Takeaways

Undervalues are the type of stocks that have not reached their full potential yet. There are a lot of stocks that lost their intrinsic value during 2020 because of the pandemic.
Some of the most famous companies that are considered to be the most undervalued stocks in 2021 are Alibaba, eBay, Hilton, Carnival Corp, and Intel.
Most analysts expect those five stocks to grow significantly until 2025. This means that buying these undervalued stocks is a good investment opportunity right now.
The mentioned companies are from different sectors and they all have very low valuations in terms of the share value. However, they might be a great option for the investors’ dividend stock portfolio.

FAQ on Undervalued Stocks to Invest

Is Undervalued Stock good or bad?

Usually, buying undervalued stocks may be a good idea because there is a low probability of losing a lot of money. No matter what the company’s market performance will be like in the future, the risk of investing is still reduced when a trader buys undervalued stocks. On the other hand, in most cases, if the stock has growth potential and if analysts expect revenue growth in a specific company, then a trader may not have to worry about anything because there is a great chance that the stock price will go higher than it is at the given moment. All this means that trading with undervalued stocks is mostly a good idea.

What are the most undervalued stocks right now?

Some of the most undervalued stocks right now include Alibaba, eBay, Hilton, Carnival Corp, and Intel. They have experienced a huge loss in 2020 because of the pandemic caused by covid-19. However, they already have started to recover and most analysts expect their revenue growth until 2025. Besides, those companies have enough resources to get back to strong economic growth which means that even though their price is undervalued right now, they will need a little time to recover so that their stock price will get much higher in the near future.

Is it better to buy undervalued or overvalued stocks?

It is almost impossible to precisely say whether it is better to buy undervalued stocks or overvalued stocks because it all depends on the individual investors’ trading goals, preferences, and financial capabilities. However, in most cases, the professional investors suggest the new traders buy undervalued stocks because they have a higher probability that their stock price will soon go higher so they will be able to generate a substantial amount of money eventually. On the other hand, the overvalued stocks are usually expected to reduce in price so the overall potential income that the trader can gain by trading with overpriced stocks is much lower.
Axiory uses cookies to improve your browsing experience. You can click Accept or continue browsing to consent to cookies usage. Please read our Cookie Policy to learn more.