In this article we will take a look at the 10 best undervalued stocks to buy now according to Reddit. You can skip our detailed analysis of these companies and go directly to 5 Best Undervalued Stocks to Buy Now According to Reddit.
The stock market has been on a wild ride since the start of the year with stock volatility, influx of retail investors that strategize on social media, and stimulus packages designed to jumpstart the economy all factoring into major market highs and lows so far. Investors on internet platform Reddit have been by far the most influential in shaping market dynamics through this uncertain period. At the turn of the year, these young investors drove a record 140% rally in the stock of video game retailer GameStop Corp. (NYSE: GME).
The GameStop Corp. (NYSE: GME) saga led to a regulatory probe in the United States and caught several well established financial institutions off-guard. Months after the historic rally, it would be fair to say that this new dynamic in global market trading has proved more resilient than initially thought. Young investors now routinely spoil hedge fund bets by banding together through Reddit groups and use collective action to spur stock rallies and crashes. These groups are public and the conversations on them make for interesting reading.
For example, Reddit users have been sharing their thoughts on undervalued stocks in recent days. One of the top picks in this category seems to be Alibaba Group Holding Limited (NYSE: BABA), the Chinese technology firm. Despite being the largest online retailer in China, perhaps the biggest internet market in the world, Alibaba Group Holding Limited (NYSE: BABA) shares are moderately priced compared to international competitors and have been hit recently by rumors of Chinese government restrictions on the founder of the firm.
Another interesting pick on Reddit forums in the undervalued list is steelmaker Cleveland-Cliffs Inc. (NYSE: CLF), one of the largest steel manufacturers in the United States that has a lot to gain from recent government plans to pour hundreds of billions into American infrastructure. Cleveland-Cliffs Inc. (NYSE: CLF) has also seen share price climb in recent weeks on the back of increasing prices because of a Chinese government crackdown on steel producers. There has also been speculation on the removal of favorable tariffs imposed on the industry in 2017.
With the vaccine rollout slowly allowing for the reopening of bars and restaurants, it is perhaps no surprise that Molson Coors Beverage Company (NYSE: TAP) is also being touted as an undervalued stock for the post-pandemic economy. Molson Coors Beverage Company (NYSE: TAP) sells beer and other alcoholic drinks and recently beat market estimates on revenue and earnings per share for the first quarter of 2021, detailing that it also expected to reinstate dividend payments in the second half of 2021 on the back of improved sales numbers.
There is no doubt that the finance world will have to contend with the new economic force that is retail investors who are rewriting the rules of trade through social media activism. Their battle with hedge funds in the next few years will probably have far-reaching consequences. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 best undervalued stocks to buy now according to Reddit.
Best Undervalued Stocks to Buy Now According to Reddit
10. Teladoc Health, Inc. (NYSE: TDOC)
Number of Hedge Fund Holders: 50
Teladoc Health, Inc. (NYSE: TDOC) is a New York-based telemedicine company founded in 2002. It is placed tenth on our list of 10 best undervalued stocks to buy now according to Reddit. Teladoc stock has offered investors returns close to 3% over the past week. The firm provides healthcare services for chronic and complicated cases like cancer and congestive heart failure, among others. It also markets telehealth solutions, chronic condition management, expert medical services, and behavioral health solutions.
On May 7, Teladoc Health, Inc. (NYSE: TDOC) stock was given a Buy rating with a price target of $300 by investment advisory BTIG. In a note, BTIG analyst David Larsen said that the telehealth vendors were being consolidated and the market was very competitive.
At the end of the fourth quarter of 2020, 50 hedge funds in the database of Insider Monkey held stakes worth $2.6 billion in Teladoc Health, Inc. (NYSE: TDOC), up from 47 in the preceding quarter worth $997 million.
In its Q4 2020 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Teladoc Health, Inc. (NYSE: TDOC) was one of them. Here is what the fund said:
“Teladoc Health offers remote physician access to patients at home. After experiencing incredible levels of growth throughout the early stages of the pandemic as its unique value proposition rose to the forefront of the healthcare industry, the firm’s shares cooled off a bit as optimistic vaccine data slightly curtailed investor expectations for the firm’s future growth potential. We sold the stock.”
9. Verizon Communications Inc. (NYSE: VZ)
Number of Hedge Fund Holders: 67
Verizon Communications Inc. (NYSE: VZ) is a New York-based multinational telecommunication firm. It was founded in 1983 and is ranked ninth on our list of 10 best undervalued stocks to buy now according to Reddit. The firm is one of the biggest telecom firms in the world with a market cap of over $235 billion. Verizon stock has returned more than 5% to investors over the course of the past year. The company has tens of millions of customers availing the wireless and wired internet services it offers across the United States.
On April 27, investment advisory MoffettNathanson downgraded Verizon Communications Inc. (NYSE: VZ) stock to Neutral from Buy with a revised price target of $57 from $62 on the back of pricing pressures from competitors.
Out of the hedge funds being tracked by Insider Monkey, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in Verizon Communications Inc. (NYSE: VZ) with 158 million shares worth more than $9 billion.
8. Ford Motor Company (NYSE: F)
Number of Hedge Fund Holders: 41
Ford Motor Company (NYSE: F) is a Michigan-based multinational automaker founded in 1903. It is placed eighth on our list of 10 best undervalued stocks to buy now according to Reddit. Ford stock has returned more than 125% to investors in the past twelve months. The company makes and sells trucks, cars, sport utility vehicles, electric vehicles, and luxury vehicles. Ford has stepped up investment in electric vehicles in recent years as sales of EVs skyrocket across the world. Like GameStop Corp. (NYSE: GME), Alibaba Group Holding Limited (NYSE: BABA) and Cleveland-Cliffs Inc. (NYSE: CLF), Ford is one of the most famous stocks on Reddit.
Ford Motor Company (NYSE: F) recently announced the new electric F-150 vehicle. Ford stock has surged since the announcement despite supply chain worries dominating the industry and leading to a fall in value for most auto stocks.
At the end of the fourth quarter of 2020, 41 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Ford Motor Company (NYSE: F), up from 38 in the preceding quarter worth $1 billion.
7. Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG)
Number of Hedge Fund Holders: 16
Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG) is a Texas-based online gaming and digital sports entertainment company. It is ranked seventh on our list of 10 best undervalued stocks to buy now according to Reddit and was founded in 2015. Golden Nugget stock has returned more than 27% to investors in the past year. Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG), looking to gain customers, offers new users a sizable deposit bonus, a lucrative rewards program, and features more games on the platform than other competitors. Like GameStop Corp. (NYSE: GME), Alibaba Group Holding Limited (NYSE: BABA) and Cleveland-Cliffs Inc. (NYSE: CLF), GNOG is one of the most famous stocks on Reddit.
On April 12, investment advisory Jefferies reiterated a Buy rating on Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG) stock with a price target of $28, calling the online gaming firm underappreciated despite upside potential for the digital gaming industry.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm BlueCrest Capital Mgmt. was a leading shareholder in Golden Nugget Online Gaming, Inc. (NASDAQ: GNOG) with 939,963 shares worth more than $13 million.
6. Raytheon Technologies Corporation (NYSE: RTX)
Number of Hedge Fund Holders: 59
Raytheon Technologies Corporation (NYSE: RTX) is a Massachusetts-based defense manufacturer. It was founded in 1922 and is placed sixth on our list of 10 best undervalued stocks to buy now according to Reddit. Raytheon Technologies Corporation (NYSE: RTX) has returned more than 43% to investors over the past year. The firm develops and sells aerospace systems, offers intelligence and space products, and markets missiles and other military electronic hardware. It has contracts with several governments around the world.
On May 18, Raytheon Technologies Corporation (NYSE: RTX) announced financial outlook for the fiscal year 2021, reiterating adjusted earnings per share of up to $3.70 and revenue of up to $65.4 billion. Raytheon Technologies Corporation (NYSE: RTX) also projected more than $10 billion in annual free cash flow by 2025. Like GameStop Corp. (NYSE: GME), Alibaba Group Holding Limited (NYSE: BABA) and Cleveland-Cliffs Inc. (NYSE: CLF), RTX is one of the most famous stocks on Reddit.
At the end of the fourth quarter of 2020, 59 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in Raytheon Technologies Corporation (NYSE: RTX), up from 55 in the preceding quarter worth $2.9 billion.
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Raytheon Technologies Corporation (NYSE: RTX) was one of them. Here is what the fund said:
“In today’s uncertain economy, we believe we have found such businesses trading at bargain prices in two sectors: industrials and financials. In the industrial space, concerns about the impact of the economic downturn on short-term profitability led to a wave of selling in a select group of leaders with durable competitive advantages, long records of profitability and bright long-term prospects. Companies like Raytheon Technologies is a wonderful example of attractive investments in this sector.”
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Disclosure: None. 10 Best Undervalued Stocks to Buy Now According to Reddit is originally published on Insider Monkey.
