In this article, we will discuss the 10 Undervalued Wide Moat Stocks to Buy According to Analysts.
The US economy was able to pass its first soft-landing test by exhibiting resilience through the risky disinflation process. Market experts believe that inflation has now markedly cooled, enabling the US Fed to pivot from rate cuts and transition to backstopping the slowing labour market. However, the final test is yet to be cleared. Market watchers continue to see whether the Fed can reduce the rates back to normal levels while stabilizing the economy.
The fundamentals in the corporate sector appear to be strong and Russell Investments believes this should help in sustaining a period of low layoffs. There has been an improvement in economy-wide corporate profits in the second quarter. The industry consensus earnings growth projections for Q3 2024 exhibit that the resilience will continue, while there are expectations of a broadening out from the mega caps.
Russell Investments believes that global equities took a breather in H2 2024. The investment management firm has seen a rotation into value stocks at the expense of growth stocks. The firm believes that the US small-cap equities have outperformed over the past few months as a result of expectations that the US economy will achieve a soft landing and that there will be lower interest rates.
Consumer Spending and CapEx Plans
The strong core retail sales in July and August and the revival of motor vehicle sales in July helped the consumer demand remain steady in Q3 2024. S&P Global Ratings estimates that consumer spending will be robust at 3.5% annualized for Q3. This will be the fastest pace of personal consumption expenditure (PCE) growth since Q1 2023. However, the rating agency believes that consumers are likely to limit their spending in the coming quarters due to numerous reasons. These include signs of cooling of the labor market, the real income growth running behind the real spending growth, and the household savings rate at a 2-year low, among other reasons.
Talking about the CapEx spending more broadly, business spending has been shaping up for a solid Q3 2024 growth. However, uncertainty around the degree of Fed easing and the 2024 US presidential election are some of the critical factors likely to hold the CapEx. The Fed easing might offer support to CapEx spending, although with a lag.
US Equity Market Outlook
The S&P 500 demonstrated strong performance so far this year. In H1 2024, the Mag7 and other Mega caps drove the performance of an index, whereas since the beginning of H2, the contributors were broad-based.
Despite a marginal decline in Mag7 earnings growth in Q2 2024, Deutsche Bank expects that their earnings will continue to increase at above-average rates. Despite valuations being stretched on a historical comparison, these companies are backed by fundamentals like strong earnings growth expectations. The bank expects annual earnings growth to remain at ~10% in the near term and the S&P 500 to reach ~5,800 points by Q3 2025 end.
The ratings agency expects the US economy to expand 2.7% in 2024 and 1.8% in 2025 (on an annual average basis). As compared to the June forecasts, these projections exhibit an increase of 0.2 and 0.1 percentage points. This increase in the forecasts primarily demonstrates the impulse from financial conditions which turned more positive. Moreover, expectations of stronger core goods consumption also contributed to this increase.
On a year-end basis, the ratings agency expects growth to come in at 2.0% in Q4 2024, reflecting a decline from 3.1% in Q4 2023. Apart from continued sluggishness in the housing and manufacturing sectors, the rating agency views that most recent activity indicators demonstrate that economic growth momentum has been running slightly above trend, even though it moderated since Q4 of the previous year. There has been some softening in the real income growth and there are clear signs of a slowdown in discretionary consumption. However, it expects inflation to slow further over the upcoming months. The labor market normalization supported in bringing down growth in unit labor costs (and improve labor productivity).
Amidst noise in the market, Wall Street experts believe that investors should take a balanced approach to investments.
With this in mind, let us look at 10 Undervalued Wide Moat Stocks to Buy According to Analysts.
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Our methodology
To list the 10 Undervalued Wide Moat Stocks to Buy According to Analysts, we used the Finviz screener to screen for stocks that are trading lower than the forward earnings multiple of ~23.05x (since broader market trades at 23.05x, as per WSJ). Next, we chose the stocks having wide economic moats. Finally, we ranked the stocks according to their upside potential, as of September 25.
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10) Amgen Inc. (NASDAQ:AMGN)
Average Upside Potential: 8.02%
Forward P/E Ratio (As of September 25): 15.31x
Amgen Inc. (NASDAQ:AMGN) discovers, develops, manufactures, and delivers human therapeutics worldwide.
Wall Street analysts believe that Amgen Inc. (NASDAQ:AMGN) has a wide economic moat, which stems from its diversified portfolio and strengthening pipeline. Furthermore, this wide moat is strengthened by the strength of its existing products, global expanding presence, and the company’s long-lasting patents.
Amgen Inc. (NASDAQ:AMGN) has expanded its portfolio to include innovative drugs in therapeutic areas, which range from cardiology to immunology. The market experts opine that the company’s progress in expanding its treatment portfolio with Uplizna and recatinlimab might play a critical role in future growth.
Amgen Inc. (NASDAQ:AMGN) has made some significant strides with the approval of TEPEZZA in Japan for treating thyroid eye disease. This marks the company’s first approval in Asia. The company’s Otezla has also been approved by the FDA. This approval followed the Phase 3 trial, demonstrating significant improvement in 33.1% of patients.
Given the company’s strong and balanced portfolio of in-market products, together with the rapidly advancing pipeline of innovative medicines, Wall Street believes that Amgen Inc. (NASDAQ:AMGN) is well-placed to achieve strong revenue growth over the long term. For FY 2024, Amgen Inc. (NASDAQ:AMGN) expects total revenues of between $32.8 billion – $33.8 billion and EPS of between $6.57 to $7.62.
Jefferies Financial Group restated a “Buy” rating on the company’s shares, issuing a $380.00 price objective (up from $375.00) on 7th August. As per Insider Monkey’s Q2 2024 data, Amgen Inc. (NASDAQ:AMGN) was in the portfolios of 69 hedge funds.
Carillon Tower Advisers, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“Amgen Inc. (NASDAQ:AMGN) shares suffered after the company released detailed clinical data on the lead obesity drug in its pipeline. Although investors recognized the medication’s efficacy, there were some concerns regarding other aspects of the medication revealed by the data.”
9) Honeywell International Inc. (NASDAQ:HON)
Average Upside Potential: 9.29%
Forward P/E Ratio (As of September 25): 18.59x
Honeywell International Inc. (NASDAQ:HON) is engaged in aerospace technologies, building automation, energy and sustainable solutions, and industrial automation businesses in the US and . internationally.
The company has a wide economic moat as it benefits from intangible assets such as strong brand and proprietary technologies. Moreover, Honeywell International Inc. (NASDAQ:HON)’s wide moat is also supported by the high switching costs. Wall Street believes that the company’s focus on organic sales growth, product innovation, and strategic acquisitions should continue to aid its revenue growth in the upcoming quarters. Moreover, the company can leverage software solutions throughout its range of industrial product offerings.
Honeywell International Inc. (NASDAQ:HON) deployed and committed significant capital towards acquisitions and share repurchases, with the total reaching ~$15 billion. This exceeds its initial commitment of $13 billion. The company’s acquisitions should be accretive beyond 2024. It has completed the acquisition of CAES Systems Holdings LLC from a private equity firm. This acquisition enhances Honeywell International Inc. (NASDAQ:HON)’s defense and space portfolio with high-reliability radio frequency technologies which provide significant opportunities for international growth.
Wall Street remains optimistic about Aerospace Technologies and with modest sequential improvement in Industrial Automation. Also, Energy and Sustainability Solutions are well-placed for favorable growth, mainly in Q3 2024 and throughout the year. Over H2 2024, Honeywell International Inc. (NASDAQ:HON)’s long-cycle businesses, aerospace growth, and strong backlog should drive growth. The company continues to focus on enhancing its technology portfolio and strengthening its market position through its proactive approach to acquisitions and capital deployment.
UBS Group upgraded the shares of Honeywell International Inc. (NASDAQ:HON) from a “Sell” rating to a “Neutral” rating, increasing the price objective from $175.00 to $215.00 on 10th June. Insider Monkey’s 2Q 2024 data revealed that 50 hedge funds held stakes in the company.
8) Exxon Mobil Corporation (NYSE:XOM)
Average Upside Potential: 12.70%
Forward P/E Ratio (As of September 25): 12.41x
Exxon Mobil Corporation (NYSE:XOM) operates as an oil and natural gas production company. It offers exploration and production of integrated fuels, lubricants, chemicals, and refined products for the automotive, trucking, and shipping industries to reduce GHG emissions.
Wall Street analysts believe that Exxon Mobil Corporation (NYSE:XOM) continues to enjoy a wide economic moat, stemming from its strategic assets. The company’s wide economic moat is further strengthened by its scale, integration, and technological capabilities. Its acquisition of Pioneer exceeded expectations, and the integration has been advancing smoothly.
Moving forward, Exxon Mobil Corporation (NYSE:XOM) continues to focus on growth through innovative technologies like hydrogen, biofuels, and carbon capture and storage, with significant investments expected to diversify its earnings and enhance shareholder value. Also, the development of Proxxima, which is a high-performance thermoset resin, and carbon materials for numerous applications is underway. Exxon Mobil Corporation (NYSE:XOM) has been focusing on producing more barrels at a lower cost and in a more environmentally friendly manner. This should help the broader US economy and energy security.
Market experts believe that the partnership with Pioneer Natural Resources in the Permian Basin should continue to yield benefits associated with logistics, procurement expertise, and water infrastructure. Additionally, the company has been making significant progress in divesting non-core assets and plans to continue to assess its portfolio for competitive advantage and divestment opportunities.
Analysts at Mizuho lifted their price target on the shares of Exxon Mobil Corporation (NYSE:XOM) from $128.00 to $130.00, giving a “Neutral” rating on 16th September 2024. Insider Monkey’s 2Q 2024 data revealed that the company was in the portfolios of 92 hedge funds.
Madison Investments, an investment advisor, released its first-quarter 2024 investor letter. Here is what the fund said:
“This quarter we are highlighting Exxon Mobil Corporation (NYSE:XOM) as a relative yield example in the Energy sector. XOM is a leading integrated oil and natural gas company. It has upstream assets that develop and produce oil and natural gas, along with downstream refining and chemical manufacturing assets. We believe it has attractive low-cost acreage in the Permian basin and has a sizeable growth opportunity in Guyana. Further, we think XOM has a sustainable competitive advantage due to size and scale, and its ability to integrate refining and chemical assets provides a low-cost advantage versus competitors.
Our thesis on XOM is that it will grow production volumes of oil and gas moderately over the next few years, while limiting excessive capital investment that plagued the industry from 2014-2020. Production growth will come from its 2023 acquisition of Pioneer Natural Resources, which is the largest producer in the Permian basin. XOM plans to double its Permian output by 2027, to 2 million barrels per day. Capital spending will be limited to $20-25 billion per year through 2027, which should allow for significant amounts of cash to be returned to shareholders including a $35 billion share repurchase program and continued dividend increases. Higher oil prices would provide a tailwind to our thesis but are not necessary. We think XOM can grow earnings and cash flow if oil prices remain above $60 per barrel…” (Click here to read the full text)
7) Bank of America Corporation (NYSE:BAC)
Average Upside Potential: 16.76%
Forward P/E Ratio (As of September 25): 10.91x
Bank of America Corporation (NYSE:BAC) offers banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments.
Bank of America Corporation (NYSE:BAC) has a wide economic moat based on its cost advantages, switching costs, and brand value. The company also enjoys a strong nationwide scale. The banking giant continues to focus on improving NIM by paying down higher-cost liabilities. Bank of America Corporation (NYSE:BAC) is focused on organic growth with the help of strategic investments in its core businesses. Wall Street expects that the banking company’s revenue should be aided by growth in customer numbers and activity throughout its business segments.
Bank of America Corporation (NYSE:BAC)’s investment banking and capital markets division should continue to exhibit strong performance amidst challenging market conditions. This further solidifies its competitive advantage. With the stabilization of interest rates, the company appears to be well-positioned to benefit from improved operational efficiencies, a healthy balance sheet, and higher lending activity.
In Q2 2024, Bank of America Corporation (NYSE:BAC) saw revenue, net of interest expense, coming at $25.4 billion, rising $180 million, or 1%. This reflects increased asset management and investment banking fees, sales and trading revenue, and lower net interest income. The strength and earnings power of the company’s leading Consumer Banking business was complemented by its growth and profitability of Global Markets, Global Banking, and Wealth Management businesses.
Barclays increased its target price on shares of Bank of America Corporation (NYSE:BAC) from $43.00 to $49.00, giving an “Overweight” rating on 17th July. According to Insider Monkey’s Q2 2024 data, 92 hedge funds held stakes in the company.
ClearBridge Investments, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“We added several new positions during the quarter. Our largest new addition was Bank of America Corporation (NYSE:BAC), one of the world’s leading financial institutions, serving some 66 million consumer and small business clients across the U.S. as well as large corporations, financial institutions and governments globally. We believe that the interest rate pressure that Bank of America faced in early 2023 has subsided, and risks surrounding deposit outflows have abated, which should allow the company to improve its book value and capital growth as well as benefit from a rebound of capital markets activity.”
6) Wells Fargo & Company (NYSE:WFC)
Average Upside Potential: 17.52%
Forward P/E Ratio (As of September 25): 9.83x
Wells Fargo & Company (NYSE:WFC) is a financial services company, which offers diversified banking, investment, mortgage, and other related services in the US and internationally.
The global market experts believe that Wells Fargo & Company (NYSE:WFC) has a wide economic moat coming from its cost advantages and customer switching costs in the core banking operations. They opine that the company’s funding costs act as the key source of advantage. Additionally, Wells Fargo & Company (NYSE:WFC) has a vast and dense branch network. In Q2 2024, the company exhibited new credit card originations, which demonstrate higher credit quality than existing ones.
While Wells Fargo & Company (NYSE:WFC) continues to focus on margin expansion in wealth management and investment banking segments, the banking giant expects an increase in wealth management revenue in H2 2024. The market believes that the potential lifting of the asset cap imposed on the banking company should significantly enhance its earnings over the upcoming years.
The expected boost in earnings should be aided by increased revenues and improved operating efficiency.
Furthermore, Wells Fargo & Company (NYSE:WFC) might see ongoing advantages from the investments made in several sectors, including trading, investment banking, and credit card services. Market watchers believe that such areas should contribute to Wells Fargo & Company (NYSE:WFC)’s growth and profitability in the future. Apart from the strategic investments, the potential regulatory developments should help the growth trajectory of Wells Fargo & Company (NYSE:WFC).
Analysts at Deutsche Bank Aktiengesellschaft upped the shares of Wells Fargo & Company (NYSE:WFC) from a “Hold” rating to a “Buy” rating, giving the price target of $65.00 on 3rd September. 83 hedge funds held stakes in the company as of Q2 2024.
ClearBridge Investments, an investment management company, released its fourth quarter 2023 investor letter. Here is what the fund said:
“Stock selection in the financials sector proved to be the largest contributor to relative outperformance. Banking stocks such as Wells Fargo & Company (NYSE:WFC) saw their share price rise during the quarter as investors anticipated Fed rate cuts that would reduce deposit costs while retaining economic strength and minimizing the risk of credit losses.”
5) Chevron Corporation (NYSE:CVX)
Average Upside Potential: 18.25%
Forward P/E Ratio (As of September 25): 10.56x
Chevron Corporation (NYSE:CVX) is engaged in integrated energy and chemicals operations in the United States and internationally.
Market experts believe that the company’s wide economic moat stems from its strong franchise, strong supply chain capabilities, and cost efficiencies. In addition, the company’s significant size adds to its already-established wide moat. Moving forward, Chevron Corporation (NYSE:CVX) is expected to deliver increased returns and margin expansion as a result of an oil-leveraged portfolio and the next phase of growth. This phase is focused on developing a large, advantaged Permian Basin position.
Chevron Corporation (NYSE:CVX)’s growth trajectory is expected to be aided by its focus on both traditional and new energy sectors. Moreover, the company’s upcoming projects are expected to enhance cash-margin and reduce carbon intensity. Chevron Corporation (NYSE:CVX) is expecting completion of its merger with Hess in Q3 2024. The company is focused on the TCO project in Kazakhstan and it plans to discuss a potential concession extension in the future.
The company’s exploration portfolio remains strong and drilling is planned in Namibia’s Orange Basin in Q4 2024. Chevron Corporation (NYSE:CVX)’s operational momentum in the Permian appears to be balanced with disciplined capital management. In Q2 2024, the company’s global production saw an increase of 11% as compared to the year-ago period. This was driven by the integration of PDC Energy, Inc. and strong execution in the Permian and Denver-Julesburg (DJ) Basins.
As per Wall Street, the shares of Chevron Corporation (NYSE:CVX) have an average price target of $177.08. At the end of Q2 2024, 64 hedge funds held stakes in the company.
Carillon Tower Advisers, an investment management company, released its fourth quarter 2023 investor letter. Here is what the fund said:
“Chevron Corporation (NYSE:CVX) traded lower, along with oil prices, and issued a disappointing earnings announcement due to overseas refining losses. Separately, the company announced an agreement to buy another energy company with operations offshore of Guyana, as well as in North Dakota, the Gulf of Mexico, and the Gulf of Thailand. This is a strategic acquisition for very little takeout premium.”
4) The Walt Disney Company (NYSE:DIS)
Average Upside Potential: 20.94%
Forward P/E Ratio (As of September 25): 17.86x
The Walt Disney Company (NYSE:DIS) operates as an entertainment company worldwide.
The company has a wide economic moat. This stems from the fact it is a conglomerate having a portfolio of treasured brands including Marvel, ESPN, Lucasfilm, and Pixar. These assets ensure that the company remains at the forefront of the entertainment world.
The Walt Disney Company (NYSE:DIS) continues to make significant investments in sports, scripted TV, and movies to aid its streaming platform and is targeting double-digit margins for Disney+. The company has its focus on making investments in sports and high-quality intellectual property (IP). Wall Street believes that the company’s advertising success is expected to be driven by a strong ad market and upfront results.
The future growth of The Walt Disney Company (NYSE:DIS) should stem from investments in the Experiences business, including cruise ships. Moreover, the company remains on track to achieve healthy double-digit margins for the direct-to-consumer segment. The Walt Disney Company (NYSE:DIS)’s licensing strategy continues to focus on monetizing its IP instead of licensing core IP. Therefore, the company’s strong content offerings and streaming services should aid its revenue and earnings growth in the upcoming quarters. Its focus is on driving incremental cost savings.
The Walt Disney Company (NYSE:DIS) released its new full-year adjusted EPS growth target of 30%. The company is on track for the profitability of its combined streaming businesses to improve in Q4 2024, with The Walt Disney Company (NYSE:DIS) expecting Entertainment DTC and ESPN+ to be profitable in Q4.
As per Wall Street, the shares of The Walt Disney Company (NYSE:DIS) have an average price target of $117.65. In Q2, 92 hedge funds held positions in the company, with a total stake valued at $4.76 billion.
Meridian Funds, managed by ArrowMark Partners, released its second quarter 2024 investor letter. Here is what the fund said:
“The Walt Disney Company (NYSE:DIS) operates a diversified entertainment business with theme parks, media networks, and streaming services. We own Disney because we believe its strong brand, valuable IP, and expanding streaming offerings will drive sustainable long-term growth. The company’s stock, however, underperformed in the quarter due to concerns about a slowdown in growth at its theme park division. While park revenue still grew by 10% year-over-year, management’s commentary suggested a moderation in post-pandemic demand and rising costs, leading to a disappointing outlook for park operating income in the second half of the year. This overshadowed the positive news that the company’s streaming segment, driven by strong subscriber growth at Disney+, reached profitability ahead of schedule. We held our position and will continue to monitor the performance of the theme park division.”
3) Merck & Co., Inc. (NYSE:MRK)
Average Upside Potential: 21.10%
Forward P/E Ratio (As of September 25): 11.45x
Merck & Co., Inc. (NYSE:MRK) operates as a healthcare company worldwide. It carries out operations via 2 segments, Pharmaceutical and Animal Health.
Merck & Co., Inc. (NYSE:MRK)’s technological lead, large scale, intellectual property, and strong pipeline continue to form its wide economic moat. Moreover, its commitment to innovation further strengthens its wide moat. The combination of a wide line-up of high-margin drugs, together with a pipeline of new drugs, should continue to help Merck & Co., Inc. (NYSE:MRK) generate strong returns on invested capital over the long term. The divestment of the Organon business should work in its favour as the remaining portfolio at the company holds a higher percentage of drugs with strong patent protection.
Moving forward, the company’s scale should continue to be supported by inorganic growth opportunities. Merck & Co., Inc. (NYSE:MRK) expanded its presence in ophthalmology via the acquisition of EyeBio and it has established leadership in the production animal sector by acquiring Elanco’s aqua business. These acquisitions should help the company broaden its market reach. Merck & Co., Inc. (NYSE:MRK) expects increased patient prescriptions and stock levels for WINREVAIR in Q3 2024.
In Q2 2024, Merck & Co., Inc. (NYSE:MRK) saw a gross margin of 76.8% as compared to 73.2% for Q2 2023. This rise was mainly because of the favorable impact of the product mix (which includes lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9), partially offset by increased amortization of intangible assets. For FY 2024, the company raised and narrowed the expected worldwide sales range to $63.4 billion – $64.4 billion.
According to Insider Monkey’s analysis of 912 hedge funds in Q2 2024, 96 held investments in Merck & Co., Inc. (NYSE:MRK). Cantor Fitzgerald reaffirmed an “Overweight” rating on the shares of Merck & Co., Inc. (NYSE:MRK), setting the price target of $155.00 on 16th September.
Carillon Tower Advisers, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“After posting lackluster returns in 2023, Merck & Co., Inc. (NYSE:MRK) got off to a strong start in January by raising the long-term sales forecasts for its oncology and cardiology pipelines and reporting solid fourth-quarter results, coupled with strong financial guidance for 2024. Merck shares also finished the quarter strong after receiving U.S. Food and Drug Administration approval in late March for a new cardiology medicine with the potential to contribute significantly to sales growth over the next several years.”
2) QUALCOMM Incorporated (NASDAQ:QCOM)
Average Upside Potential: 26.08%
Forward P/E Ratio (As of September 25): 15.15x
QUALCOMM Incorporated (NASDAQ:QCOM) is engaged in the development and commercialization of foundational technologies for the wireless industry worldwide.
The company has a wide economic moat as a result of its patent portfolio. Furthermore, this wide economic moat is aided by QUALCOMM Incorporated (NASDAQ:QCOM)’s intellectual property and years of R&D expertise in wireless technologies. Wall Street analysts believe that the company has been taking market share in premium Android handsets, Automotive cockpit, and PC. The upcoming phase of artificial intelligence growth is at the network edge. QUALCOMM Incorporated (NASDAQ:QCOM) appears to be well-placed for AI and Gen AI applications reaching these network edge markets.
The company believes that the launch of the Snapdragon X Series solutions for PCs is expected to aid its long-term growth trajectory. This launch marks a notable milestone in QUALCOMM Incorporated (NASDAQ:QCOM)’s transformation to intelligent computing. The company’s chip business (QCT) and licensing business (QTL) should continue to generate healthy cash flow. In licensing, QUALCOMM Incorporated (NASDAQ:QCOM) was able to tackle several challenges in recent years, and Wall Street believes that QTL should be able to sustain high-margin royalty revenue over time.
For Q4 2024, the company expects revenues in the range of $9.5 billion – $10.3 billion, with QCT revenues anticipated to come between $8.1 billion – $8.7 billion. For the same period, QUALCOMM Incorporated (NASDAQ:QCOM) anticipates GAAP diluted EPS of between $2.38 – $2.58.
Analysts at Bank of America upped their target price on shares of QUALCOMM Incorporated (NASDAQ:QCOM) from $180.00 to $245.00, giving a “Buy” rating on 31st May. As per Insider Monkey’s Q2 2024 data, 100 hedge funds reported owning stakes in the company, up from 78 in the preceding quarter.
O’keefe Stevens Advisory, an investment advisory firm, released its second-quarter 2024 investor letter. Here is what the fund said:
“During the quarter, the A.I. rally broadened beyond the obvious players of Nvidia, AMD, and hyperscalers. QUALCOMM Incorporated (NASDAQ:QCOM), a long-standing investment, is gaining recognition for integrating artificial intelligence into mobile phones. Qualcomm’s A.I. on-device capabilities enable real-time language translation, improved voice recognition, and sophisticated imaging techniques as A.I. becomes more integral to mobile experiences. Qualcomm benefits by leading the market in providing robust, efficient, and versatile A.I. solutions. A.I. could be the first technology advancement in several years to accelerate the smartphone replacement cycle as users desire these advanced capabilities.”
1) Micron Technology, Inc. (NASDAQ:MU)
Average Upside Potential: 38.02%
Forward P/E Ratio (As of September 25): 11.12x
Micron Technology, Inc. (NASDAQ:MU) designs, develops, manufactures, and sells memory and storage products worldwide.
Market experts believe that Micron Technology, Inc. (NASDAQ:MU) continues to enjoy a wide economic moat, which stems from its vertically integrated supply chain capabilities, strong R&D capabilities, and strategic partnerships. The company’s technological leadership and well-diversified portfolio should further strengthen Micron Technology, Inc. (NASDAQ:MU)’s moat. Its NAND and storage businesses and advancements in 1-beta DRAM, and G8/G9 NAND technologies should aid its growth prospects in the near term.
Micron Technology, Inc. (NASDAQ:MU) continues to prepare for elevated demand in data centers and AI markets, expecting strong revenue growth in these sectors. It expects a record quarterly revenue for fiscal Q1 2025 and continues to expand its manufacturing footprint globally. The record revenue should come on the heels of the high-volume production of advanced technology nodes. Moreover, cost reductions are expected in DRAM and NAND for fiscal 2025.
Micron Technology, Inc. (NASDAQ:MU) has plans to expand its manufacturing footprint, which includes new facilities in Idaho, India, and China. The demand for HBM should grow, with the company’s HBM3E products providing lower power consumption and higher capacity. It focuses on aligning customer requirements and maintaining a healthy and stable position in the HBM market.
Bank of America upped its price target on shares of Micron Technology, Inc. (NASDAQ:MU) from $144.00 to $170.00, giving a “Buy” rating on 17th June. According to Insider Monkey’s Q2 data, 120 hedge funds held long positions in the company.
Parnassus Investments, an investment management company, released the second quarter 2024 investor letter. Here is what the fund said:
“Micron Technology, Inc. (NASDAQ:MU) posted fiscal-third-quarter results that met expectations. Micron’s DRAM (dynamic random access memory) and NAND (non-volatile storage technology) segments grew revenue strongly, continuing the company’s recovery from a cyclical downturn last year. We believe Micron is well positioned to capitalize on AI-driven demand for greater memory.”
While we acknowledge the potential of MU as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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