In this article, we discuss 5 undervalued wide moat stocks to invest in. If you want to see more undervalued wide moat stocks to invest in, the risk/reward, and methodology of this list, go directly to 11 Undervalued Wide Moat Stocks to Invest in.
5. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM) is arguably the best bank among the big four banks in the United States considering the bank’s leadership and its earnings history. In addition to having arguably the best CEO in finance in Jamie Dimon, JPMorgan Chase & Co. (NYSE:JPM) spends around $12 billion in technology to make many of its best in class products even better.
Managing Director and Head of Global Tech Strategy, Innovation & Partnerships at JPMorgan Chase Larry Feinsmith said, “While other tech companies have a narrower scope of things they do very well, what differentiates JPMorgan Chase is our ability to invest $12 billion dollars in a broad number of technologies simultaneously. Our size and scale are simply unparalleled.” With great products, JPMorgan Chase & Co. (NYSE:JPM) has long term earnings growth potential.
4. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 112
The Walt Disney Company (NYSE:DIS) shares have declined 44.6% year to date to trade for a forward P/E of 16.17 which could be attractive in the long term if the company maintains its market share in the entertainment business.
The Walt Disney Company (NYSE:DIS) certainly has many quality assets given its Marvel franchise and Disney World. Analysts have an average price target of $125.93 per share, which arguably makes the stock undervalued given The Walt Disney Company (NYSE:DIS)’s competitive advantages such as its brand and scale.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 177
As the biggest social media company in the world, Meta Platforms, Inc. (NASDAQ:META) has substantial network effects that give it a wide moat. Given its shares trade for a forward P/E ratio of 14.44, Meta Platforms, Inc. (NASDAQ:META) also has long term upside if it can control costs and maintain its over 3 billion monthly active user base.
Furthermore, Meta Platforms, Inc. (NASDAQ:META) has considerable potential in AI which could help increase its earnings in the long term.
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 269
Amazon.com, Inc. (NASDAQ:AMZN) is an e-commerce and cloud computing leader with considerable scale that gives it substantial competitive advantages. While its shares trade for a forward P/E of 50.76, Amazon.com, Inc. (NASDAQ:AMZN) is nevertheless arguably cheap given its earnings growth potential in cloud computing.
Baron Funds commented on Amazon.com, Inc. (NASDAQ:AMZN) in a Q3 2022 investor letter,
Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest e-commerce retailer and cloud services provider. Shares of Amazon increased 6% in the quarter after the company reported strong results with 7% year-over-year revenue growth driven by 33% growth in Amazon Web Services (AWS), Amazon’s leading cloud computing service, while guiding for an acceleration in third quarter revenue growth, which is expected to be between 13% and 17% year-overyear. Amazon’s share of e-commerce is roughly 40%, far ahead of competition, yet domestic e-commerce accounted for only 14.5% of total retail sales (according to U.S. Census Bureau data for the second quarter of 2022), implying durable growth opportunities ahead. Internationally, the opportunity remains large as Amazon still has less than a 2% market share of international retail spending. Its advertising share is also only 3% and growing, underpinned by the structural closed-loop systems it enables (merchants know exactly whether their ad dollars resulted in a purchase since they are all done on the Amazon platform), which enables accurate targeting and measurement. Lastly, AWS has a good runway for growth as the industry still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 269
Microsoft Corporation (NASDAQ:MSFT) ranks #1 on our list of 11 Undervalued Wide Moat Stocks to Invest in given 269 hedge funds in our database were long the stock at the end of the third quarter. Given its dominant position in desktop operating systems as well as its substantial market share in enterprise software, Microsoft Corporation (NASDAQ:MSFT) has a wide moat.
The stock also has considerable earnings growth potential in the future in AI which arguably makes shares undervalued. The company’s investment in OpenAI has been a pretty big success given the strong reception to OpenAI’s ChatGPT.
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