The stock market has been gaining every year since 2008 and setting all-time highs along the way. As a result, many investors think it is at its peak and along with it, so are individual stocks. But the reality is that not all stocks have been consistently rising. There are undervalued stocks out there.
In fact, there are a lot of undervalued stocks. Most of the recent gains in the stock market has centered around a handful of stocks, while others have just languished. As a result, there are some good buying opportunities out there for investors.
In this post, I am going to highlight 3 undervalued stocks that still have room to grow, even though the market as a whole is near an all-time high.
What are these 3 undervalued stocks? Keep reading to find out!
3 Undervalued Stocks To Invest In This Hot Market
#1. Shire (NASDAQ: SHPG)
Shire is a pharmaceutical company based in Ireland. The stock has swung wildly over the past few years thanks to many events.
- In 2014, the stock jumped on news that AbbVie was going to buy it out. When that didn’t materialize, the stock dropped.
- In 2015, Shire placed a hostile takeover bid of Baxalta. Shares again jumped. But the stock dropped on the realization of the large amount of debt the company would be taking on.
Shares of Shire are still down, but the company has a solid pipeline of drugs coming to market. Trials for lanadelumab are positive and analysts see the drug adding $2 billion in annual revenue.
They also have 2 other drugs, Xiidra and Vyvanse, both of which are market leaders.
In its recent earnings report, Shire reported earnings per share of $3.63, which beat estimates by $0.36 and revenues of $3.57 billion, which met estimates but were an increase of 109%.
Experts expect earnings growth of 15% for both 2017 and 2018. If this holds, you can expect the stock to rise.
#2. Tesoro (NYSE: TSO)
Oil has been in the news lately as the price of crude has been fluctuating wildly. One company that is benefiting from low oil prices is Tesoro. But what happens when oil prices rise? Tesoro has already thought of that and is working on being a powerful player here too.
For starters, Tesoro owns 7 oil refineries and the company recently bought Western Refining which adds 3 more to its portfolio.
The company also owns over 3,000 retail gas stations in the western US.
What does all this mean for Tesoro? For starters, they are a major player in low cost fuel in the US and with them shipping this oil to California where they are a big player, it only helps them company grow.
Earnings per share recently came in at $0.42 which beat estimates of $0.11. Revenues missed by $600 million, coming in at $6.64 billion. But revenue did grow by 30% compared to last year.
Earnings are expected to grow over 34% for 2018 and the stock should benefit from this growth.
#3. Tenneco (NYSE: TEN)
If you looked at Tenneco stock back in the early 1990’s you would see a conglomerate company by definition. The company had business interests in auto parts, packaging, energy and shipbuilding to name a few.
Knowing that the company had to get focused in order to survive, Tenneco started to sell off assets and it is now solely an auto parts company that specializes in suspension systems and emission controls.
Sounds boring, but the company produces these components for over 40 car, truck and off-highway vehicle manufacturers.
The stock fell in 2014 with fears of a recession that never came to be, but the stock price never rebounded. In fact, it is trading at just 10 times earnings.
Speaking of earnings, the company reported earnings per share of $1.53 which beat estimates by $0.10. Revenues also beat, coming in at $2.29 billion, an increase of more than 7% compared to last year.
As the US and other countries continue to tighten emissions regulations, you can expect Tenneco to have all the business they need. As a result, analysts are expecting earnings to grow 6% in 2017 and 10% in 2018.
So there are 3 undervalued stocks that have a bright future ahead of them. Even with the stock market as a whole near all-time highs, these 3 stocks don’t have any limited upside potential at this point.
They all have good things going for them and the stock prices should reflect that with gains in the coming months and years.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.