Special Report
Three of the Most Undervalued NASDAQ Stocks Under $25
Oftentimes, a stock will often become undervalued because of negative events, like the pandemic. Perhaps the company missed earnings, became overlooked, or was hit with downgrades. Or, maybe the stock fell along with its competition.
Or, perhaps high interest rates weighed them down.
Whatever the case may be, now is the time to buy some of the most undervalued stocks on the market –especially with the Federal Reserve leaning toward lowering interest rates this year.
Better, according to ABC News, “As inflation nears normal levels and hiring remains robust, many economists expect the U.S. to achieve a soft landing. That type of outcome would help companies thrive and stock values climb.”
That being said, investors may want to consider undervalued stocks, such as:
Marathon Digital (MARA)
Bitcoin mining stocks, like Marathon Digital (MARA) fell out of favor following a sell the news reaction to Bitcoin ETFs. However, don’t write this mining stock off just yet. Not only is it severely undervalued, there are some big signs of life thanks to Bitcoin.
For one, analysts at JP Morgan say outflows from Grayscale’s covered spot Bitcoin ETF is largely behind us. “This would imply that most of the downward pressure on bitcoin from that channel should be largely behind us,” the analysts added, as quoted by Forbes.com.
Two, there’s speculation Bitcoin could surge even higher. All in hopes the Hong Kong Securities and Futures Commission (SFC) could also approve a potential Bitcoin ETF shortly. Three, Bitcoin is pushing higher on the possibility of interest rate cuts this year.
Helping, analysts at BTIG just upgraded MARA to a buy rating, with a $27 price target.
“The SEC last week approved 11 Spot ETFs, another step in Bitcoin’s maturation and should pave the way for more institutional capital into the ecosystem, the analyst tells investors in a research note. The firm cites weakness in the miners and Marathon’s decision to pivot into infrastructure late last year for the upgrade,” as noted by TheFly.com.
MARA earnings have been solid, too.
In its most recent quarter, the mining company posted net income of $64.1 million, or $0.35 per diluted share, during the three months ended September 30, 2023, compared to a net loss of $72.5 million, or $0.62 loss per share, in the same period last year. Revenues were $97.8 million for the quarter, significantly above third quarter 2022 revenues of $12.7 million, as a 467% increase in bitcoin production was amplified by 32% higher average bitcoin prices during the current year period.
Viking Therapeutics (VKTX)
With the obesity crisis bursting at the seams, keep an eye on Viking Therapeutics (VKTX).
The company is working on its potential obesity treatment, VK2735, which was already shown to be safe and well-tolerated for up to 28 days in healthy, obese volunteers. It also led to an average weight loss of about 18 pounds from baseline. The company also just wrapped up patient enrollment for its Phase 2 trials, with results expected by the first half of the new year.
Better, “The high level of interest in this trial allowed us to enroll the study more rapidly than anticipated and significantly exceed our original enrollment target. This speaks both to the continued unmet needs of patients with obesity and the promise demonstrated by the encouraging Phase 1 study data from VK2735 reported earlier this year,” said Brian Lian, Ph.D., chief executive officer of Viking, in a company press release.
We also have to consider there’s been substantial M&A interest in obesity treatment stocks. For example, Roche recently acquired Carmot Therapeutics in a $3.1 billion deal. Even companies such as Amgen and Pfizer are looking for obesity drug deals in an effort to compete with Novo Nordisk and Eli Lilly.
“The obesity data with VK2735 is particularly relevant now as the market is acutely aware of the potential for buyouts of weight loss names,” added Seeking Alpha.
Helping, analysts at H.C. Wainwright recently raised their price target on VKTX to $33. That’s partly because Viking’s obesity drug could gain exposure to a potential $50 billion obesity market. Even Roth MKM raised its price target to $24 from $19 on the obesity story. Plus, we have to consider the weight loss and obesity management market is expected to increase from $2.8 billion in 2022 to $13.2 billion by 2029, as noted by Fortune Business Insights.
SunPower (SPWR)
Another promising, and undervalued stock to consider is SunPower (SPWR), a $603 million provider of photovoltaic solar energy generation systems and battery energy storage products.
While it’s down about 81% over the last year, don’t write it off just yet. For one, its current crisis should create opportunities moving forward.
Two, as the world fights climate change, it’s ramping up spending on solar, for example. In fact, according to the International Energy Agency (IEA), the world’s annual pace of solar installations is expected to quadruple in about eight years, as noted by PV Magazine.
Plus, the IRA, or the Inflation Reduction Act offers tax credits to companies involved in solar power installations. The Defense Production Act has encouraged solar panel production. And countries have been busy investing in and promoting the use of solar energy.
Three, solar stocks, like SPWR, took a hit because of sky-high interest rates. However, with the Federal Reserve set to cut rates this year, solar stocks could see better days ahead. In addition, analysts at Mizuho just raised their price target on SPWR to $6, with a neutral rating. The firm also believes the stock could see upside if we see lower interest rates.
Wells Fargo says its bullish on residential solar, which should help SPWR, too. The firm says “Residential solar demand is more sensitive to interest rate movements than utility scale; thus, we expect falling interest rates will be a bigger driver to performance,” as quoted by CNBC.
While SPWR may not appear attractive at the moment, give it time. When and if the Federal Reserve starts cutting interest rates, SPWR could take off.