Key Takeaways:
- PayPal looks undervalued at 14 times earnings, with analysts expecting 11% annual earnings growth and over 30% upside.
- Billionaire investors are buying Pinduoduo, and analysts see nearly 30% upside.
- UnitedHealth Group has been a strong long-term compounder, and analysts believe the stock could climb 30% from here.
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The stock market is full of short-term noise, but sometimes, strong businesses trade at discounts to their long-term potential.
These three stocks are high-quality businesses that look undervalued, according to analysts.
1: PayPal (PYPL)
PayPal has long been a leader in digital payments, but the stock has fallen over 70% from its all-time highs.
Despite increasing competition from Apple Pay, Venmo, and other fintech platforms, PayPal remains a profitable business with steady growth, and is consistently earning over 10% returns on capital.
Right now, analysts have an average price target of $95 per share, which means they see about 35% for the stock today.
What makes PayPal attractive?
- The stock trades at just 14 times earnings, which is a historically low valuation.
- Analysts expect earnings to grow at over 10% annually over the next three years.
PayPal is still a key player in digital payments and could be a great buy at these levels with its low P/E ratio and expected earnings growth.
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2: Pinduoduo (PDD)
Pinduoduo is one of China’s fastest-growing e-commerce platforms, offering discounted products through a unique social shopping experience.
Billionaire investors like Michael Burry (Scion Asset Management) and David Tepper (Appaloosa Management) bought shares of Pinduoduo last quarter:
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Unfortunately, the stock is up over 20% in the past 3 months, so it’s not as cheap as it used to be.
However, analysts have an average price target of $147 per share, meaning they still see nearly 30% upside.
The stock still has significant upside with the company’s potential to expand beyond China and grow its global e-commerce footprint.
3: United Health Group (UNH)
UnitedHealth Group is the largest health insurance provider in the U.S., and delivers insurance services and healthcare solutions.
The stock has been a long-term compounder with the stock growing 16% annually over the past decade. This long-term growth was driven by the company averaging nearly 20% returns on capital over the past 10 years. Over the long term, a stock’s annual return tends to gravitate towards its annual return on capital.
In the last three months, the stock has dropped more than 20%, which makes UnitedHealth Group look like a compelling stock to buy.
Right now, analysts have an average price target of $637 per share, meaning they see over 30% upside for the stock.
UnitedHealth is a dominant force in healthcare and has excellent profitability. This could be an excellent opportunity to buy a long-term compounder while it’s undervalued.
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TIKR Takeaway
Finding undervalued stocks with strong growth potential can help investors see long-term investing success.
The TIKR Terminal offers industry-leading financial data on over 100,000 stocks and was built for investors who think of buying stocks as buying a piece of a business.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. We aim to provide informative and engaging analysis to help empower individuals to make their own investment decisions. Neither TIKR nor our authors hold positions in any of the stocks mentioned in this article. Thank you for reading, and happy investing!
