Most Undervalued Stocks To Watch In 2023

In this guide, we will be discussing the most undervalued stocks to watch in 2023 with high return potential. Some must-buys before the stock market enters recovery mode. And by getting in early, you increase your chances of growing your investment at an unprecedented rate.

Read on to learn about the top stocks to buy today, how to identify the one that’s best for you, and where to buy it. 

 

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Below, we will discuss each of these stocks in detail. We will tell you what they are and their underlying business and examine their past price action. We will also try to understand why they are undervalued today. But even more importantly, we will look at what the future holds for each of these assets.

A Closer Look At Undervalued Stocks To Buy

A stock is considered undervalued if it trades at a price lower than its perceived market value. This is, however, subjective and different analysts and investors will have varying views on how much a stock is undervalued.

The undervaluation could also be temporary – lasting only a few days. It could also be extended, lasting a few months or years – depending on what caused it in the first place.

Here is an outline of what our analysts consider the most popular undervalued shares in 2023.

1. Amazon – Overall most undervalued Stock to Watch in 2023

Amazon is the largest e-commerce company in the US, established by Jeff Bezos in 1994. Over the years, however, it has expanded its business operations to venture into cloud computing via Amazon AWS and digital streaming via Prime Video digital streaming platform.

Amazon is also one of the most lucrative stocks of all time. By the time it peaked in the last quarter of 2021, AMZN was trading more than 180000% above its IPO price. By December 2022, however, the online retail giant stock had lost 60% of this peak price, effectively shaving off $800+ Billion of its market cap.

We consider it the best undervalued stock because most of the factors driving down its share price are temporal. These include the extended bear market, plummeting tech stocks, lackluster retail sales reports, and poor economic outlook due to the rising cost of life and recession fears.

Amazon makes it here because fundamental and technical analysts are both convinced that it will rebound as soon as the stock market starts recovering. How high can Amazon stock prices reach before December 2023, you may ask? Well, Wall Street analysts argue the stock is a strong ‘BUY,’ placing its worth between $135 and $170 by the end of the year. 

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2. Tesla – Best Alternative to the Most Undervalued Stock

The best alternative to Amazon in the most undervalued stocks in the 2023 category is Tesla. It is a pioneer EV designer and one of the leading electric vehicle manufacturers that launched in 2003 and went public in June 2010. It currently dominates the EV industry with a 61% market share, and the number of total Tesla sales recently surpassed 3 million units. 

In addition to its revolutionary technology and its controlling market share, Tesla draws much of its popularity from its association with Elon Musk – co-founder and current CEO. He has been instrumental in turning around the company’s fortunes and growing its popularity.

Tesla makes it here because, in spite of having its best year on record, TSLA stock prices still tanked significantly. In the 12 months leading to September 2022, Tesla’s annual revenue was $75 Billion - close to a 60% increase year-over-year. Not forgetting that its net income increased by 220% during the same period.

Despite these gains, TSLA stock still lost close to 70% of its November 2021 peak price. Much of these could be attributed to three key factors. First is the extended bear market, second is the plummeting tech industry stock prices and lastly – the growing negative media publicity.

We believe Tesla to be undervalued because most of the factors pushing its price down are temporary. We expect the EV maker stock to rebound and rush to new heights as soon as the market starts recovering.

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3. Meta Platforms – Popular Undervalued Stock with Promising a Future 

Meta Platforms is the parent company of Facebook. It is also home to equally popular social media and technology platforms like Instagram, Messenger, WhatsApp, and Oculus. This has made it the largest social media entity in the world – by user numbers – and one of the most popular technology companies.

Previously known as Facebook, Meta rebranded with the aim of conquering the metaverse. But this new vision, the extended bear market, dwindling revenues, and increased competition haven’t sat well with Meta investors. This has meant that Meta platform stock shed more than 25% of its price in the last five years. At the time of writing, it is trading close to 70% below its September 2021 peak price.

The poor stock price action may be attributed to three key challenges facing the company. First is the plummeting price of tech industry stocks. Second is the investor’s overreaction to the news that Facebook had lost subscriber numbers for the first time since going public. Thirdly, there is growing concern over Facebook CEO/founder’s vision for the company, particularly his overemphasis on Metaverse and VR/AR technologies.

Analysts consider META the best undervalued stock to invest in for the long term because they expect it to eventually bounce back.

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4. SoFi technologies – Best Undervalued Stock in the Finance Industry

SoFi technologies is a financial and investment services provider. It is home to the SoFi website and SoFi mobile app, which provide you with an investment hub that you may use to buy stocks, indices, and ETFs. It also provides investors with Robo-investing services – an automated investing service that comes in handy for beginner investors looking to start buying and trading stocks. Additionally, it provides checking account and student loan services.

This growth stock currently ranks highly among the most undervalued but hugely promising fintech stocks. The company went public in May 2021, and several factors can be attributed to several key factors.

First is the diminishing loss in investor funds because the company is yet to become profitable. The poor stock price action may also be due to the fact that SoFi operates in a relatively new and untested fintech industry. Other factors that have put downward pressure on SoFi stocks include the ongoing sell-off for tech stocks as well as the extended bear market.

Heading into 2023, the analyst consensus for SoFi technologies is a strong buy. The market expects SoFi technologies price to start rebounding in the next few months and rally by between 150% and 200% to sell for between $7.50 and $10.00 by the end of the year - which confirms its gross undervaluation.

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5. Disney – Massively Discounted Stock with Huge Upside Potential

Disney is a blue-chip company and one of the largest entertainment and media enterprises globally. The only reason why we feature it among the most undervalued stocks to watch in 2023 is that it is yet to recover from the pandemic disruption.

Covid-19 and associated disruptions severely affected its film, cruise ship, and theme park businesses. And even though its stock price may have rallied to all-time highs during the pandemic market boom, these lines of business are yet to fully recover, which contributed to its ongoing price correction.

Disney is also grossly undervalued because of the many factors putting downward pressure on its stock prices. These include the fears of a recession that saw bears take over the markets throughout 2022 and the overreaction to the cancellation of dividend distribution.

Note, however, that even though the DIS stock price has been on a downtrend, subscriber numbers for its newly launched Disney+ TV are on the rise. So are its total annual revenues and net incomes. This says that Disney is ready for a rebound and could easily rally to its early 2021 highs as soon as the market starts recovering. If that happens this year, it will translate to a 200% growth in your capital.

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6. Alphabet – Massively Discounted Stock With Huge Upside Potential

Alphabet is a technology conglomerate and the holding company of Google and former Google subsidiaries like YouTube, Fitbit, and Nest. It is more popular for running the Chrome web extension and the Android mobile OS used on billions of PCs and smartphones across the world.

The tech company was established in 1998 and went public in 2004. By the time the GOOGL stock price peaked in November 2021, Alphabet had positioned itself as one of the most lucrative technology stocks. Like most other tech stocks, however, Alphabet stock has crashed under the weight of rising inflation and interest rates, a year-long bear market, and fears of a looming recession.

At the time of writing, GOOGL is trading more than 40% below its November 2021 peak. We must observe that in addition to the external factors, GOOGL’s price may have tanked because of investor overreaction to its declining net income for the year 2022.

Several factors, however, convince investors of a swift rebound and possible rally to new heights for Alphabet stock in the near future. First is the temporary nature of the many factors pressuring its stock price downwards. This has most investors convinced that as soon as the market and tech stocks start recovering, GOOGL will likely run back to its previous highs. Additionally, Alphabet has sought to expand its revenue base by incorporating multiple subsidiaries.

The majority of analysts agree that Alphabet is relatively undervalued and give it a ‘BUY’ consensus rating. They are also convinced that GOOGLE revenues will grow in 2023, helping the stock rally by between 30% and 70% to end the year selling for $120 to $150.

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7. Chevron – Popular Energy Stock that is Yet to Peak

Chevron Corporation is an oil and gas company headquartered in San Ramon, California. It is the second-largest direct descendant of the all-popular Standard Oil and one of the largest oil and gas companies in the world.

The company had its best year on record yet in 2022. Its total annual revenue increased by more than 70% Y-O-Y for the 12 months ending September 2022 to $238 Billion. Its net income for the same period rallied 240% Y-O-Y to reach $34 Billion.

CVX stock price is, on the other hand, trading around the peak price set in November 2022. In the last 12 months, the stock has rallied by more than 40%.

Why, then, do we group it among the best undervalued stocks to buy in 2023 despite trading around its peak price? Because we believe that it is yet to peak. That the rising cost of living, ongoing Russia-Ukraine war, proposed price cap on Russian oil, and possible cut down on oil production by Russia will all continue pushing energy costs and CVX share price high.

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8. Sigma Lithium – Undervalued Stock with Massive Long-Term Upside Potential

Sigma Lithium Corporation is a Canadian-based mining company specializing in the extraction of Lithium and development of Lithium products, like car batteries used by electric vehicle manufacturers. Listed in Canada and most recently with the NASDAQ, SGML stock price has maintained an overall uptrending price action since it went public in 2012. Despite the critical role it plays in pushing forward the electric vehicle industry, SGML stock only broke above $10 in September 2021. This, and its $4.5 Billion market cap, speak to its gross undervaluation.

In 2022, Sigma Lithium Corporation grew its stock price by more than 400% and is currently trading around this peak price level. These notwithstanding, our analysts still believe it to be one of the most undervalued stocks to watch in 2023.

Some of the reasons why Sigma Lithium is undervalued include the fact that it still is a loss-making company and is only expected to become profitable after 2023. Additionally, Sigma controls the largest Lithium mining fields in the Americas. Further, there has been a lot of bad press about Lithium mining in Africa. Some African countries, like Zimbabwe, even banned the export of raw Lithium export.

All of the above are expected to pressure Sigma Lithium Corp’s stock price upwards. By the end of the year, analysts predict that SGML stock price will most likely have rallied by between 40% and 70% to reach between $55 and $70.

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9. Diamondback Energy – Most Undervalued Oil Stock to Add to Your Portfolio

Diamondback Energy is an independent oil and natural gas company headquartered in Midland, Texas. Based on its market cap of slightly over $25 Billion, Diamondback Energy is one of the most undervalued oil companies to watch in 2023. Listed a decade ago, its stock prices have appreciated by more than 700% overall and by more than 15% in the last 12 months.

Note, however, that unlike most other stocks listed here, Diamondback Energy isn’t undervalued because it lost value in 2022. On the contrary, the Russia-Ukraine war and the ensuing energy crisis were a boon for the oil industry and oil stocks. In the 12 months leading to September 2022, for example, Diamondback Energy’s annual revenues rallied by 73% to break above $9 Billion while its net income grew 900%+ to break above $4 Billion.

The oil and gas company also sought to grow its financial standing by raising its cash reserves and equivalents by more than 500%. All these, plus the potentially ongoing oil and gas crisis, ensure that Diamondback Energy hint at the possibility of an uptrend for the Diamondback Energy stock.

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10. Innovative Industrial – Popular and Hugely Discounted Cannabis Industry REIT

Innovative Industrial Properties is a real estate investment trust headquartered in San Diego, California. It was founded in 2016, went public the same year, and specializes in commercial properties relating to the fast-growing Cannabis industry.

Since its establishment, the REITs market cap, revenues, net income, and share price have all been on an uptrend. In the first three quarters of 2022, Innovative Industrial Properties reported a total annual income of $205.9 Million (a 41% increase year over year). Net income for the same period was $112 Million. The company’s market cap has also rallied past $2.6 Billion.

Over the last five years, IIPR stock prices have rallied by more than 250% - peaking above $280 in November 2021 (more than 1400% above its IPO price). By the first week of January 2023, it had shed more than 65% of this peak price.

Much of this loss can be attributed to the downtrending real estate stock prices as well as the bear market that dominated the stock exchanges throughout 2022. Fears of a looming global recession can also be attributed to its loss of IIPR stock prices.

We, therefore, include it in the list of the most undervalued stocks in 2023 because it is poised to kick off its recovery. Such other factors as the legalization of Cannabis in more states, the attractive ROI, and the recovery of the real estate stocks are all expected to push up its value. Assuming it gets back to its 2021 highs, you could also be staring at 280% capital gains – which confirms why it deserves a position on your watchlist for the best undervalued stocks to watch in 2023.

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Where To Buy The Best Undervalued Stocks In 2023?

After settling on the popular undervalued stock to buy in 2023, you now need to find a suitable stock brokerage that lists these shares. There currently are thousands of highly regulated and reputable online trading platforms. We would recommend using the all-popular eToro online brokerage.

Here is an overview of the brokerage, explaining why it is the best place to buy undervalued stocks in 2023.

eToro - Highly Regulated and Commission-Free Broker

eToro lists most of the popular undervalued stocks that we have discussed hereinabove. When buying either of these, you will only be charged a competitive spread. The broker also supports fractional share ownership and maintains highly affordable trading minimums, i.e., $10.

Other factors that make eToro one of the best places to buy popular undervalued stocks include its beginner friendliness. This is evidenced by its straightforward client onboarding process, highly intuitive trading interface, and support for social and copy trading.

Here is a quick guide to buying any of the undervalued stocks on eToro:

Step 1: Register a share investor account

Step 2: Verify your identity

Step 3: Fund the approved trading accounts with as little as $10.

Step 4: Search for the undervalued stock

After finding the most underpriced stocks, click the ‘BUY’ option, and indicate how much of the stock you wish to buy.

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Conclusion – Most Undervalued Stocks In 2023

There goes out the list of what we consider undervalued stocks to watch in 2023. There are two ways through which you can invest in the undervalued stocks that we have discussed above. For starters, you may choose to invest in a single undervalued stock. Alternatively, you may choose to create a portfolio of undervalued stocks by investing small chunks of capital in multiple undervalued stocks.

Want to start investing in undervalued stocks today? We recommend that you use the stock investing for eToro that we have described hereinabove.

eToro – Buy Undervalued Stocks With 0% Commission

Open an account with eToro, deposit some funds with USD, and finally – buy Shares from just $10.

Your capital is at risk. Other fees apply.

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