Despite the frenzy over meme stocks dying down a while ago, plenty of undervalued Reddit stocks are available for investors to pick up.
Reddit’s social media platform hosts one of the largest communities of traders. Its r/wallstreetbets community has over 13.3 million members and was responsible for coordinating a short squeeze against GameStop and others. It is one platform that makes or breaks meme stocks (stocks that gain popularity through social media).
After going through several different Reddit community discussions, we selected the best undervalued Reddit stocks for future growth, resilience, valuation against peers and shareholder returns.
|MPW||Medical Properties Trust||$10.89|
|TSM||Taiwan Semiconductor Manufacturing Company Limited||$75.55|
Medical Properties Trust (MPW)
Medical Properties Trust (NYSE:MPW) is an undervalued stock that suffered from bearish sentiment earlier in July. It continued through the third quarter. The stock has gone down over 33% since its last rally.
The company started to make a recovery in November. However, the company’s trailing 12-month price-to-earnings ratio still stands at 5.6x compared to 21.1x at the end of December 2021.
Medical Properties has a strong foundation, with 93.8% of its leases expiring in 2031. The recent bear rally opens a new attractive entry point for investors. Furthermore, the company is returning an impressive sum to its shareholders with a dividend yield of around 10%.
Medifast (NYSE:MED) is another one of the companies that suffered a significant decline in its stock price in 2022 due to rough market conditions.
The company is down 47% year-to-date and is trading at a price-to-earnings ratio of 8.54, down from over 15 at the beginning of the year.
The company has shown strong growth in the previous years. Between 2017 and 2021, Medifast’s revenue grew from $300 million to $1.52 billion. Also, management expects the fiscal year 2022’s revenue to be between $1.51 billion and $1.59 billion.
Medifast’s focus on shareholder returns has remained consistent over the years due to its strong balance sheet. The company exited the third quarter with $69.7 million in cash, cash equivalents and zero debt. Moreover, in the last decade, the company has reduced the number of its outstanding shares by 1.9 million and has a dividend yield of 5.61%.
Oracle Corporation (ORCL)
It has not been a sweet year for the tech industry. However, Oracle Corporation (NYSE:ORCL) has been beating its peers, as shown in its latest quarterly results. The company posted its second quarter 2023 results on Dec. 12, where it outperformed its earnings estimates by 4 cents after reporting earnings per share of $1.21.
Despite the macroeconomic headwinds, Oracle’s revenue was up 18.5% year-over-year, beating the forecasts by $260 million. However, the company stock is still down 7.86% year to date and is trading at a price-to-earnings ratio of 18.84x, compared to the peer average of 34.5x.
Oracle also has healthy and stable shareholder returns with a 1.61% dividend yield and a 26.22% payout ratio. The company has been raising its dividends for 12 consecutive years. Furthermore, $1.2 billion over $1.2 billion in the last two quarters.
Taiwan Semiconductor Manufacturing Company Limited (TSM)
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the market leaders in the semiconductor industry. The chip demand is never-ending, and Taiwan Semiconductor holds over 50% of the market share.
The company stock has been beaten down 41% year-to-date, but its fundamentals and strong profitability over the year make this stock an interesting addition to an investor portfolio. It has been trading near the lower ends of its price-to-earnings ratio since 2016.
Taiwan Semiconductor is trading 12.95 times earnings. Additionally, Taiwan Semiconductor has a dividend yield of 2.25% compared to its industry average of 1.37%. When perusing undervalued Reddit stocks, you rarely get the combination of an industry-leading position and a solid yield. However, TSM is an exception to this rule.
The payment processing company Visa (NYSE:V) has shown resilience in the tough economic conditions faced by the market in 2022.
The stock has declined by 7.84% year-to-date compared to the S&P 500’s decline of 20.24%. However, the company is still trading at 6.9% below its fair value. Visa stock is trading at 27.55x its earnings compared to the peers’ price-to-earnings ratio of 33.1x.
After its latest earnings report, Visa announced a share buyback program of $12 billion and increased its quarterly dividend by 20% to $0.375 per share. The company bought around $2.1 billion in shares in its September quarter. It had $5.1 billion in authorized funds under its previous share repurchase program.
Walt Disney (DIS)
With its track record of success, resonant branding, and iconic characters, it’s no wonder that Walt Disney (NYSE:DIS) has remained one of the most attractive stocks in the market.
However, Disney shares took a huge tumble this year, making it their worst year since 1974. This is because investors lowered the price of Disney shares after feeling disappointed over the Avatar sequel’s low ticket sales. The general macroeconomic environment is also negative, adding more fuel to the fire.
Nevertheless, Disney has long been one of the world’s most beloved companies. And its stock has been a staple in many investment portfolios. This is no accident—the company’s resilience has allowed it to remain strong and steady through the decades, even when the economy or market conditions are less than favorable.
Despite naysayers, Disney continues to break barriers and expand its horizons. It is proof that its stock is an evergreen pick for investors. Its impressive performance over the years demonstrates its strength despite bumps. Hence, when looking at undervalued Reddit stocks you cannot ignore this one.
For savvy investors, Gartner (NYSE:IT) is an excellent stock to consider. It’s already provided considerable returns in the past; however, its recent dip in stock price makes it even more exciting.
Not only do you have a chance to get in at a lower entry point, but you can also benefit from long-term future growth as the company remains an industry leader. Recent diversification into new markets shows that it has plans for continual expansion and growth for years to come. As such, now is definitely an ideal time to look into purchasing this excellent stock for your portfolio.
It’s been an exciting quarter for Gartner, with the release of its Q3 financial results showing impressive growth across the board. The non-GAAP EPS came in a full $0.54 higher than expected at $2.41. Meanwhile. the revenue rose 10.8% year on year to exceed expectations by $30 million and come in at a healthy $1.33 billion.
This performance speaks volumes about Gartner’s resilience in difficult market conditions, demonstrating the strength and adaptability of the company’s business model while setting a positive tone as they end this quarter on a high note.
For stock investors, Gartner is an exciting option. It has already provided good returns in the past. But now that the stock has dropped significantly, it’s a very appealing prospect among undervalued Reddit stocks.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.