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The stock market has taken some hits so far in 2022, but this move lower has opened up opportunities to buy up high-quality stocks at discount prices. And there are three undervalued stocks to buy this week that can outperform over the years to come.
Some of these stocks have fared worse than the overall market. It's worth mentioning that these stocks lag in the current environment of high inflation and rising interest rates - areas where these companies should stand out.
But many of these stocks were overvalued coming into the new year.
Now, however, these stocks have slid far enough to make them comparably undervalued. That presents some opportunities that Money Morning Chief Investment Strategist Shah Gilani thinks are more than worthwhile.
So, here are the three undervalued stocks to buy this week...
Undervalued Stocks to Buy, No. 3: Biogen
Biogen Inc. (NASDAQ: BIIB) is a company that's managed strong profitability with its Roche collaboration in oncology and Biogen's MS business - its assets easily support a large swath of the business.
The biotech company does face some potential pitfalls, however. Environmental, social, and governance risks, mainly related to U.S. drug price-related policy reform - Biogen earns about 60% of U.S. market sales - could knock the stock down.
But at the end of the day, they shouldn't push potential investors away from BIIB. These are issues that other biotech companies are all going to face, and Biogen has a more robust foundation should there be any shakedowns in the industry.
Not to mention that Biogen has some strong research and development strategies that keep the company ahead of the rest when it comes to its MS and neurodegenerative disease divisions. These are two areas where it can price a bit stronger since patients need treatment; Biogen has built a cornerstone for these therapeutics.
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Undervalued Stocks to Buy, No. 2: Salesforce.com
When it comes to cloud-based software, Salesforce.com Inc. (NYSE: CRM) is a clear leader in the industry with Sales Cloud. The company's moved from no product to a 33% market share in just over 20 years. The company is, without a doubt, one of the best platforms to turn to for an increase in productivity by sales representatives.
In a nutshell: Salesforce's software helps drive revenue higher for users.
The company has to thank in part its Sales Cloud SFA solution for its success, which by itself creates organizational momentum that pushes IT managers and executives to engage with more positive, self-serving behavior.
It also helps that customers, especially those who might not be wholly satisfied, stick with Sales Cloud due to the time and cost to switch away - not to mention the risk of implementing new applications and migrating data and the time, expense, and lost productivity of retraining the workforce on a new platform. While that's more circumstantial than intrinsic to the company, it still works in Salesforce's favor.
At the end of the day, SFA brings in consistent revenue and is highly beneficial to the users. And that means that it's going to continue to serve Salesforce in the long run, driving the share price higher by anywhere from 40% to 80% - making it one of the best undervalued stocks to buy.
Undervalued Stocks to Buy, No. 1: Meta
Meta Platforms Inc. (NASDAQ: FB) has had a rough go of it over the past few months. Shares of the social media giant are down 33% year to date and could stand to lose a bit more ground.
But Shah Gilani believes that FB can move higher and recover the lost ground once the antitrust regulations are behind the company. And it helps that Meta has a vast user base.
If you ask Shah, "Their sheer size makes them likely to climb higher because they are the space they work within."
Despite the flak, Meta is still growing its user base. The company has a knack for developing and generating data that helps other companies to share more effective ads. That helps push Meta's overall return on investment higher by further monetizing its network.
And the company's foray into the emerging metaverse (hence the name change) could better serve the company's monetization efforts.
Of course, antitrust enforcement and regulations threaten how Meta handles data. But this would apply to all data companies and not just Meta, which levels the playing field a bit more.
Meta's large userbase and consumer engagement are likely to continue to drive demand for Meta ad inventories, although at potentially lower prices. Analysts at CNN see shares of FB climbing higher over the next 12 months, surpassing previous 52-week highs to reach $425 per share. If you were to invest in Meta now, you could see potential returns of more than 85% for this undervalued stock.
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You've probably seen our Chief Investment Strategist, Shah Gilani, on TV. You can catch him every week on FOX Business's "Varney & Co.," and he's also a frequent guest on CNBC.
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