BKNG - 6 Undervalued Nasdaq Stocks to Buy Before Wall Street Catches On
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I would like to write today about 6 undervalued Nasdaq stocks to buy before Wall Street catches on. These stocks escape the Street’s notice their profits are level or forecast to be lower. That is all Wall Street wants to see now, given its recession fears.
These stocks are having difficulties. Analysts project lower earnings next year. That has put a damper on their price performance as a result.
But it also makes them cheap from both a price-to-sales standpoint and also on a discounted future outlook basis. This provides a unique opportunity for investors who are willing to be patient.
Let’s dive in and take a look at these stocks.
SITMSiTime Corporation$150.57SLABSilicon Laboratories$127.92ADIAnalog Devices$154.07BKNGBooking Holdings, Inc.$1,691.47RADIRadius Global Infrastructure$14.23AVGOBroadcom$486.14Undervalued Nasdaq Stocks: SiTime Corporation (SITM)
SiTime Corporation (NASDAQ:SITM) makes resonators and clock integrated circuits (ICs), and various types of oscillators used in ICs. These are key ingredients for computers, servers, GPUs, etc.
Given high demand, revenue is soaring. Sales are forecast to rise 50% this year to $327.6 million from $218.8 million in 2021.
Analysts surveyed by Refinitiv (Yahoo! Finance) see sales up 22% to almost $400 million. This puts the stock on a price-to-sales (P/S) multiple of almost 10x for 2022 and 8x for 2023.
Moreover, EPS is seen growing over 16% in 2023 to $5.06. Its forward P/E multiple is over 29x earnings, down from 34x for 2022.
The stock is up 24% over the past year, but YTD it’s down over 50%. That makes this one of the top undervalued NASDAQ stocks to buy before Wall Street catches on.
Silicon Labs (SLAB)
Silicon Laboratories (NASDAQ:SLAB) is a fabless semiconductor maker that specializes in wireless microcontrollers and sensor products.
These are used in the Internet of Things (IoT), including connected home and security, industrial automation and control, smart metering, smart lighting, commercial building automation, and consumer electronics.
Silicon Labs’ sales are forecast to grow 41% this year to $1.o2 billion and 16% next year to $1.18 billion. That puts SLAB stock on a price-to-sales multiple of 4.6x this year and 4x in the year to 2023.
Moreover, earnings are forecast to hit $3.64 per share this year. Its P/E multiple is high at 34.2x. However, with earnings growth, its forward P/E multiple falls to 29.5x.
That makes it one of the undervalued NASDAQ stocks to buy now.
Analog Devices (ADI)
Analog Devices (NASDAQ:ADI) is an integrated circuit manufacturer. It specializes in digital signal processing technologies and related areas. The company is in a high-growth field. Given the lack of chips in many industries, demand is high.
Sales are forecast to rise over 61% this year to $11.8 billion. For 2023 they are set to rise 5% to $12.47 billion. That puts ADI stock on a forward P/S multiple of over 6x revenue.
Moreover, analysts also forecast earnings will hit $9.26 this year. That represents 43% growth over last year’s $6.46 EPS.
As a rest, ADI stock is on a forward 16x earnings multiple, and a lower multiple at 15x for 2023. That is probably way too low a valuation for this high-growth company. Expect to see the market rerate it once fears of recession abate.
Booking Holdings (BKNG)
Booking Holdings, Inc. (NASDAQ:BKNG) Earnings per share (EPS) are forecast to more than double in 2022 for this online travel and restaurant reservation company to $99.60 per share. And next year, EPS will grow 30.8% to $130.31 per share.
This gives it a forward price-to-earnings (P/E) ratio of 13.7x on 2023 EPS. Moreover, BKNG makes a large amount of free cash flow (FCF). Last quarter, its FCF was $1.586 billion and it spent 66% of that FCF on buybacks.
So, with $20.17 billion in revenue forecasts, it could produce $11.76 billion in FCF. At a 50% margin, then it will make $10.08 billion in FCF.
This could lead to $6.67 billion in buybacks, representing 9.3% of its total stock market value. That will push BNKG stock much higher.
Undervalued Nasdaq Stocks: Radius Global Infrastructure (RADI)
Radius Global Infrastructure (NASDAQ:RADI) acquires and leases out cell phone towers. It trades for 10x sales this year and 8x for next year.
However, its earnings as measured by Funds from Operations (FFO) have been negative. That makes this one of the more disappointing situations, as it prevents investors from being able to receive any kind of dividends.
This could change as revenue and earnings grow. This makes this one of the top undervalued NASDAQ stocks to buy before Wall Street catches on.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) develops semiconductor chips and associated software. EPS is forecast at $40.24 for the year ending Oct. 2023. That puts it on a forward P/E multiple of just 11.97x.
Broadcom pays a dividend of $16.40 per share annually. Broadcom can easily afford to keep paying this dividend as it is 40.7% of its earnings.
In fact, every year in the past 11 years, Broadcom has raised its dividend.
AVGO stock, trading at $481.73 as of July 13, has a dividend yield of 3.4%. This is also slightly higher than its four-year average of 3.2%, according to Seeking Alpha. That implies it could move higher.
Broadcom is also buying back a large number of its shares. Last quarter alone, it spent $3.29 billion on buybacks. That works out to $13.16 billion annually or 6.82% of its market cap. This makes it one of the most undervalued NASDAQ stocks to buy.
On the date of publication, Mark Hake did not hold (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.
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