Undervalued Reddit stocks are a great option for investors looking for growth. In past bear markets, stocks have bounced back quickly and strongly. There is hope that 2023 will bring much-needed respite.
Undervalued Reddit stocks are a great way to get in on the ground floor of the next bull market. They offer the potential for big returns with relatively little risk. So if you’re looking for growth, undervalued Reddit stocks are worth a look.
The following list includes a mix of companies with strong prospects for the future. A lot of them are usual suspects. You’ll find them on most lists of stocks to buy. However, some are new enterprises offering massive gains for aggressive investors.
Any investment strategy worth its salt will tell you that one of the keys to success is diversification or spreading your eggs across multiple baskets. The logic behind this is simple: by investing in various asset classes, you can protect yourself from the risk of any of them underperforming. This is especially important when it comes to stocks, which can be notoriously volatile.
With that in mind, here are seven undervalued stocks that knowledgeable users on Reddit have recommended.
| UPST | Upstart | $18.10 |
| AMD | AMD | $75.25 |
| HD | Home Depot | $324.88 |
| BABA | Alibaba Group | $75.99 |
| NIO | Nio | $10.01 |
| GM | General Motors | $39.97 |
| NFLX | Netflix’s | $286.69 |
Upstart (UPST)
AI lending platform Upstart (NASDAQ:UPST) is a lending platform that uses its algorithm to determine whether a loan application should be approved.
The AI model considers more than 1,500 variables, and the company believes it is more accurate in managing risk than FICO. Upstart loans are more expensive than traditional ones, but the company believes its platform will save money in the long run.
Upstart’s customers are typically younger and more highly educated than the general population, and the company believes its platform will help them build better credit histories. Upstart is still a young company, but its long-term proposition is very enticing.
Upstart is still a young company. And it remains to be seen if its platform can scale. Nevertheless, the long-term proposition for Upstart is very enticing.
If Upstart can successfully grow its user base and continue to improve its AI model, it has the potential to become a major player in the lending industry.
AMD (AMD)
AMD (NASDAQ:AMD) is under pressure this year.
The stock is down nearly 50% from its highs, and some investors are worried about the company’s ability to compete with Intel (NASDAQ:INTC) in the high-end CPU market.
While there are some concerns about AMD’s business, I believe the stock is a great long-term investment.
That begs the question, why is the stock down?
Quarterly results are dampening investor sentiment. While total revenue rose 29%, its net profit declined 93% from the year-ago quarter.
AMD has nonetheless shown a strong performance in the data center and gaming businesses. The Ryzen processor series is more efficient than the competition and continues pushing the manufacturer in the data center and gaming business.
Ultimately, if you are looking for a buy-and-hold investment, AMD will suit you. The company is benefiting from strong secular trends in the semiconductor industry, and I believe AMD will outperform Intel over the long term. AMD is a risky stock, but I believe the upside potential justifies the risk at current levels.
Home Depot (HD)
Home Depot (NYSE:HD) stock is somewhat undervalued at the moment.
Despite an economic slowdown, the company will reap big gains as the economy returns to normal. So now is not a bad time to invest and benefit from Home Depot in the longer run.
During the pandemic, Home Depot benefited from strong demand for its products and services as people have spent more time at home. But it is well-positioned to withstand a slower economy and emerge even stronger when things eventually return to normal.
Despite inflationary pressures, Home Depot posted impressive numbers in the third quarter, with a 5.6% year-over-year revenue increase to $38.9 billion.
The EPS also spiked 8.2% to $4.24 from $3.92 in the prior-year quarter. The company has seen strong demand from DIY and professional customers. With hopes that we might see the back of the bear market by early 2023.
Alibaba Group (BABA)
Alibaba Group (NYSE:BABA) is a Chinese e-commerce giant that controls a significant share of the Asian market.
It is also involved in several technology ventures that offer services to the parent company and other clients.
However, Alibaba recently posted a net loss of $2.89 billion for the third quarter, mainly due to regulatory pressures. Those pressures are nothing new, as they have been going on for the past couple of years.
Jack Ma, the founder of Alibaba Group, was thrust into the spotlight in 2020 after making controversial statements about Chinese financial regulatory practices. His remarks drew the ire of the Chinese authorities.
Alibaba’s online retail properties took up over a quarter of the global e-commerce market in 2020, nearly doubling Amazon’s (NASDAQ:AMZN) share.
Although the company has been under fire recently, these issues will not last forever. Smart investors looking for undervalued Reddit stocks should take advantage of the recent dip and load up on NFLX stock.
Nio (NIO)
Founded in 2014, Nio (NYSE:NIO) reported a mixed set of earnings recently. In the third quarter, revenue jumped 33% year-over-year to $1.83 billion, but the company still reported an adjusted loss per share of around 30 cents.
In addition, Nio plans to install 20 power swapping stations in Europe by the end of 2022. And it aims to close in on 1,000 on the continent eventually.
Given the current market trend, increasing global focus on electric vehicles, and Nio’s strong position in China – the world’s largest EV market – there is potential for a significant upside in the stock price over the long term.
However, near-term challenges such as volatile crude prices, ongoing trade tensions between China and the U.S., and macroeconomic headwinds could weigh on sentiment and performance. Consequently, potential investors are advised to monitor these developments closely before making any decisions.
General Motors (GM)
One of the bigger names among undervalued Reddit stocks is General Motors (NYSE:GM). The iconic automaker is down more than 35% as concerns about vehicle oversupply and weakening consumer demand hammer investor sentiment.
However, there are plenty of reasons to be optimistic about GM’s future. The automaker invests heavily in augmented reality and electric vehicle (EV) technologies.
The company is betting that these two cutting-edge technologies will be key to its future success. AR has the potential to revolutionize the way we interact with our vehicles, while EVs offer a cleaner, more sustainable form of transportation.
GM is already working on several projects that utilize these technologies. And it plans to continue investing in them in the future.
It has announced it will spend $35 billion on electric and autonomous cars through 2025. And CEO Mary Barra forecasts the EV segment to become profitable by 2025. This commitment to innovation will benefit both GM and its customers in the years ahead.
Netflix (NFLX)
Current Stock Price As % Of 52-Week High: 41.89%
Netflix’s (NASDAQ:NFLX) has faced some tough challenges and had to evolve and update its services to maintain its position as one of the leading streaming providers.
Fortunately, Netflix is not taking this challenge lightly. The recent quarterly results broke the pattern of losses, with the streaming giant adding 2.4 million net subscribers in the third quarter.
Netflix also plans to take a more aggressive stance on password sharing in 2023. This move will likely alienate some users, but it could also help Netflix keep its prices low for all users by preventing widespread password sharing.
Only time will tell how these latest changes will affect Netflix’s business, but one thing is for sure: the company is never afraid to shake things up. Hence, when looking at undervalued Reddit stocks, you must consider Netflix as a top pick.
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.