Stocks to buy

Identifying undervalued sleeper stocks will always be a great way to find strong returns in the market. As with all investments, you can only get out what you put in; reaching a million will take time. That said, the three names below can help you in your journey toward millionaire status.

The market is again in flux. Lots of investors have realized strong returns in tech in 2023. Those who invested heavily in Nvidia (NASDAQ:NVDA) and other AI-linked shares are surely happy after Nvidia’s strong performance and outlook. While bigger names remain inherently interesting, investors should consider the undervalued and underappreciated shares below.

Kellogg’s (K)

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Kellogg’s (NYSE:K) stock currently offers a lot of shareholder upside based on its planned strategy to divide the business in two. The company, long known as a cereal giant, is shedding legacy branding to reinvent itself and provide valuable returns.

Specifically, Kellogg’s is planning to sell its North American cereals business at some point in 2023.

Kellogg is focusing on its snacking business, which includes Cheez-Its, Pringles, and Pop-Tarts, and snacking in general. Snaking has held very strong in 2023 and has been an area in which consumer demand has yet to soften.

Kellogg will also retain its plant-based foods business and its international cereal business. Slow-growing U.S. cereals are out, and chasing sales growth is in. That means high margins associated with those legacy cereal brands will be lost. But higher valuation multiples will now be in play for firms like Mondelez International (NYSE:MDLZ). In fact, Mondelez clearly inspired Kellogg’s move here. The company successfully executed the exact strategy Kellogg is now undertaking.

Growth and the valuations associated with it are prompting the move. Mondelez has shown how fruitful the strategy can be.

Splunk (SPLK)

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Splunk (NASDAQ:SPLK) remains an undervalued tech stock that can create gains for those willing to invest. It makes software utilized by companies seeking to search, analyze, and monitor machine-generated data. In other words, Splunk provides services that should continue to have a long runway as AI is just starting to take off.

Revenues jumped by 11% in the most recent reporting period and were higher than what analysts anticipated. That indicates that Splunk is catching the leading edge of trending business. EPS figures were similarly surprising. Splunk also made a lot of cash in the quarter, with free cash flow hitting $486 million, up 253% year-over-year. The company can pivot toward real growth if it chooses to do so because of that cash.

Shares continue to trade below $100 even as average target prices are nearer $120 and have been since the earnings release.

Crown Castle (CCI)

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Crown Castle (NYSE:CCI) stock should continue to grow with the adoption of 5G and increased communications penetration. Its portfolio includes over 40,000 cell towers and 85,000 miles of fiber overall.

It’s also a company with a low price that analysts don’t believe will stay low for long. Shares trade at $112, but Wall Street expects CCI stock will trade at $150 over the mid-term. Fundamentals screener site Gurufocus places that target price a much higher $194. In short, there is an overall consensus view that Crown Castle can make investors quite a bit of money.

The other strong news is that Crown Castle’s Jan. 25 outlook remains unchanged after its April earnings report. Analysts’ earlier strong backing of CCI stock then should continue to be strong.

Right now, Crown Castle’s site rental revenues are growing modestly. But as 5G takes deeper root, those revenues can increase substantially. That’s why there continues to be such a high upside in CCI overall.

On the date of publication, Alex Sirois 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.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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