The Nasdaq 100 is a list of the 100 most valuable companies traded on the Nasdaq index as measured by market capitalization. The Nasdaq index is generally associated with the technology sector. However, the Nasdaq 100 spans all industries and sectors. And, like all other indexes, the Nasdaq 100 includes many undervalued stocks that are not to be ignored.
There’s a wide diversity of sectors represented in this article including everything from tech to healthcare to utilities and more. The firms discussed here are undervalued and offer a lot of upside to investors.
Identifying undervalued opportunities is primarily about understanding why a company is currently undervalued and why it should rise moving forward. All of the stocks discussed below exhibit positive factors suggesting that they are strong investments.
These are not get-rich quick opportunities for the most part. Instead, these stocks represent firms with what look to be sustainable competitive advantages.
Keurig Dr Pepper (KDP)
Keurig Dr Pepper (NASDAQ:KDP) is clearly undervalued at the moment. A cursory look at the target prices assigned to its shares shows as much. This source indicates that KDP shares are underpriced by approximately 10% and this one indicates potential returns are closer to 30%. Neither of those scenarios includes the positive effects of the dividend that KDP shares provide. It boosts returns by 2.6% at the moment.
Some readers may be with Keurig Dr Pepper as an investment because it is getting a lot of attention lately. Some analysts are even beginning to compare it favorably to Coca-Cola (NYSE:KO). The thrust of that argument hinges on the notion that KDP shares are undervalued and thus have more upside. Although KO outperforms KDP in multiple key metrics KDP remains underpriced. I also like the argument that Keurig Dr Pepper benefits from a strong coffee business that somewhat shields it from the negative potential of declining carbonated drink consumption.
Beyond all of those generalities is the fact that KDP’s earnings are steadily rising and its business rock solid overall. It’s undervalued and steady which is a combination most any investor can appreciate.
Workday (WDAY)
Workday (NASDAQ:WDAY) CEO Carl Eschenbach offered a succinct summary of why its stock is highly attractive when he stated that:
“With the emergence of Generative AI, the shifting talent landscape, and pressure to realize operational efficiencies, Workday has never been more relevant. Our strong value proposition, investments in key growth initiatives, and leadership in AI are paying off as more organizations turn to Workday to manage their two most important assets – their people and money.”
The application of generative AI to enterprise scale software is one of the biggest growth opportunities today. Companies like Workday are well positioned to grow rapidly as AI transforms operational efficiency both within the firm itself and for its external clients.
That’s the high level catalyst investors should consider overall. Drill down into current financials and there’s plenty to like otherwise. Revenues are growing at approximately 18% and Workday has dozens of AI use cases in development. The company should be able to upsell those AI applications into its recurring revenue base and find new partners as well. Workday is particularly attractive based on its high gross margins in a software sector already known for particularly high margins. That will remain a key driver of its business and a prime reason to invest.
Monster Beverage (MNST)
Monster Beverage (NASDAQ:MNST) stock represents a company that is easy to appreciate: The company sells an in-demand product that has become a household name while maintaining strong business fundamentals.
There’s absolutely nothing wrong with investing in a company that projects roughly 10-12% top line growth annually into the near future with moderately quicker earnings growth. Yet Monster Beverage remains undervalued nonetheless. I think the reasons for that are easy to understand. For one, MNST shares don’t include a dividend unlike other popular beverage stocks like KO and KDP. So, there’s no income potential, only upside appreciation potential. Second, other energy drink stocks like Celsius Holdings (NASDAQ:CELH) are arguably more exciting with their early growth narratives. Neither of those arguments invalidates Monster Beverage’s steady fundamentals, though.
That’s where it shines and will continue to shine. Monster Beverage has a strong history of creating highly positive cash flows from its investments. I personally am a big fan of companies that can create profit over the long term and Monster Beverage is one of them.
Analog Devices (ADI)
Many AI stock plays like Analog Devices (NASDAQ:ADI) can simultaneously appear overvalued and undervalued. Analysts either believe that the continued emergence of AI provides a catalyst for substantial upside or that prices are too high relative to historical multiples. Analog Devices is far from the only AI stock currently being viewed in that light.
The company managed to deliver results above the midpoint of guidance during the most recent quarter. Analog Devices did so even as inventory issues continue to work against it. The company managed to produce $3.1 billion in free cash flows and returned $675 million to shareholders during the quarter. So, while the markets continue to be concerned that AI is overblown, ADI continues to outperform.
The biggest positive sign for Analog Devices is that inventory levels are stabilizing after the massive buying frenzy over the past few years. The company expects a return to sequential growth in Q3. That suggests investors who buy now will be rewarded near the end of the year. That should create a profit taking opportunity or provide reason to hold on and await further growth.
GE Healthcare Technologies (GEHC)
GE Healthcare Technologies (NASDAQ:GEHC) is a young stock spun off from its parent company in early 2023. GE wanted to concentrate on the industrial businesses that make up its core. That meant spinning off a healthcare unit that produces complex imaging machinery while focusing on aviation and power production.
That’s where the company stands today: An independent business and stock that has appeal investors should understand. GEHC shares are undervalued at the moment. Those shares currently trade for $82 which is near the low analyst target price. The consensus price target sits at $94 and GEHC includes a very modest dividend yielding 0.15%. There’s obvious upside for investors willing to risk it.
Those investors should remain confident because per share earnings are expected to boom by more than 43% in 2024. GE Healthcare is still finding its way following the spin off but there’s plenty to like fundamentally. None of that mentions the fact that AI is highly applicable to healthcare imaging providing a real growth opportunity to GE Healthcare to consider.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) stock represents a company that is part Amazon (NASDAQ:AMZN), part Paypal (NASDAQ:PYPL), and part Visa (NYSE:V). It has emerged as the eCommerce and fintech leader for a maturing Latin American economy that it dominates.
Whether LATAM customers are ordering goods online, paying for those goods, or simply becoming banked, there’s a good chance MercadoLibre is involved. The company’s Q1 earnings report is pretty much par for the course: 36% revenue growth combined with similar payment volume growth.
Topline growth is expected to fall to approximately 20% in 2025 and level out thereafter for several years. However, EPS growth is going to approach 40% during that period and that alone will continue to make MELI shares highly sought after.
MercadoLibre is undervalued by approximately 20% based on analyst opinion from this metrics-based site. The company continues to Garner favorable comparisons to Amazon with the caveat that it is much more profitable earlier and also has distinct fintech advantages.
Datadog (DDOG)
Datadog (NASDAQ:DDOG) is a cloud application security platform software stock that offers a lot to investors at present. The shares also have between 12 and 30% upside depending on whether you consider the consensus price or the high target price.
Datadog may very well reach that latter growth rate if AI security software takes off in the same way that hardware has in 2023 and 2024. That’s what some analysts anticipate will happen. Those same analysts expect that the importance of security at the enterprise scale will drive sales for firms including Datadog.
The application of AI to security software at the Enterprise level is a huge untapped opportunity. The point here is relatively simple: Hardware firms like Nvidia (NASDAQ:NVDA) represent the greatest AI investments so far. The implementation of that hardware will create new opportunities for software as AI matures. Datadog is well positioned in that sense.
The company is also growing rapidly and is expected to experience massive EPS growth during this fiscal year. In short, there’s a lot to like about Datadog.
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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.