The stock market has historically been volatile in the month of August. Participants are generally on vacation making it more difficult to pin down the direction of indexes. And undervalued meme stocks are inherently volatile. While the risk in undervalued meme stocks is a turn-off to some investors, the companies discussed here are primarily safer firms. They also happen to be inexpensively priced at the moment. Thus, it’s as good a time as any to consider adding positions to your portfolio or perhaps gambling on a few short positions in the riskier meme stocks discussed here.
Alibaba (BABA)
Part of the greater fear surrounding Alibaba’s (NYSE:BABA) stock stems from the difficulty in gauging the firm. The truth is U.S. investors are quite separated from the firm and the Chinese economy in general. If it’s difficult to judge the direction of a given domestic stock, it’s that much harder to judge a share like BABA.
Add to that headlines and general chatter that China isn’t doing well, and uneasiness in investing in Alibaba only grows. However, Alibaba’s June quarter results should serve to allay some of those fears. Sales increased by 14% while net income increased by 63%. Those simple fundamentals indicate that the firm is navigating any perceived trouble.
In addition, the company repurchased $3.1 billion of its own shares during the period, as well. That should marginally increase the earnings potential of the remaining outstanding shares. Beyond that, Alibaba is restructuring to better derive growth from its six subsidiaries. That means investors should expect a more nimble firm better able to react to its environment. In turn, those six subsidiaries will be able to better contribute and Alibaba should improve overall.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is attractive near $400 ahead of earnings. By now, you’re likely aware that NVDA is the primary producer of the chips that underpin AI systems, and has rightly benefited from the emergence of AI this year. The company already has investors excited, especially after it announced that it was anticipating $11 billion in sales in Q2. That’s well above expectations for $7 billion.
While the news initially sent NVDA to $380, and then $460, the stock has since fallen back to about $433 ahead of earnings. Perhaps investors have cold feet ahead of the report, but NVDA doesn’t appear bothered. Then again, it’s entirely possible that the benefits of AI have been overstated. However, Nvidia didn’t pull that $11 billion figure out of thin air.
PayPal (PYPL)
PayPal’s (NASDAQ:PYPL) stock continues to be maligned by its most recent earnings. All after the company reported that active accounts fell slightly to 431 million accounts overall. Margins declined due to the fact that PayPal’s generic payments solutions business grew more than expected and has lower profits. Communicated in that manner it sounds bad, right?
Yet PayPal’s metrics were all near or above what Wall Street was expecting for the quarter. There’s little reason to logically discount PayPal at this point. It’s one of the original fintech giants. In addition, the fintech opportunity continues to be a significant one.
Nio (NIO)
With Nio (NYSE:NIO), the general consensus is that its shares are worth the USD equivalent of $13. Coincidentally, that’s roughly where it is trading at the moment. Thus, investors are unlikely to rush in and buy given that there doesn’t look to be much upside currently.
However, Deutsche Bank analysts believe otherwise and raised their target price from $13 to $17. The company is feeling renewed urgency and new models are moving to market quicker and efficiency improving.
While a single analyst’s upgrade is unlikely to be reason enough for shares to move higher, news that July deliveries reached an all-time high might. Deliveries increased by 103.6% reaching 20,462 vehicles in total. Roughly half of those deliveries were Nio ES6 SUVs as deliveries exceeded 10,000 for the month.
Beachbody (BODY)
Beachbody (NYSE:BODY) is risky, and, unfortunately, there’s not much to like here. It continues to lose subscribers, money, streaming viewers, and just about everything else. Perhaps its single fundamental saving grace is the fact that its losses narrowed during the second quarter.
The company has enough cash and assets to continue operating for at least another year. That makes BODY stock the kind of investment that could easily surprise in a given week and shoot up on seemingly uncorrelated news. Beachbody began public trading back at the height of the pandemic when at-home workouts were wildly popular. Stocks like Peloton (NASDAQ:PTON) paved the way for Beachbody’s success but it simply never received the same positive reception. It’s a gamble to be sure but it wouldn’t be surprising to see it provide quick gains despite its overall trajectory.
Altria (MO)
With Altria (NYSE:MO), the stock is a buy, as the company pivots from cigarettes to a smoke-free future. The fundamentals are really clear when it comes to substantiating that idea. Altria has essentially attached a massive premium to its shares in the form of its dividend. That dividend acts as an enticement to investors who might otherwise be fearful that Altria’s best days are behind it given the decline in cigarette smoking rates.
Simply follow the numbers. Altria’s sales are basically flat. It continues to rely on cigarette sales for the bulk of sales as it pivots into new revenue streams. People still buy Marlboros. Altria pays 8.6% as a dividend to those willing to invest in its pivot. That gives investors a large margin of error before their investment costs them. The dividend hasn’t been reduced since 1970. It’s also sustainable given that it cost Altria $1.7 billion in Q2 which was less than the firm’s $2.117 billion in earnings.
DTE Energy (DTE)
DTE Energy (NYSE:DTE) is an undervalued utility firm that serves Detroit. Better, it’s showing signs of solid growth, investing in clean energy, with a dividend yield of 3.63% to boot. Earnings have been solid, too. In fact, operating earnings reached $206 million in the second quarter, up from $178 million a year earlier.
The company is also moving toward cleaner energy production and plans to eliminate the use of coal by 2032. That’s a useful talking point that should help the company to market itself moving forward. However, the more important point is that DTE Energy is fundamentally strong. Along with that fundamental strength, DTE offers stability as a utility firm and income to boot.
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.