The belief that the summer isn’t the best time to buy stocks often leaves some stocks significantly undervalued. Here, we look at the best undervalued stocks to buy.
Where Can I Buy Undervalued Stocks in June 2021?
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Which Undervalued Stocks to Buy in June 2021?
We have looked at the current valuation multiples like price-earnings (P/E) ratio and earnings prospects to come up with a list of undervalued stocks. We think shares of these companies can experience significant price gains once investors begin to notice them. In no particular order, our suggested undervalued stocks to buy in June 2021 are as follows, but be sure to do your own research before buying them.
1. Ford (NYSE:F)
Ford is one of the world’s largest automobile manufacturers. The company has ventured into electric vehicles to embrace a changing market. It has committed to an EV-only future in Europe and is already beginning to see a positive impact on its financials. A report released on June 3 showed Ford’s EV sales for May nearly tripled. The stock trades at a trailing 12-month price-earnings (P/E) ratio of just 16.20 and a forward 12-month P/E ratio of 9.28. Ford is massively undervalued, which explains its 41% surge in price since 12th May. earnings are expected to grow by 139% this year.
2. General Motors (NYSE:GM)
This is another automobile manufacturer that has started to focus on EVs in recent years. The company’s electric vehicles business is central to its future. GM plans to offer 30 new EV models globally by 2025. The stock is up nearly 57% since January this year. It trades at an attractive trailing P/E ratio of just 10.26 while its forward P/E is 9.61.
3. Boeing (NYSE:BA)
The airline industry as a whole is massively undervalued. Stocks have suffered from the adverse effects of the pandemic, but now things appear to be moving back to normal. Analysts see BA benefitting from changes in the airline industry that will see companies replace old models of airplanes with newer models that emit less carbon. The company’s earnings are expected to grow by 89% this year and 522% next year.
4. Simon Property Group (NYSE:SPG)
Simon Property Group is a real estate investment trust (REIT) that invests in shopping malls. The pandemic adversely affected its business but it is now on a rebound following country-wide re-openings. Still, SPG trades at an attractive P/E ratio of 38.05, which compares positively to the industry average of about 46.87. The company is converting most of its malls into community and family residences amid a shift in shopping trends. This could pay off massively as compared to if the company chose to lease out unutilised space.
5. Qualcomm (NASDAQ:QCOM)
Qualcomm’s portfolio of wireless products will play a key role in the transition to 5G networks. With its chipsets, the company has been one of the key players in the evolution of mobile communications. Shares of the company trade at an attractive P/E ratio of just 18.88. EPS is expected to grow by more than 25% this year. If 5G networks live up to expectations, QCOM could be set for a major run.
6. Verizon Communications (NYSE:VZ)
Earlier this year, in a US government spectrum auction for $81 billion, Verizon secured $45.5 billion worth of the airwave auction. This cements its place as a leader in the telecommunications industry. This also puts VZ in a strong position to capitalize on the 5G network adoption in the country. Verizon shares trade at a P/E ratio of just 12.19, which indicates a massive undervaluation compared to industry peers. Verizon announced a fresh dividend on the 2nd of June and said it will increase dividend payouts by the end of the year.
7. Alibaba Group (NYSE:BABA)
Late last year, shares of Alibaba Group plunged nearly 30% after its subsidiary Ant Group’s IPO was blocked by the Chinese government. BABA stock has continued to fall ever since but with a few rebounds. The stock is now trading at a P/E ratio of just 25.32, which indicates a massive undervaluation. BABA is often referred to as the Amazon of China. However, its P/E is several levels below the average of 132.11 for the e-commerce and internet services industry.
8. JD.com (NASDAQ:JD)
Like Alibaba, JD.com is another internet retailer based in China. The company’s stock price has fallen since February from the highs of about $107 to the current level of about $75.00. Shares now trade at a trailing P/E ratio of just 14.77, again showing signs of massive undervaluation.
9. Tilray (NASDAQ:TLRY)
Tilray is a medical cannabis company based in Canada. The company’s stock is down more than 86% below its 2018 highs. In 2018, the bull run was mostly driven by speculation. However, things will change this year when Tilray completes its merger with fellow Canadian cannabis company, Aphria. The combined company will generate revenue of up to $180 million making TLRY the largest pot stock in the world. Earnings are expected to grow by 32% this year and 76% next year.
10. Barrick Gold (NYSE:GOLD)
Barrick Gold shares plummeted by 37% between September last year and February this year. The stock has since rallied 24% but remains 22% off last year’s highs. GOLD currently trades at a P/E of just 16.76, making it one of the most undervalued stocks to buy in June 2021. With the gold price rising, watch Barrick Gold rally along.
Why Buy Undervalued Stocks in June 2021?
June marks the start of the summer months, which some believe aren’t the best time to invest. Due to market exodus and sell-offs, it is easy to find undervalued gems that could do well before the end of the year. Rather than coming back in September when prices have already advanced, buying undervalued stocks in June makes more sense because the payoff is bigger at the end of the year.
The Bottom Line
As we move into the summer months, now is the perfect time to go hunting for undervalued stocks. Just like Warren Buffett advises, it is best to buy stocks when others are running away. This is a simple principle. Stocks are cheaper, and potentially undervalued when very few are interested in buying.