To The Moon

Investors are on the lookout for undervalued stocks in the current market with Redditors at r/ValueInvesting sharing their insights. A user named D3Thijs expressed concerns about the high valuation of many stocks and sought suggestions for alternative investments. Redditors promptly responded with their value picks.

⚠️ Trading tips: looking at a break and hold above 173.8 for a cup and handle pattern breakdown for a green apple. Could the CPI result at 8:30am complete this feat to move towards 176? Again, it’s a matter of time 😉

Let’s mov’it, mov’it 🚀

Redditor JRshoe1997 and others, including ilikebunnies1, highlighted Apple Inc (NASDAQ:AAPL) as a stock to watch. Comments suggested a positive sentiment, with ilikebunnies1 stating Apple’s current price is “pretty decent.” The company’s innovative approach and consistent growth made it an attractive choice.

The forward price-to-earnings (P/E) ratio for Apple stock compared favorably to a majority of the other Magnificent 7 tech stocks:

* Apple: 26.18

* Microsoft Corp (NASDAQ:MSFT): 30.49

* Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG): 20.0

* Amazon.com Inc (NASDAQ:AMZN): 41.49

* Meta Platforms Inc (NASDAQ:META): 25.32

* NVIDIA Corp (NASDAQ:NVDA): 35.59

* Tesla Inc (NASDAQ:TSLA): 56.18

Other Value Picks From Redditors

Alphabet: Both BSGrappling and ilikebunnies1 mentioned Google’s parent company, Alphabet Inc., as a potential value pick. BSGrappling expressed a strong liking for Alphabet at its current price, indicating confidence in the company’s performance.

As indicated above, Alphabet stock actually trades at the most attractive forward price multiples currently from amid the Magnificent 7 stocks. However, heightened volatility around the stock and divergent opinions on the business kept many investors on the sidelines.

Buy call 1

Buy call 2

Apple Inc. shares have gotten left behind this year as investors double down on artificial-intelligence winners, but one analyst thinks the script could soon flip.

Though the iPhone maker does plenty with AI, it's not particularly vocal with either investors or consumers about being part of that trend. But as a hardware seller, Apple (AAPL) has a unique opportunity to bring mobile AI applications to consumers, according to Evercore ISI analyst Amit Daryanani.

"As AI-enabled tools become more mainstream, we think there will be a strong value proposition to run AI on the edge," he wrote in a note to clients put out after Monday's close. "The advantage of doing on the edge (iPhone) would be lower latency, better security and easier/cheaper accessibility."

"On the edge" refers to using AI on your device, with the data available to you on your system and not reliant on a cloud connection.

Admittedly, consumers may need greater on-device power and memory to make these AI dreams a reality, but those needs might be enough to drive a "supercycle" for Apple, according to Daryanani, referring to the potential for a wave of device upgrades.

Apple's management has teased an AI announcement later this year, and Wall Street has been wondering how the company will make its mark in the AI landscape.

"We think [Apple's] AI strategy will focus on incorporating on-device inference for [large language models] that will substantially uplift the user experience for not only the iPhone but also Mac/iPad," Daryanani said. Because Apple controls its own chips and links them to what it does with its software ecosystem, the company could make "significant updates to the hardware including a potentially improved neural engine or GPU."

These enhancements, if meaningful enough, could also drive users to pay up for new, more expensive phones, Daryanani said.

AI is one factor that could get Apple shares out of their funk, in his view. Another is the company's approach to capital allocation. While Apple has set out to dwindle down its net-cash position to zero, Daryanani wonders if the "next step" for Apple involves using leverage to keep its buyback going - or to accelerate it. The company has about $65 billion of cash on its balance sheet currently, without factoring in what it will add through generating free cash flow.

"We expect to hear more on this during their April [earnings] call," he said.

Finally, while investors have been concerned about sluggish growth trends for Apple's hardware, Daryanani said the company's acceleration in services revenue has been "underappreciated."

He reiterated his outperform rating and $220 price target on Apple shares in his latest note to clients.

"We think the sell-off is rather overdone," he wrote, with shares down about 10% so far this year as the S&P 500 SPX has advanced 7%.

Reversal play in 11 mins

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