Here are 7 High-quality Stocks that are Still Undervalued
Let's make a fast start to the week...
Here are 7 high-quality stocks that are still undervalued despite the all-time high market:
The company literally destroyed earnings and substantially raised the guidance.
It has now reached over 100MW data center capacity and targets 1GW by the end of 2026.
Even if just 50% of the target capacity becomes active by the end of next year, they'll have 500MW capacity.
Every 100MW capacity can generate $1 billion in revenue at the current prices.
Even if they just achieve 600MW active capacity and 70% occupancy by the end of next year, they can generate $4.2 billion in revenue.
At 5x sales, we are looking at a $21 billion company.
It's valued at just $16.5 billion now.
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The company doubled its revenue in a year and added 500,000 members.
They missed earnings because the healthcare industry, in general, couldn't predict the activity rates and medical inflation, which is not specific to $Oscar Health, Inc.(OSCR)$ .
The management is filing for repricing in 98% of the marketplaces.
With repricings and better underwriting discipline, it can easily become a multi-bagger in the next couple of years.
The math is simple:
Revenue grows 30% annually in the next 2 years, and it achieves 3% net margin.
We will end up with $19 billion in revenue and $570 million in net income.
Slap 15 times earnings, we get an $8.5 billion business. 2.5x in two years.
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It also suffered the same headwinds that $OSCR suffered.
Activity rates increased significantly, and its medical loss ratio increased 430 bps to 89.4%, eating into its bottom line.
The good news was that the revenue still grew +10% YoY, meaning there wasn't any structural problem.
It's bidding up for 2026, and the management expects to get back to growth next year.
It's a no-brainer now as it trades at just 8 times operating cash flow.
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The stock initially got hammered down because of the worries about competition from Eli Lilly.
Last week, it got another hit as the management cut the full year guidance despite beating earnings.
Yet what the market ignores is that the guidance was cut primarily because of the decline of the USD against the Danish Krone, its reporting currency.
Last week, $Eli Lilly(LLY)$ oral GLP-1 trial results disappointed, and $Novo-Nordisk A/S(NVO)$ gained value as its oral offering outperformed that of $Eli Lilly(LLY)$ .
Even assuming just 8% annual revenue growth for the next 10 years, it's around 65% undervalued.
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It delivered a double beat, yet the stock got hammered down because of the declining take-rates and soft guidance.
Yet, its market position remains strong as the payment volume keeps increasing and the active users keep growing.
They have just launched off-site ads and started to accept crypto payments.
Even if they can generate just 15% annual earnings growth in the next 5 years, the stock will double, assuming an exit multiple of 15.
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The company delivered amazing numbers since it became public in 2021:
- 60% annual volume growth.
- 42% annual revenue growth.
- Expanded from 29 to 43 countries.
It has the highest revenue growth expectation for 2026 among the mainstream fintechs with 27%.
Yet, it's the second cheapest with 18 times forward earnings after PYPL, which is trading at 13 times forward earnings.
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It delivered a strong beat last quarter, but the stock still dipped as the management provided vague guidance.
Despite the short-term turbulence, long-term tailwinds are in place as the chip demand is increasing, skyrocketing, and foundries like TSMC and Samsung are rapidly building new fabs.
The management expects $50-$70 billion in revenue for the end year 2030.
Even if we get the midpoint, $60 billion, and keep the profit margin stable at 30%, we'll get $18 billion net profit.
Attaching a 25 times earnings multiple, we get a $450 billion company, promising a 12.5% annualized return from today's valuation.
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