Market is close to a correction territory and the highest quality stocks are selling at discount.
Here are 10 undervalued foundational stocks to buy now: 🧵
The stock has gone nowhere since November 2021.
Meanwhile, it increased revenue by 50%, doubled profits and net margin. AWS growth is reaccelerating even though they remain supply constrained.
It'll grow free cash flow by more than 15% annually for the next decade, yet it's trading at just 17 times operating cash flow.
Great opportunity to double down now.
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2.
$Alphabet(GOOG)$ Cheapest mega-cap stock by far.
Investors are overly pessimistic about the future of the search yet the search volume is increasing and so does commercial queries' share of search.
Gemini 2.5 Pro is the most advanced AI model yet and they haven't even started monetizing it properly.
Youtube has the largest share of screen time and Waymo is the only commercial robo-taxi business that is active in multiple cities.
17 times forward earnings is a bargain for such a quality business.
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3.
$Nu Holdings Ltd.(NU)$ It's the largest digital bank in the world with over 110 million users.
It's dominating Brazil and operations in Mexico and Colombia are growing even faster than they were in Brazil at the same stage.
It still has over 27 countries in LatAm to expand and they are even considering expanding internationally by moving their headquarters to the UK.
If the growth stops, they can still quadruple the revenue as their average revenue per active user is still around 25% of that of traditional banks.
It's trading just at 18 times forward earnings.
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4.
$Advanced Micro Devices(AMD)$ The stock is trading below January 2022 levels.
Meanwhile data center revenue doubled since then and it's set to double again this year.
Management expects over 50% gross margin in data center segment which will drive net margin above 30%.
Given that GPU demand isn't subsiding anytime soon, the market heavily underestimates its potential at 22 times forward earnings.
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5.
$Novo-Nordisk A/S(NVO)$ The stock declined more than 50% after the trial results for its next-gen weight loss drug "Cagrisema" disappointed.
Investors expected 25% weight loss after full dose while the drug delivered 22.7%. I think this is a massive overreaction.
The drug has recently entered Phase-3 trials and there are ample opportunities to enhance its performance.
Plus, NVO has an amazing track record of capital allocation with 30% median ROIC in the last 5 years.
I think it's an opportunity at 17 times forward earnings.
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6.
$ASML Holding NV(ASML)$ Monopoly in manufacturing of Extreme-Ultraviolet Lithography (EUVL) machines.
Its tech is essential for manufacturing of the most advanced chips and its customers are the world's leading foundries like TSMC, Samsung and Intel.
As TSMC is expanding in Japan, Europe and the US and Samsung and Intel are heavily investing in their foundries to catch up with TSMC, the demand for EUVL machines will accelerate.
It's also set to switch to next-gen EUVL machines that costs $120 million more than the current technology. This will also drive top-line growth.
26 times forward earnings is a fair price for it given that it has 100% market share in such a critical equipment.
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7.
$Taiwan Semiconductor Manufacturing(TSM)$ The largest foundry in the world with over 95% market share in manufacturing of most advanced chips.
It manufactures all the chips for Apple and Nvidia and all the advanced CPU and GPU cores for AMD.
It's rapidly expanding in the US, Japan and Europe to mitigate the geographical risk.
18 times forward earnings is an attractive valuation given that they are set to post above 20% revenue growth this year and next.
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8.
$LVMH-Moet Hennessy Louis Vuitton(LVMUY)$ Largest luxury fashion conglomerate on earth trading at 17 times forward earnings.
The company has been suffering from the uncertain macroeconomic environment as many wealthy countries have been getting in and out of recession since Covid.
Its sales will reaccelerate as the global economy stabilizes in the next 2-3 years coupled with massive stimulus of China.
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9.
$Brookfield Corp(BN)$ One of the largest alternative asset managers in the world trading at 15 times forward distributable earnings.
They have a great capital allocator like Bruce Flatt at helm and they have strategic investments in infrastructure and renewable energy.
Given that they are o path for compounding distributable earnings at around 15% long-term and they are showing no signs of slowdown, I think 15 times forward distributable earnings is cheap.
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10.
$Uber(UBER)$ Everybody thinks robo-taxis will kill them but we see that tech stack for robo-taxi is already getting commoditized.
Waymo is already scaling, Tesla is starting this year and Nvidia is developing the tech stack for General Motors.
Where the product gets commoditized, distribution is king and $UBER has it.
It'll be an indispensable distribution partner for robo-taxi providers and it'll allocate gigs between human and robot drivers based on availability and price.
It's extremely attractive at 19 times forward price to free cash flow.
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