3 Stocks Estimated To Be Trading Up To 49.4% Below Intrinsic Value

As the market continues to fluctuate, investors are always on the lookout for undervalued stocks that have the potential to surge in value. In this article, we will explore three stocks that are estimated to be trading up to 49.4% below their intrinsic value, making them attractive investment opportunities for those willing to take on a little more risk.

1. Uber (UBER 1.23%)
Uber, the largest ride-sharing company outside of China, has developed a network advantage due to the size of both its customer base and the number of people driving for Uber. Both are showing strong growth coming out of the pandemic. Uber expects gross bookings to climb to at least $165 billion by 2024, and it's not unreasonable to expect the enterprise value of a gig economy stock such as Uber to climb to a level equal to a 1x multiple of gross bookings. Despite this growth, Uber's stock is trading at a 34% discount to Morningstar's fair value estimate of $39.50 per share. As Uber continues to expand its network and increase its Uber One subscriptions, its gross margin is expected to expand over time, making it a potentially undervalued growth stock.



2. Meta Platforms (META -0.59%)
Meta Platforms, the largest social media company in the world, is facing temporary setbacks due to changes in Apple's iOS data-sharing policies and an uncertain economic environment. These factors have led marketers to pull back on ad spending on Meta's platforms, affecting its earnings. However, Meta's strong user base and growing digital advertising market suggest that the stock is undervalued. As Meta moves past these hurdles, it should resume strong revenue growth and produce an expanding operating margin as it leverages research and development efforts in ad technology and virtual reality. Despite these challenges, Meta's stock is trading at a 15% discount to Morningstar's fair value estimate of $78 per share.



3. Etsy (ETSY 2.45%)
Etsy, the leading online marketplace for non-commoditized products such as crafts, used musical instruments, and vintage clothing, has crafted a unique niche in the world of e-commerce. Its strong fundamentals and unique offering have not been reflected in its stock price, which is trading at a 34% discount to Morningstar's fair value estimate of $39.50 per share. Etsy's post-pandemic user base and expanding operating margins suggest that the stock is undervalued and should bounce back toward its pre-pandemic EV/EBITDA ratio of between 40x and 50x. Despite inflation concerns and other economic uncertainties, Etsy's competitive advantages and differentiated products should allow it to expand its bottom line over the long term.



In conclusion, these three stocks – Uber, Meta Platforms, and Etsy – are estimated to be trading up to 49.4% below their intrinsic value, presenting attractive investment opportunities for those looking to capitalize on market inefficiencies. However, it's essential to conduct thorough due diligence and consider the specific risks and challenges faced by each company before making any investment decisions.