Top 10 Undervalued Stocks in US Based on Cash Flows

US market has shown a robust performance with a 1.3% increase over the last week and a 15% rise over the past year, with earnings projected to grow by 15% annually. Top 10 undervalued stocks based on cash flows include Semrush Holdings, Roku, Pennant Group, Hesai Group, and Camden National, with estimated discounts ranging from 48.6% to 49.7%. Rocket Lab and DoorDash are highlighted as potential undervalued stocks, with estimated discounts of 33.1% and 30.1%, respectively.

The U.S. stock markets continued their upward trajectory last week, with the S&P 500 index rising by approximately 1.3% and reaching a new all-time high. Over the past year, the S&P 500 has shown a robust performance, rising by around 15% [1]. This resilience is attributed to a series of positive economic data releases, including inflation readings, retail sales, and corporate earnings growth.

Inflation readings for June were in line with expectations, with the Consumer Price Index (CPI) inflation rate coming in at 2.7% year-over-year, slightly higher than the forecasted 2.6% [1]. The Producer Price Index (PPI) inflation rate was 2.3%, below the expected 2.5% and last month's revised 2.7% reading [1]. Despite tariff increases, inflation has remained contained, suggesting that higher tariff rates have been absorbed across various sectors and that the overall impact on prices has been minimal.

Retail sales for June also provided positive news, climbing by 0.6% for the month, well above the forecasted 0.1% and last month's -0.9% reading [1]. This indicates that consumer spending remains strong, contributing significantly to the economy.

The second-quarter corporate earnings season has begun on a positive note, with approximately 12% of companies reporting earnings, of which 86% have exceeded expectations [1]. Financial companies, in particular, have reported strong results, with higher trading revenues and better-than-expected capital markets activity.

Tariffs remain a concern for investors, with the U.S. administration pushing back its trade deadline to August 1. However, despite the uncertainty, markets have shown resilience, supported by solid economic fundamentals. The administration has announced several deals and frameworks, which may help open economies to U.S. goods and diversify supply chains.

Looking ahead, markets are expected to face volatility as investors digest new tariff updates and head into the seasonally choppy months of August and September. However, a more favorable backdrop is anticipated heading into year-end, with the Federal Reserve considering rate cuts and the new tax bill in place.

In conclusion, U.S. markets have shown a strong performance, supported by positive economic data and a resilient corporate earnings season. Despite tariff uncertainty, the markets have been able to climb several walls of worry, and investors can expect a more stable backdrop heading into the year-end.

References:
[1] https://www.edwardjones.com/us-en/market-news-insights/stock-market-news/stock-market-weekly-update