3 UNDERVALUED STOCKS NOBODY TALKS ABOUT 📉
Hello investors, cheap stocks like $APP or $SOFI are talked about over and over, so we thought it would be nice to share stocks that we think are starting to trade at interesting values and that aren't talked about as much.
CENTRUS ENERGY $LEU
Centrus is down about 70%, which we think could present an interesting opportunity.
Centrus Energy's main business today is supplying LEU, or low-enriched uranium, which is used as fuel in conventional nuclear power plants.
In addition, Centrus is developing production of HALEU, or uranium enriched to a higher level, which will be important especially for the new generation of advanced nuclear reactors. This part of the story is particularly interesting to us, because advanced reactors could find use in the future in connection with rising electricity consumption from data centers and AI.
The competitive advantage, in our view, lies mainly in the combination of technology, licenses, know-how, existing infrastructure, and relationships with the U.S. government and customers.
We therefore see the stock as interesting primarily over a longer-term horizon. At the same time, it is a significantly riskier investment. Centrus is a typical high risk / high reward stock for us, where the potential can be high, but you also need to count on a higher degree of uncertainty.
RHEINMETALL $RHM.DE
Rheinmetall is a German defense company that mainly manufactures military vehicles, tanks, artillery and tank ammunition, weapon systems, air defense systems, and other military equipment.
Its customers are primarily the armed forces of European countries and other allied nations, with the German army being one of its largest customers. The company's revenue therefore comes mainly from long-term military contracts and deliveries of military equipment and ammunition.
What we like about Rheinmetall is primarily its position in the European defense industry and the long-term growth in European defense spending. The company also has a very strong backlog, which gives it high visibility into future revenue.
The stock has fallen significantly recently and is currently about 50% below its previous high.
We see our intrinsic value at around EUR 1,500, so the current decline is starting to create a more attractive ratio between price and the company's long-term potential.
CREDO TECHNOLOGY $CRDO
We have already informed you about Credo Technology, and from the beginning we viewed it as one of the more attractive companies in the AI infrastructure and high-speed data center connectivity space.
In our original analysis, we calculated a fair value of approximately $160 per share, and given the price at the time of around $150, we decided to buy.
But since then, the stock has risen very quickly. Over the past two weeks, it reached about $210, which is roughly a 40% gain compared to our purchase price.
The business itself still appeals to us, and nothing fundamental changes about our investment thesis. The problem is the current stock price. At around $210, we are already significantly above the level we considered fair based on our original valuation.
Therefore, at the current price, Credo doesn't seem cheap enough for us to buy more. If a more significant correction were to occur in the future, or if the company increased its earnings faster and our intrinsic value moved higher, we could return to the stock.
If you found this post interesting, you can also find it in video form on our Instagram. 📲
