As the curtain closed on 2023 with most stocks rallying, fueled by the anticipation of a potential Federal Reserve interest rate cut, investors are eagerly eyeing the opportunities that 2024 might bring. Notably, the past year witnessed an improved performance across various stocks, with many rebounding from losses incurred in 2022.
To uncover hidden gems in the market, Finbold turned to OpenAI’s generative artificial intelligence (AI) tool, ChatGPT, to identify a select few stocks that are undervalued despite boasting strong fundamentals. The tool picked the following stocks.
Topping the list is PayPal (NASDAQ: PYPL), the digital payments giant that continues to redefine the landscape of financial transactions. ChatGPT notes that the company possesses strong growth prospects and is trading at a discount to its historical valuation. With the ongoing shift to online payments, the tool indicates that PayPal is well-positioned to capitalize on evolving consumer preferences.
Although PayPal stock recorded losses in the past year, the stock is worth considering due to key fundamentals, such as the company’s substantial free cash flow generation. For instance, for the quarter ending September 30, PayPal produced $1.1 billion in FCF, constituting 14.9% of its $7.4 billion in net revenue for the same quarter.
By the last close of markets, PYPL was trading at $61.41 with one-year losses of 17%.
Verizon (NYSE: VZ), a prominent telecommunications company, holds the second position due to its well-established reputation for delivering a dependable dividend. According to ChatGPT, Verizon trades at a low price-to-earnings ratio, making it an appealing choice for investors. The company’s strategic involvement in the 5G technology rollout further enhances its allure, offering potential gains as the technology landscape evolves.
Despite facing challenges stemming from the surge in interest rates, Verizon’s stock is also poised to benefit from potential interest rate cuts. Interestingly, the stock has exhibited positive indications in the short term.
Moreover, Verizon recently disclosed its Q3 earnings, revealing a decline compared to the previous year but surpassing Wall Street estimates. In the third quarter ending September 30, 2023, VZ’s total operating revenues amounted to $33.34 billion.
The stock is currently down 6% in the past year, trading at $37.70.
Archer Daniels Midland (NYSE: ADM), a global agricultural processor, emerges as another undervalued choice in 2024, according to ChatGPT. With a diversified portfolio, the company is trading at a discount to its peers, as noted by ChatGPT. The favorable market climate, marked by rising food prices and growing biofuel demand, positions ADM well for potential growth.
Despite an overall decrease in the company’s shares over the past year, investor attention is now directed toward the upcoming earnings release. Projections indicate an anticipated earnings per share (EPS) of $1.65, reflecting a 14.51% decrease from last year’s corresponding quarter. Simultaneously, the latest estimate foresees revenue at $24.35 billion, signaling a 7.16% decline compared to the same quarter in the previous year.
The stock’s current valuation is $72.22, showing one-year losses of nearly 20%.
ChatGPT has identified NextEra Energy (NYSE: NEE) as the fourth pick, ranking among the largest renewable energy producers in the U.S. According to ChatGPT, the company is trading at a reasonable valuation, considering its substantial growth prospects. Positioned to capitalize on the rising demand for sustainable solutions amidst the global transition to clean energy, NextEra Energy stands out.
NextEra’s success is rooted in its dual structure: a sturdy regulated utility foundation, primarily represented by Florida Power & Light, delivering consistent performance fueled by the state’s steady population growth.
In addition to this stable core, NextEra has become one of the world’s largest clean energy companies. Poised for continuous expansion, particularly in the context of the global shift towards renewable power, NextEra’s renewable business currently boasts a capacity of 34 gigawatts, with plans to increase this to up to 41 gigawatts by 2026.
The stock is valued at $60.74, representing losses of 27% over the past year.
Closing the list is Albemarle (NYSE: ALB), the leading producer of lithium, a crucial material for electric vehicles (EV). ChatGPT highlights that Albemarle is currently trading at a discount to its growth potential, making it an intriguing option for investors. With the rising demand for electric vehicles, the company stands to benefit from the surge in the clean energy sector.
In the meantime, ALB is down 32%, with the stock trading at $144.48.
Taking all factors into consideration, the highlighted companies possess strong fundamentals that could potentially have a positive impact on their stocks.
