The 3 Most Undervalued Sleeper Stocks to Buy Now: August 2023

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In analysis from July 2022, Michael Gapen, the chief United States economist at Bank of America (NYSE:BAC), stated that he is expecting a mild recession this year. However, the unemployment rate in July fell by .2% to 3.5% and consumers continued to spend, which was not what analysts were expecting. It is likely that consumers will continue looking for undervalued sleeper stocks and investing in the technology giants, as surges in local government spending help the economy temporarily recover.

Because of this, we are analyzing to see if there are better alternatives for investors. In particular, here are some of the best sleeper stocks for you to add into your portfolio that are poised to capitalize on the current market dynamics for long-term growth.

ePlus (PLUS)

ePlus (NASDAQ:PLUS) is an American information technology (IT) SaaS company that specializes in IT solutions, financing and consulting services. They are named on CRN’s list of industry leaders in the SaaS solution-providing industry for 2023. PLUS has launched a threat detection response and guidance service with specialized consultants for customers of its managed detection and response services.

Additionally, ePlus has entered partnerships that strengthen its services. One is the acquisition of CCI Systems‘ Network Solutions Group. The acquisition allows ePlus to gain access to high-capacity networks, driving revenue through improving its service delivery capabilities. Palo Alto Networks (NASDAQ:PANW) also announced a partnership with ePlus for its detection and response security services.

ePlus has healthy financials, with $574.2 million in revenue for Q1 2024. ePlus further demonstrates its profitability with a 9% EBITDA margin.. PLUS stock is an undervalued buy stock because of its healthy financials, developments with its services, and partnerships that strengthen its services.

Alibaba (BABA)

Alibaba (NYSE:BABA) is one of the biggest Chinese technology conglomerates with multiple segments in e-commerce and technology. Alibaba is a highly diverse company in industries such as e-commerce, retail and technology. One of the biggest parts of Alibaba is its retail industry. That bodes well for the company because in 2022 the global retail market was valued at $21 trillion. It is forecast to reach over $41 trillion by 2030.

Alibaba is planning to undergo a major reorganization to split its businesses into six distinct business groups. By enabling each unit to concentrate on its specific niche, the reorganization prevents negative impacts from spreading across the company and promotes individualized growth.

BABA stock is currently down about 4% year-to-date (YTD). However, analysts forecast a median upside of nearly 60% over the next 12 months. Alibaba’s YOY ROE growth of 214% and its EPS GAAP growth of 32.05% underscore its impressive long-term growth trajectory. Plus, with a high gross profit margin of 37.45%, Alibaba’s financial strength can quickly capitalize on market trends.

Given Alibaba’s strong financials, high-growth potential, and especially its reorganization, BABA stock is a buy for any investor looking for high growth.

United Airlines (UAL)

United Airlines (NASDAQ:UAL) is one of the largest airline companies in the world. They provide airline transportation services throughout the 5 continents, running nearly 4,500 flights a day to 300 cities.

To stay competitive, United Airlines is adopting innovation by partnering with Archer (NYSE:ACHR) to acquire electric vertical takeoff and landing (eVTOL) aircraft. United has also partnered with Eve Air Mobility (NYSE:EVEX) with plans to operate air taxi routes in Chicago and San Francisco. Through this electric air travel venture, United Airlines aims to open new markets and attract diverse passengers with its eco-friendly approach, which will further drive growth and sustainability.

United Airlines’ financials so far in 2023 are remarkable. Their trailing 12-month revenue for 2023 has reached $50.88 billion, which reflects a 13.19% increase YOY. On top of that, UAL has been earning significant cash with YOY operating cash flow growth of 184.06%. UAL stock is up 31% YTD, and 18 analysts forecast a 12-month median price of $73, a 48% upside.

Given United Airlines’ exceptional financial growth and its promising eVTOL potential, UAL one of the sleeper stocks that represents an attractive option for investors seeking growth opportunities.

On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Michael Que is a financial writer with extensive experience in the technology industry, with his work featured on Seeking Alpha, Benzinga and MSN Money. He is the owner of Que Capital, a research firm that combines fundamental analysis with ESG factors to pick the best sustainable long-term investments.

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