While it may be comfortable betting alongside the consensus opinion, investors seeking enhanced returns should consider undervalued long-term stocks. If you have the time to spare, these ideas should be relevant for the entire marathon, not just a sprint or two.
One of the advantages of targeting enterprises that could expand over an extended period is the predictability aspect. Typically, you’re looking at entities that are already deeply established. That offers comfort, number one. Number two, by specifically looking for fundamental discounts, you can potentially enjoy greater returns.
That might be a better strategy than focusing on high-risk, high-reward names, most of which could end up falling flat. With that in mind, below are undervalued long-term stocks to consider.
Deere (DE)
Based in Moline, Illinois, Deere (NYSE:DE) falls under the farm and heavy construction machinery category. Per its public profile, the company engages in the manufacture and distribution of various agricultural equipment worldwide. At first glance, DE might sound like a boring idea among undervalued long-term stocks. However, the sectors Deere serves are obviously critical for human health.
Not surprisingly, analysts rate shares a consensus moderate buy with a $424.07 average price target. That implies an upside of over 14%. Further, the high-side target lands at $495. During the trailing 12 months (TTM), Deere posted a net income of $9.47 billion, translating to earnings per share of $33.20. Revenue during the period reached $58.6 billion.
For fiscal 2024, covering experts believe EPS could come in at $25.40 on sales of $45.56 billion. Admittedly, that’s disappointing compared to last year’s results of EPS of $34.69 on sales of $55.56 billion. However, with DE’s modest performance in the market, it’s currently trading at 11.18X trailing-year earnings and 1.83X trailing-year sales.
About one year ago, these metrics stood at 14.05X and 2.11X, respectively. Given the importance of agriculture, DE represents one of the undervalued long-term stocks to buy.
TotalEnergies (TTE)
Based in France, TotalEnergies (NYSE:TTE) represents a multi-energy firm that produces and markets primarily oil. However, it also specializes in biofuels, natural gas, green bases, renewable energy sources and electricity generation. Along with its home market, Total serves the rest of Europe, North America, Africa and other regions. Fundamentally, TTE’s narrative as one of the undervalued long-term stocks comes down to this: the world continues to run on oil.
Not only that, the world may continue to run on oil for a very long time. For example, at the present juncture, the pivot toward electric vehicles is being stymied by a lack of infrastructure. That may take a while to resolve. In the meantime, hybrid vehicles offer a critical compromise. And that probably means hydrocarbon players like Total will be in business for the foreseeable future.
For fiscal 2024, analysts are looking at EPS to reach $9.29 on sales of $244.24 billion. That’s a mixed outlook given last year’s results of EPS of $9.40 on revenue of $237.13 billion. However, the geopolitical backdrop and the threat of global supply chain disruptions seem to favor a higher valuation for TTE.
Therefore, its present metrics of 7.95X trailing-year earnings and 0.8X trailing-year sales could be undervalued compared to future global dynamics.
Baidu (BIDU)
Headquartered in Beijing, China, Baidu (NASDAQ:BIDU) falls under the broad communication services space. In particular, it serves in internet content and information. Essentially, Baidu is the Google of China, mainly providing internet search services. In addition, the company offers what’s called Baidu Feed, which provides users with personalized data based on their demographics and interests.
Thanks to the massive scope of China’s consumer economy, BIDU ranks among the top undervalued long-term stocks to buy. Yes, its market performance has been disappointing recently. Further, questions exist about the health and stability of Chinese consumers. Still, we’re talking about a nation which is about four times the size of the U.S. Should a recovery occur, it could potentially send BIDU stock soaring.
During the TTM period, Baidu posted net income of $19.22 billion, translating to $6.48 per share. Revenue reached $134.97 billion. Looking out to the end of this fiscal year, experts believe EPS could come in at $11.40 on sales of $19.76 billion.
Admittedly, that’s a mixed picture. However, BIDU’s trailing-year earnings and sales fell to 15.04X and 1.77X, respectively. That’s well below the levels seen almost one year ago at 25.7X and 2.78X, respectively. Thus, it may be one of the undervalued long-term stocks to consider.
On the date of publication, Josh Enomoto 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 InvestorPlace.com Publishing Guidelines.