3 Deeply Discounted Stocks the Smart Money Is Scooping Up

Portfolio managers and Wall Street analysts do more research than the average person before buying a stock. These individuals can also draw from years of experience and connect past and present events to discover hidden opportunities. 

It’s possible to generate higher returns by paying attention to which stocks smart money buys. While you should still analyze a stock instead of buying it based on what someone else is doing, monitoring smart money trends can save a lot of time. You can quickly decide if a stock is worth analyzing. Then, do your own research to determine if the stock makes sense for your long-term financial goals.

Indeed, some stocks look deeply discounted relative to their long-term opportunities. Interestingly, some of these ‘discounted’ stocks are approaching all-time highs. Many investors think about a stock’s price in the next 10-20 years instead of its current price. With that in mind, let’s examine some of the deeply discounted smart money stocks.

Microsoft (MSFT)

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Microsoft (NASDAQ:MSFT) is a top smart money stock due to its consistent financial growth, business segments and catalysts. The tech giant offers exposure to artificial intelligence (AI), cloud computing, business software, advertising, social media, gaming and other verticals. It’s practically it’s own fund, but Microsoft is dominating in most of the verticals in which it operates.

The company reported 17% year-over-year (YOY) revenue growth in the third quarter of fiscal 2024 and delivered 20% YOY net income growth. Microsoft Cloud was the top performer and generated more than half of Microsoft’s total revenue. Also, Microsoft achieved double-digit growth rates for most of its business segments.

The Magnificent Seven stock has steadily outperformed the stock market for several years, including this one. Shares are up by 26% year-to-date (YTD) and have gained 241% over the past five years. Wall Street analysts have been bullish for several years. Hence, Microsoft is rated as a strong buy and has a projected 7% upside from current levels.

Meta Platforms (META)

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Meta Platforms (NASDAQ:META) is another stock that looks undervalued despite hitting all-time highs. The stock is a smart money favorite with a 56% YTD gain. And, it’s almost tripled over the past five years. The $1.37 trillion corporation trades at a 31 P/E ratio and offers a 0.37% yield.

The advertising giant is undervalued because of Meta Platforms’ superb financial growth. The company reported 27% YOY revenue growth and 117% YOY net income growth in the first quarter. The high net income growth comes as the company trims its headcount and looks for other opportunities to cut costs. 

Moreover, Meta Platforms has 3.24 billion daily active users across its platforms. That’s a strong foundation for any initiatives Meta Platforms works on to diversify its revenue. The company is investing heavily into AI and virtual reality (VR) to diversify beyond advertising. Therefore, Wall Street analysts are confident in Meta Platforms’ prospects based on the consensus strong buy rating.

Alphabet (GOOG, GOOGL)

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is charging forward a $3 trillion market cap. The online advertising leader currently has a $2.36 trillion market cap and trades at a 30 P/E ratio. Shares are up by 38% YTD and have gained 239% over the past five years.

Smart money is loading up on this stock as it capitalize on AI. Gemini has gone through some growing pains and looks ready to contribute to the company’s future. Also, Google Cloud benefits from AI as more businesses rely upon the cloud computing provider to store their data and host AI applications.

Revenue increased by 15% YOY in the first quarter as advertising and cloud computing continued to shine brightly. Net income jumped by 57% YOY as Alphabet trimmed its costs while delivering exceptional growth for its shareholders. Google Cloud now makes up more than 10% of the company’s total revenue and can continue to revenue acceleration in subsequent quarters.

On this date of publication, Marc Guberti held long positions in MSFT and GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.