By Jeremy Flint, Investor Place, Trades Of The Day, 2024-07-05
Low-priced stocks with upside are increasingly hard to find as top-performing mega-caps edge ever closer to overvaluation. As seen with Nvidia (NASDAQ:NVDA) recently, even moderate underperformance can be devastating when much of the wider market hinges on continued momentum.
At the same time, many are increasingly nervous as economic conditions don't seem as rosy as most agencies report, forcing investors not staking capital on mega-caps to generally keep their cash in reserve and reap the rewards of high interest rates offering decent yield with limited risk.
However, if we broaden our definition, a handful of low-priced stocks with upside are still available. In some cases, these stocks are purely undervalued despite high per-share pricing. In other instances, they fall within penny stock territory without the usual risks.
The ideal low-priced stocks with upside are those priced low enough that buying a handful of shares won't break the bank while also offering significant undervaluation based on current fundamentals or projected future performance.
Tilray Brands (TLRY)
Tilray Brands (NASDAQ:TLRY) stock may have dropped significantly this year, yet it remains a leading cannabis stock and low-priced stock with upside amid rescheduling developments. It boasts promising long-term growth potential due to its robust market position and strategic diversification efforts.
One of Tilray's key strengths is its growing craft beer business, a facet often overlooked by investors in favor of its key cannabis segment. Since acquiring several brands from Anheuser-Busch (NYSE:BUD) in 2023, Tilray's alcohol sales doubled, providing revenue diversification within a competitive cannabis market.
The craft beer sector's potential is substantial and frequently underappreciated — but for reasons beyond revenue. As efforts for broader recreational cannabis legalization gain momentum, Tilray's established production, distribution and operational infrastructure will help it bring products to market rapidly. This comprehensive network could be pivotal in nationwide cannabis product distribution, giving Tilray a significant edge over competitors.
Tilray plans to raise an additional $250 million to fund strategic acquisitions and expand its operations. Although this move will dilute existing shareholders, it offers a strategic entry point for long-term investors looking to capitalize on the potential upside in low-priced stocks with upside.
Apple Hospitality REIT (APLE)
As consumer sentiment improves and the summer travel season kicks off, Apple Hospitality REIT (NYSE:APLE) stands out among most low-priced stocks with upside, let alone other REITs. Apple Hospitality owns over 200 hotel properties across the U.S. and leases them to premier hoteliers like Marriott (NASDAQ:MAR) and Hilton (NYSE:HLT).
With a 6.72% dividend yield, the REIT offers a robust alternative to traditional fixed-income investments, providing stability and growth potential through its high-value properties and reliable tenants.
In its latest quarterly report, Apple Hospitality posted a notable increase in funds from operations (FFO), reaching $83.24 million, up from $78.96 million the previous year. FFO is a top metric for REITs as it reflects earnings from core operations, excluding gains from property sales, thus offering a clearer picture of leasing performance. This uptick in FFO during a typically slower travel period signals strong underlying performance.
Moreover, Apple Hospitality is reaping the benefits of a resurgence in business travel, with a marked increase in midweek bookings. This trend positions the REIT to capitalize on both the summer leisure travel surge and the ongoing recovery in business travel, ensuring high occupancy rates throughout the week.
Riot Platforms (RIOT)
Riot Platforms (NASDAQ:RIOT) is widely known for its Bitcoin (BTC-USD) mining operations, but its potential in the AI sector is often overlooked. And, despite a recent bump to per-share pricing, Riot remains a unique player among low-priced stocks with upside when you factor in potential future operations.
While primarily focused on cryptocurrency, Riot has a unique opportunity to transition into the AI space due to the rising costs of Bitcoin mining and the substantial power demands of AI companies.
Riot established a profitable revenue stream by selling excess energy back to local municipalities and utility companies, generating $71.2 million last year. Though the company hasn't yet targeted AI firms specifically, the increasing energy requirements of these companies suggest Riot could soon find a lucrative market in providing power for AI operations.
Furthermore, the current pace of data center construction is not keeping up with the explosive growth in AI demand. This scenario positions Riot's existing GPU facilities as highly valuable assets. Meanwhile, investors benefit from Riot's dual exposure: the crypto market, which has seen Bitcoin prices surge 40% in the past 6 months, and the potential expansion into AI energy solutions.
— Jeremy Flint
Source: Investor Place
The post 3 Low-Priced Stocks With 100%+ Upside Potential appeared first on Trades Of The Day.
