5 Cheap NASDAQ Stocks to Buy

3. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Holders: 177

Meta Platforms, Inc. (NASDAQ:META) is a cheap stock given its substantial competitive advantages and forward P/E ratio of 15.21. While Meta Platforms, Inc. (NASDAQ:META)’s forward valuation isn’t exactly the lowest in tech, the company’s earnings estimates are fairly low given analysts expect the social media giant to spend a lot next year. If Meta Platforms, Inc. (NASDAQ:META) cuts back on spending, the forward P/E ratio could look more attractive.

ClearBridge Investments commented on Meta Platforms, Inc. (NASDAQ:META) in a Q3 2022 investor letter,

Meta Platforms, Inc. (NASDAQ:META), one of two overweights among the mega cap stocks, underperformed in the third quarter (-15.9%) and is the Strategy’s largest detractor year to date. Meta has also trailed mega cap advertising peer Alphabet, which we don’t own, as revenue growth has slowed due to tough comparables to a strong e-commerce environment in early 2021, negative impacts from Apple’s privacy changes and rising expenses.

While we have trimmed our position close to 20%, we remain invested as we do not think the stocks’ valuation at about 13x consensus 2023 earnings appropriately reflects its long-term earnings and free cash flow generation potential. Despite current revenue headwinds, we believe Meta is well-positioned to navigate industrywide changes to advertising targeting and its transition to the Reels short-form video format will monetize in the coming years, helping to re-accelerate revenue growth.

We also welcome Meta’s implementation of cost-cutting measures, which should help uncover the company’s high underlying profitability. Lastly, we see Meta’s investments in augmented reality as a call option for long-duration investors.