5 Undervalued Cyclical Stocks To Invest In According to Analysts

In this article, we discuss the 5 undervalued cyclical stocks to invest in according to analysts. To read the detailed analysis of current market conditions and cyclical stocks, go directly to the 10 Undervalued Cyclical Stocks To Invest In According to Analysts.

5. JD.com, Inc. (NASDAQ:JD)

PE ratio as of April 18: 12.08

Average Analyst Price Target Upside: 49.75%

Number of Hedge Fund Holders: 56

JD.com, Inc. (NASDAQ:JD) is a supply chain-based technology and service provider. It is one of the undervalued cyclical stocks to invest in according to analysts as it is trading at a price-to-earnings multiple of 12.08x, as of April 18. In the fourth quarter of 2023, 56 hedge funds had stakes in JD.com, Inc. (NASDAQ:JD), with total positions worth $1.77 billion. Tiger Global Management LLC is the largest in the company as of Q4 of 2023 with a position worth $254.347 million, representing 1.8% of the investment portfolio.

On April 18, JD.com, Inc. (NASDAQ:JD) announced that the company bought back 87.5 million Class A ordinary shares (equivalent to 43.8 million ADSs) in the quarter that ended on March 31 in the open markets from both NASDAQ and the Hong Kong Stock Exchange for $1.2 billion.

Based on 9 Wall Street analysts’ ratings over the past three months, JD.com, Inc. (NASDAQ:JD) has a consensus rating of Moderate Buy. The average price target of $37.97 implies an upside of 49.75% to the stock’s current price, as of April 18.

4. Aptiv PLC (NYSE:APTV)

PE ratio as of April 18: 6.65

Average Analyst Price Target Upside: 50.75%

Number of Hedge Fund Holders: 39

Aptiv PLC (NYSE:APTV) is a designer, manufacturer, and seller of vehicle components and operates through Signal and Power Solutions, and Advanced Safety and User Experience segments.

Aptiv PLC (NYSE:APTV) has a PE ratio of 6.65, as of April 18. In the past three months, the stock has received Buy ratings from 10 Wall Street analysts. As of April 18, the average price target of $104.38 has an upside of 50.75% from the last price of $69.24.

39 hedge funds held positions in Aptiv PLC (NYSE:APTV) and their stakes amounted to $1.242 billion in the fourth quarter of 2023. As of December 31, 2023, Ian Simm’s Impax Asset Management is the most dominant shareholder in the company and has a position worth $651.977 million.

ClearBridge Investments commented on Aptiv PLC (NYSE:APTV) in its fourth quarter 2023 investor letter:

“Stock selection in the consumer discretionary sector also weighed on performance. This included two of the portfolio’s top individual detractors in Hasbro and Aptiv PLC (NYSE:APTV). Similarly, Aptiv, a Tier 1 automotive parts supplier to global automakers, faced lingering pressure stemming from the United Auto Workers strike earlier in the year as well as a lull in electric vehicle orders. However, unlike Hasbro, we see these headwinds as transitory issues and believe the company is the market leader and exceptionally well-positioned to be a long-term beneficiary of the growth in EVs.”

3. Alibaba Group Holding Limited (NYSE:BABA)

PE ratio as of April 18: 12.86

Average Analyst Price Target Upside: 51.59%

Number of Hedge Fund Holders: 116

Alibaba Group Holding Limited (NYSE:BABA) is a Chinese company engaged in e-commerce and retail, among others. On April 10, Citi analyst Alicia Yap lowered the price target on the stock to $124 from $126 and maintained a Buy rating on the shares. The stock has a consensus Buy rating among 15 analysts and its average price target of $104.49 represents an upside of nearly 52% from current levels.

As of April 18, the stock’s PE ratio is 12.86, which makes it one of the undervalued cyclical stocks to invest in according to analysts. According to our database, 116 hedge funds held stakes in Alibaba Group Holding Limited (NYSE:BABA) in the fourth quarter of 2023, with positions worth $3.587 billion. As of December 31, 2023, with 4.35 million shares of the company, valued at $337.168 million, Appaloosa Management LP is the top shareholder of the company.

Artisan Partners stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its fourth quarter 2023 investor letter:

“Pretty much all of our holdings rose during the quarter. Only one stock declined by more than a couple of percent—Alibaba Group Holding Limited (NYSE:BABA), which was down 9% for the quarter and 12% for the year. This investment continues to be a disappointment. We estimate the shares are trading at around 5X EBITA—a valuation normally reserved for a company with evaporating profits. While it’s true Alibaba is underperforming its peers in the market, the fact is it remains the market leader in its core businesses, and the business is still growing. In the most recent quarter, revenues grew 9% and profits grew 26%.It’s not evaporating.

The management seems to be making meaningful changes designed to enhance shareholder value, including structural changes to improve profitability and restore its competitive position. It is monetizing non-core assets and making improvements in capital allocation. A lot of good things are happening that are not yet recognized in the share price. There are reasons—primarily geopolitical—for this, but at the current valuation, we could easily see the shares double and they would still be cheap.”

2. Baidu, Inc. (NASDAQ:BIDU)

PE ratio as of April 18: 12.52

Average Analyst Price Target Upside: 67.04%

Number of Hedge Fund Holders: 48

Baidu, Inc. (NASDAQ:BIDU) is a provider of internet search services and offers its services through two segments, Baidu Core and iQIYI. Baidu, Inc. (NASDAQ:BIDU) was part of 48 hedge funds’ portfolios in the fourth quarter of 2023 with a total stake value of $1.7 billion. Alkeon Capital Management is the biggest shareholder in the company and has a position worth nearly $260.437 million as of Q4 2023. As of April 18, the stock’s PE ratio is 12.52.

Baidu, Inc. (NASDAQ:BIDU) has a consensus rating of Strong Buy, as per the 14 Wall Street analysts that have covered it over the past three months. The average price target of $159.37 represents an upside of 67.04% from the last price of $95.41, as of April 18.

Ariel Investments mentioned Baidu, Inc. (NASDAQ:BIDU) in its fourth quarter 2023 investor letter:

“By comparison, China’s internet search and online community leader, Baidu, Inc. (NASDAQ:BIDU) traded lower alongside Chinese equities as intensifying problems in China weighed on investor sentiment during the period. The company continues to invest heavily in Artificial Intelligence (AI) and recently launched its generative AI, Ernie Bot, aimed at rivaling Open AI’s ChatGPT. While monetization of the new technology is largely dependent on regulatory review, we think Baidu should continue to experience margin improvement with the ongoing implementation of efficiency and profitability initiatives. While some investors remain on the sidelines due to uncertainty surrounding China’s economic growth, government regulations, and the political rhetoric towards Taiwan, we remain enthusiastic about Baidu’s longer-term opportunity for revenue growth and margin expansion across internet search, cloud, autonomous driving, artificial intelligence and online video.”

1. ON Semiconductor Corporation (NASDAQ:ON)

PE ratio as of April 18: 12.84

Average Analyst Price Target Upside: 93.39%

Number of Hedge Fund Holders: 45

ON Semiconductor Corporation (NASDAQ:ON) is a semiconductor company, and it is an undervalued stock, as its price-to-earnings ratio is 12.84, as of April 18.

ON Semiconductor Corporation (NASDAQ:ON) occupies the first place on our list of undervalued cyclical stocks to invest in according to analysts as 20 Wall Street analysts have covered the stock, and 15 keep a Buy-equivalent rating on the stock. As of April 18, the average price target of $121.37 implies an upside of 93.39% from present levels.

In Q4 of 2023, 45 hedge funds held positions in ON Semiconductor Corporation (NASDAQ:ON), and their total stakes amounted to $885.107 million. As of the fourth quarter of 2023, D E Shaw is the most prominent shareholder in the company. The firm has increased its stake in the company by 66% to 2.975 million shares worth $248.534 million.

Artisan Select Equity Fund stated the following regarding ON Semiconductor Corporation (NASDAQ:ON) in its first quarter 2024 investor letter:

“Among our top detractors were Atlassian, ON Semiconductor Corporation (NASDAQ:ON) and Exact Sciences. ON Semiconductor is a leading designer and manufacturer of chips for power management and image sensing. From a battery-electric vehicle (EV) standpoint, ON is a leading producer of silicon carbide chips. Shares have been under pressure as the company grapples with multiple quarters of inventory right-sizing across the entire auto supply chain and slower-than-expected growth of EV sales. However, ON is seeing smaller sales declines than peers due to market share gains, and we believe the company will be equally well positioned if automakers rebalance their efforts from full EVs toward hybrid vehicles. We remain patient.”

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Disclosure: None. You can also look at the 30 Least Developed Countries in Africa in 2024 and Bill Miller’s Latest 13 Stock Picks.

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