Trading in stocks is all about finding undervalued stocks. A stock is said to be undervalued when it trades at a lower price compared to its intrinsic value. On the other end of the spectrum, a stock is said to be overvalued if it trades at a higher price compared to its intrinsic value.
Many traders look for undervalued stocks to capitalize on the opportunity for lower risk and higher potential rewards. Even a small swing in price can mean a lot. If you can pick stocks trading at a discount, you can potentially make a lot of money. Let us look at how companies trade and whether we can expect a downward or upward trend in the stock shortly.
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Alphabet Inc. (GOOG, GOOGL)
Buyers made up a majority of stockholders in Alphabet Inc. during May. As of the end of trading on May 2, the percentage of shares held by traders was 59.9%, compared to 52.5% at the same time last month. Surprisingly, the percentage of shares held by institutions was also up slightly from the previous month, at 34.4%. Institutions collectively hold roughly 86% of the stock overall.
The fact that traders are showing interest in Alphabet is likely a positive sign for the stock. Traders have been more price-sensitive than other types of investors, so positive sentiment could mean Alphabet won’t stay undervalued for too long.
Medifast Inc. (MED)
Medifast Inc. investors bought a net 6.6 million shares during May, worth about $78.2 million. This was the largest amount of fresh shares bought by investors during the month. In addition, the percentage of shares held by institutions rose to 45.3%, compared to 34.7% in the previous month.
The strong institutional buying could be a sign that the stock is on investors’ radar. Medifast is a dietary supplement company that develops and sells weight-loss products. Investors and traders might want to monitor this stock closely as it may be ripe for a breakout.
ASML Holding NV (ASML)
ASML Holding NV investors bought 18.4 million shares during May, worth about $371.6 million. This was the largest amount of shares bought by investors during the month. In addition, the percentage of shares held by institutions rose slightly compared to the previous month, at 41.0%.
ASML is a semiconductor equipment company that makes devices that are used in the fabrication of computer chips. The recent drop in stock price could signify that investors are buying up shares of this company.
EOG Resources Inc. (EOG)
EOG Resources Inc. investors bought a net of 1.2 million shares during May, worth about $5.5 million. This was the smallest amount of shares bought by investors during the month. In addition, the percentage of shares held by institutions was essentially unchanged from the previous month, at 61.7%.
EOG Resources is a midstream oil and gas company that provides logistics and services to the oil and gas industry. The recent uptick in oil prices may be driving this buying activity, as midstream companies have a lot of exposure to crude prices.
Lowe’s Cos. Inc. (LOW)
Lowe’s Cos. Inc. investors bought a net 10.7 million shares during May, worth about $131.9 million. This was the second-largest amount of shares bought by investors during the month. In addition, the percentage of shares held by institutions rose slightly compared to the previous month, at 36.9%.
Lowe’s is a hardware retailer that sells home improvement products, such as appliances and building materials. Lowe’s is the largest hardware retailer in the U.S., so this stock could be a good long-term investment.
Microsoft Corp. (MSFT)
Microsoft Corp. investors bought a net 6.8 million shares during May, worth about $94.3 million. This was the fourth-largest amount of shares bought by investors during the month. Institutions collectively own roughly 37% of the stock, according to reports.
Microsoft is a technology company that develops software for business use. Analysts believe the recent surge in stock price is due to short-term optimism about the company’s future.
Upstart Holdings Inc. (UPST)
Upstart Holdings Inc. investors bought 9.3 million shares during May, worth about $125.1 million. This was the fifth-largest amount of shares bought by investors during the month. Institutions collectively own roughly 81% of the stock, according to reports.
Upstart is a software development company that provides technology solutions. The recent rise in stock price could be a sign that investors are betting this company will outperform the market.
Visa Inc. (V)
Visa Inc. investors bought a net of 9.2 million shares during May, worth about $122 million. This was the sixth-largest amount of shares bought by investors during the month. Institutions collectively own roughly 69% of the stock, according to reports.
Visa is a financial technology company that provides payment processing services, such as credit card services. Analysts believe the recent surge in stock price could signify that investors are bullish on the company’s future.
Grupo Aeroportuario del Sureste SAB de CV (ASR)
Grupo Aeroportuario del Sureste SAB de CV investors bought 13.6 million shares during May, worth about $176.7 million. This was the seventh-largest amount of shares bought by investors during the month.
Institutions collectively own roughly 78% of the stock, according to reports. ASR is a maritime transport company based in Mexico. The recent rise in stock price could mean that investors believe the company will perform well.
Meta Platforms Inc. (FB)
Meta Platforms Inc. investors bought 18.9 million shares during May, worth about $242.3 million. This was the eighth-largest amount of shares bought by investors during the month. Institutions collectively own roughly 79% of the stock, according to reports. Meta is a social network that has become a need for the corporate marketers and individuals. Investors may jump in after Facebook Inc.’s recent plunge, which may signify that this stock is undervalued.
Bottom line
During May, equities appeared to be a buy candidate. GOOG, MED, EOG, LOW, and MSFT topped the list in which stocks investors were buying the most. If you’re looking for undervalued stocks, these companies fit the bill. In addition, stocks trading at a discount to their intrinsic value may offer a high reward for the risk taken.
