Revolutionary Turnaround: Six Flags Entertainment (SIX)
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Six Flags Entertainment (NYSE:SIX) operates regional theme parks across North America. The stock has been mired in a brutal downtrend since 2018, with the pandemic delivering a crushing blow that it’s still recovering from. However, I believe brighter days lie ahead as travel demand resurges. In Q1, Six Flags’ season pass sales jumped double-digits, with both unit sales and average prices rising. Group sales have also rebounded over 20% year-over-year, nearing pre-COVID levels.
Most encouraging, in-park spending per guest climbed 5% when excluding discontinued memberships, driving record Q1 in-park revenues. Management’s “premiumization” strategy of enhancing park offerings and infrastructure seems to resonate as guests stay longer and spend more. Rising EPS should also lift the stock in the long run.
Source: Chart courtesy of GuruFocus.com
I believe Six Flags’ attendance and margins can keep recovering as interest rates eventually ease and consumer discretionary spending picks up. For patient investors, this battered stock could deliver meaningful upside.
Financial Maverick: Block (SQ)
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Block (NYSE:SQ) provides mobile payment solutions for businesses and individuals. The company delivered impressive Q1 results, beating on both the top and bottom lines with EPS of 85 cents and revenue growth of over 19% YOY to $5.96 billion.
While Block was often viewed as a high-growth but unprofitable alternative to PayPal (NASDAQ:PYPL), I believe the stock is deeply undervalued and poised for a sharp recovery. The recent pullback in shares alongside other fintech names misrepresents Block’s robust fundamentals.
Block has not only turned the profitability corner, but also maintained strong double-digit top-line momentum. Analysts expect 14% revenue growth for 2024 and expect EPS to skyrocket from $3.40 this year to $15 by 2033. It’ll be very hard for the market not to reward the profitability.
Source: Chart courtesy of GuruFocus.com
Block looks like a compelling buy trading at these beaten-down levels.
Giant Reawakening: Alibaba (BABA)
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Alibaba (NYSE:BABA) is one of China’s largest tech giants, and I believe the stock is a screaming buy at these depressed levels. The broader Chinese market has been struggling, but there are clear signs of a recovery as the government eases monetary policy. Alibaba reported robust results this quarter, with its core Taobao and Tmall businesses achieving double-digit GMV growth. International commerce revenue surged 45%, and cloud revenue saw strong double-digit gains, driven by triple-digit growth in AI-related sales.
I’m confident Alibaba will outperform going forward as it slashes cloud service prices to boost adoption. With China’s vast data industry unlikely to rely on foreign tech, Alibaba is perfectly positioned to dominate this market for years to come. Management expects a gradual return to healthy GMV growth in fiscal 2025 as the shopping experience improves. While new monetization products won’t launch until the second half, I believe Alibaba’s investments in pricing, supply, and service will pay off hugely in the long run. Analysts also see solid upside.
Source: Chart courtesy of GuruFocus.com
It is definitely one of the most deeply undervalued stocks at these levels.
Medical Marvel: Baxter International (BAX)
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Baxter International (NYSE:BAX) is a leading global medical products company. I believe Baxter is a deeply undervalued stock poised for significant upside. The healthcare industry is booming due to an aging population, new drug innovations, and increasing health challenges. Baxter is well-positioned to benefit from these tailwinds in the long term.
In Q1, Baxter delivered solid results, beating on both revenue and EPS. Sales grew 3% in constant currency, driven by broad-based demand and pricing strength. Margin improvement initiatives are also gaining traction. Baxter’s essential product portfolio and newly streamlined operating model provide durability and strategic clarity.
Undervalued Stock Picks That Could Be Hidden Gems for Investors
Baxter International Inc.
Investors eyeing opportunities in healthcare may find themselves drawn to Baxter International Inc. (NYSE:BAX). With a reputation for innovation, Baxter stands out despite a recent underperformance in the Healthcare Systems & Technology segment.
The recent FDA clearance of Baxter’s next-gen Novum IQ infusion pump platform offers a glimmer of hope. This new technology is likely to attract hospitals looking to upgrade, potentially fueling growth for Baxter in the near future.
Adding to its allure, Baxter also provides an attractive 3.4% dividend yield, which makes it a potentially rewarding choice for income-focused investors.
Carnival Corporation (CCL)
Setting sail in the world of travel stocks, we encounter Carnival Corporation (NYSE:CCL), a company that has weathered the storm of the pandemic and is now looking to make waves in the market.
Despite being down 66% from pre-pandemic levels, the stock has charted a 30% course upwards in the past year, hinting at brighter days ahead. Carnival’s record revenues, bookings, and customer deposits in Q1, coupled with a 17% year-over-year yield increase, suggest a strong trajectory.
As the cruise industry sets sail on the path to recovery and with potential rate cuts on the horizon, Carnival’s prospects look promising. Lower interest rates could buoy the company, helping it navigate through choppy financial waters more smoothly.
FMC Corporation (FMC)
FMC Corporation (NYSE:FMC) is cultivating a different type of growth in the market with its crop protection products. Despite experiencing a significant drop in stock value since the start of 2023, FMC is showing signs of a potential resurgence.
While Q1 revenues missed expectations due to channel destocking, FMC remains optimistic about the future. As growers recalibrate their inventory levels and the market stabilizes, FMC is in a favorable position to capitalize on the looming market recovery starting in Q2.
With strategic restructuring efforts aimed at delivering net savings and robust free cash flow improvements, FMC seems poised for a price recovery, riding high on renewed revenue and EPS growth expectations.
Dollar General (DG)
For budget-conscious investors seeking retail opportunities, Dollar General (NYSE:DG) emerges as a beacon of hope in the current market scenario. With a chain of discount retail stores dotting the U.S. landscape, Dollar General has a strong foothold in the consumer market.
Boasting a remarkable 6.1% sales growth in Q1, coupled with an expansion of its store network, Dollar General demonstrates resilience in attracting consumers in various economic climates. The company’s ability to cater to essential needs has positioned it as a favored shopping destination for many.
Although recent market pressures have weighed on the stock price, the long-term growth narrative for Dollar General remains compelling. Investors who weather the storm and seize the opportunity presented by this dip may reap significant rewards as the retail giant bounces back on track to deliver strong returns.