It could pay to look into the most overlooked stocks in the market right now. Despite big gains or major catalysts looming on the horizon, some stocks have trailed the broader market’s performance or been ignored by the financial press, analyst community, and investors. This is unfortunate as it means that investors are missing out on some potentially big gains that could lift their portfolios.
While the current stock market rally has broadened, it remains heavily concentrated in a select number of large-cap technology stocks and companies focused on artificial intelligence (AI). However, it might not be long before some market laggards are back on the fast track and their stocks are surging. At the same time, some stocks that have quietly outperformed in recent months may have more runway ahead.
Here are the three most overlooked stocks that could stage a triple-digit comeback: June edition.
Most Overlooked Stocks: GoDaddy (GDDY)
Website developers might seem a little outdated amid the current artificial intelligence (AI) boom. But don’t tell the shareholders of GoDaddy (NYSE:GDDY) that. The website development and web hosting company’s stock has nearly doubled in the past 12 months, driven by a 38% gain so far in 2024. The stock has performed well enough to be added to the benchmark S&P 500 index effective June 24.
Despite the big run higher in its share price, GoDaddy stock is currently trading at a low multiple of just 12 times future earnings estimates. Inclusion in the S&P 500 index will likely send GDDY stock higher as mutual funds and exchange-traded funds (ETFs) that track the index will be required to buy shares. GoDaddy’s stock has been rising due to financial results that beat Wall Street estimates.
Southwest Airlines (LUV)
On the day of this writing, shares of Southwest Airlines (NYSE:LUV) are up 8% on reports that activist investor Elliott Investment Management has built a $1.9 billion stake in the carrier. Privately held Elliott has become one of Southwest Airlines’ largest investors and plans to push for changes to reverse the company’s slump. Southwest, the biggest U.S. discount airline, has struggled in recent years with the pandemic, a systemwide meltdown, labor unrest, and delays in new aircraft deliveries.
Elliott Investment Management is one of the world’s most influential activist investors. The firm takes big stakes in publicly traded companies and then pushes for change. According to media reports, Elliott Management plans to engage with Southwest’s executive team. Of course, Southwest is not the only airline that has struggled since the onset of the pandemic. However, with air travel back to record levels, analysts and investors expect Southwest’s stock to perform better than it has been.
While up 5% in the year, Southwest Airlines stock is trading 42% lower than five years ago. That could change with Elliott Investment Management involved. The firm reportedly seeks to oust Southwest CEO Bob Jordan and overhaul the airline’s board of directors.
Apple (AAPL)
Don’t count out Apple (NASDAQ:AAPL). The consumer electronics giant has been one of the most overlooked stocks of the year. Since January, Apple stock has gained 5% versus a 13% increase in the benchmark S&P 500 index. Apple’s share price might rise sharply after the company’s annual Worldwide Developers Conference, which began on June 10. That’s because Apple could unveil new AI-enabled products at the conference.
Products anticipated include a new Siri voice assistant for the iPhone that employs AI, new AI microchips, and a potential partnership with privately held OpenAI. Analysts say the addition of AI should help boost sales of new iPhones at a time when they face strong competition, particularly in China. Apple might also announce new microchips supporting AI computers and laptops.
New AI products could be the spark that lights a fuse under AAPL stock. Analysts say that investors want to know that Apple can still innovate and isn’t completely shut out of the AI revolution.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
