Comcast Corp. (NASDAQ: CMCSA), Qualcomm Inc. (NASDAQ: QCOM) and Williams-Sonoma Inc. (NYSE: WSM) hail from very different industries, but the three stocks have one thing in common: All are dividend payers that could be considered undervalued, relative to their future potential.
A stock may be considered undervalued for various reasons. For starters, fundamental analysis may reveal that the stock's current price is lower than its intrinsic value. That refers to factors including earnings and revenue potential, as well as cash flow projections.
Additionally, if market sentiment or short-term factors have suppressed a stock's price, it could present an attractive entry point. For example, small- and mid-cap bank stocks were sold off hard in March and April, before beginning to rally in mid-May, as concerns about a banking crisis eased.
Finally, a stock may be overlooked or underfollowed by analysts or investors. That’s especially true of small- and mid-cap stocks, or even large caps in slower-growth, unglamorous or out-of-favor industries. When big investors and analysts pay scant attention to a stock, it may result in mispricings that can benefit retail investors.
Here’s a look at three stocks that may have room to run, as bargain-shopping investors realize their potential.
Comcast’s annualized dividend per share is $1.16, for a yield of 2.92%, according to MarketBeat’s Comcast dividend data.
The company has a 16-year track record of increasing its dividend.
While many consumers associate Comcast with their Xfinity cable package, the company also owns NBCUniversal, whose properties include NBC, Telemundo, CNBC, USA Network, MSNBC, Oxygen, Bravo, Syfy, E!, Universal Pictures, Peacock, Universal Parks & Resorts and DreamWorks Animation, among others.
Analysts see earnings flat this year, but increasing by 12% in 2024.
Bank of America upgraded the stock on May 1, saying it found valuations “undemanding,” meaning it sees upside potential relative to where the stock is currently trading.
B of A also noted that Comcast also maintains a strong balance sheet, and the company may benefit from a planned sale of its stake in streamer Hulu to The Walt Disney Co. (NYSE: DIS) in early 2024.
The stock has been forming a flat base below a buy point of $42.10. You can see that formation on the Comcast chart.
San Diego-based Qualcomm makes semiconductors and other gear used in smartphones and other devices. As smartphone sales are slowing, for numerous reasons, Qualcomm’s stock has been hit especially hard. A dispute with major customer Apple Inc. (NASDAQ: AAPL) and investors’ fears that Qualcomm would lose that business didn’t help.
A 20.86% rally in the past month has resulted in a year-to-date gain of 14.59%, even as the stock continues to work its way out of a cup-shaped pattern that’s part of a larger downtrend. The stock’s current buy point is above $139.94.
Qualcomm’s dividend data show that the company’s annual dividend per share is $3.20, and the yield is 2.62%. The company has increased its dividend for 21 years.
Morningstar analyst Brian Colello says he expects the chipmaker to retain its leadership in the areas of 5G and lower frequency bands. He wrote, “Apple’s decision to build its own baseband chips, or modems, to displace Qualcomm should be a medium- to long-term headwind, but not a death blow, especially as Qualcomm is poised to grow in automotive and Internet of Things semiconductors.”
You may be familiar with Williams-Sonoma’s stores located in upscale shopping areas, but the company actually operates on what it calls a “digital-first, design-led” strategy. According to the most recent annual report, “Our e-commerce channel has been our fastest-growing business over the last several years and represented more than 66% of our net revenues and profits in fiscal 2022.”
The digital strategy is clearly paying off, as other home goods retailers whose primary business relies on walk-in traffic, struggle.
The Willams-Sonoma dividend yield is 2.85%, and the annualized dividend per share is $3.60.
The company has increased its dividend for 17 years in a row. That kind of longevity also tells you that the company has been consistently profitable, which is a sign of an efficiently run operation.
Williams-Sonoma’s P/E ratio is 8, which is in line with many of its peers in the home furnishings and home goods retail segment.
Williams-Sonoma analyst ratings show a consensus view of “hold.”