Key Takeaways:
- Google’s earnings have grown 20% annually over the past decade, and analysts expect over 10% annual revenue and earnings growth moving forward.
- MSCI is a long-term compounder and looks undervalued today. The stock has seen 25% annualized returns over the past decade, driven by its strong returns on capital.
- PepsiCo has increased its dividend for 53 consecutive years, and analysts see nearly 10% upside with the stock today.
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Investing in wide-moat companies when they look undervalued can be a great way for long-term investors to see outsized returns over time.
Here are three of the best undervalued wide-moat stocks available on the market today. Stocks 1 & 2 look particularly interesting.
1: Google (GOOGL)
Some investors worry that AI could crush Google’s Search business.
Yes, AI will certainly have an impact on Google.
However, Google’s seen strong earnings growth in recent years, and analysts expect both Google’s revenue and earnings to grow over 10% annually for the next three years.
Does this look like a dying company?
Why Google looks like a good opportunity today:
- Google Cloud, YouTube, Waymo, and AI provide growth opportunities outside of Google’s Search business.
- The stock trades at just under 19 times forward earnings.
- Analysts expect revenue and earnings to both grow over 10% annually over the next 3 years.
- Analysts see about 30% upside for the stock today.
Google remains a dominant tech company with multiple revenue streams, making it a compelling investment despite recent concerns.
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2: MSCI (MSCI)
MSCI is a financial data powerhouse that quietly dominates the investment industry.
ETFs and asset managers use the indexes that MSCI owns, which leads to highly predictable recurring revenue for MSCI as well as extraordinary returns on capital.
A business with high returns on capital earns real shareholder profits from its investments. This profitability ultimately drives earnings growth, which leads to shareholder returns.
MSCI saw 25% annual returns over the past 10 years, while earnings per share grew nearly 23% annually over this time. The business should continue to see strong returns on capital.
Long-term return on capital figures and EPS growth figures matter because they show you the underlying quality of the business.
The numbers clearly show that MSCI is a business of exceptional caliber, so when the stock looks undervalued—as it does today—it’s worth taking a further look.
Why MSCI stands out:
- The stock has delivered 26% annual returns over the past decade.
- The stock is down nearly 10% in the past 3 months, which is why analysts now see about 15% upside.
MSCI is a long-term compounder, which means today there’s a rare chance to buy a wide-moat business, while it’s undervalued.
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3: PepsiCo (PEP)
PepsiCo is a consumer staple giant that owns a diverse portfolio of beverage, snack, and food product brands.
The company has increased its dividend for 53 consecutive years, making it a strong pick for dividend growth investors.
Today, the stock trades near its lowest valuation multiple in the past 5 years after seeing declining sales volume and revenue falling short of expectations.
Why PepsiCo looks like a solid investment today:
- Analysts expect growth to bounce back. Revenue is expected to average nearly 3% annual growth over the next 3 years, while earnings-per-share is expected to grow nearly 5% annually.
- Analysts see nearly 10% upside for the stock, which means now could be a good time to invest in this long-term dividend growth stock.
PepsiCo provides steady growth, reliable income, and strong brand power, making it a great stock for investors looking for a long-term dividend stock.
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TIKR Takeaway
Google, MSCI, and PepsiCo all look undervalued today, and could make sense for long-term investors.
The TIKR Terminal offers industry-leading financial data on over 100,000 stocks and was built for investors who think of buying stocks as buying a piece of a business.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. We aim to provide informative and engaging analysis to help empower individuals to make their own investment decisions. Neither TIKR nor our authors hold positions in any of the stocks mentioned in this article. Thank you for reading, and happy investing!
