Cheap Stocks to Buy With Massive Upside Potential, According to WarrenAI

Investing.com -- Value investors hunting for bargains may want to take note of several stocks currently trading at steep discounts according to recent analysis from WarrenAI. These companies show compelling metrics across PEG ratios, fair value calculations, and analyst price targets, potentially offering significant upside for investors willing to look beyond current market sentiment.

The standouts in the cheap stock category demonstrate unusually low PEG ratios (price/earnings to growth) combined with substantial upside potential, though each comes with its own set of considerations:

Fluor Corporation (NYSE:FLR) emerges as the clear value leader with an almost non-existent PEG ratio of 0.0018, suggesting extreme undervaluation relative to its growth rate. The engineering and construction firm boasts a remarkable 56.3% fair value upside and analysts project a 59.0% potential gain from current levels.

What makes Fluor particularly compelling is its extraordinary earnings growth of 965.6% and a return on equity of 102.2%. This performance indicates not just a recovery but a dramatic business transformation that the market hasn’t fully recognized yet.

In a recent development, Fluor Corporation secured a position on a $3.5 billion defense contract and was also awarded a three-year logistics contract from the U.S. Army. The company also completed the sale of 15 million shares of NuScale Power Corporation for net proceeds of $605 million.

PROG Holdings (NYSE:PRG) shows significant value metrics with a tiny 0.05 PEG ratio and substantial 63.8% fair value upside. While analysts are more conservative with a 29.1% target upside, the lease-to-own retailer’s growth-to-price ratio remains highly attractive.

Investors should note the company’s 90.2% debt-to-equity ratio, which introduces leverage risk that could amplify both gains and potential downside in changing economic conditions.

PROG Holdings reported second-quarter financial results that surpassed forecasts, with revenue reaching $604.7 million and earnings per share of $1.02. Following the results, Raymond James raised its price target on the company’s stock.

PagSeguro Digital (NYSE:PAGS), a Brazilian fintech company, rounds out the list with a still-impressive 0.32 PEG ratio. The stock shows a substantial 58.0% fair value upside according to WarrenAI’s analysis, though analyst targets are more modest at 18.0% potential gains. The company appears to offer a technology sector discount while maintaining steady growth fundamentals.

PagSeguro Digital recently announced its second-quarter results, reporting an 11% year-over-year increase in total revenue and a 14.2% rise in diluted GAAP earnings per share. Additionally, Morgan Stanley raised its price target on the company while maintaining an Underweight rating.

While these stocks show compelling valuation metrics, the significant gap between current prices and potential fair values suggests the market may be seeing risk factors or challenges that pure numbers don’t capture. Investors should conduct additional research to understand why such apparent bargains exist before making investment decisions.

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