Considering a $2,000 investment? Potentially Profitable Stocks for 2025 and Beyond's Horizon.
With the S&P 500 hovering near its all-time highs, you might think that finding undervalued stocks is a challenging task for value-focused investors. But, by taking a closer look, there are still plenty of overlooked stocks trading at discounts based on their growth potential. Two such stocks worth considering if you have $2,000 to spare are the AI server-maker Super Micro Computer (SMCI -5.40%) and the ride-hailing underdog Lyft (LYFT -3.05%).
Super Micro Computer
Super Micro Computer's stock has seen a significant decline since reaching an all-time high of $118.81 per share on March 13, 2024. The downturn was due to a series of challenges, including allegations of accounting irregularities, regulatory investigations, and the departure of its auditor.
However, management has been proactive in addressing these issues. They have appointed a new independent auditor, submitted a compliance plan to Naradaq to avoid delisting, and indicated that they will file their 10-K report by February 25. This follows the subpoena of financial documents by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) in late December. If successful, Supermicro could potentially be a buying opportunity, as its growth potential remains strong.
The company is one of the industry leaders in dedicated AI servers, with expectations of yet another year of strong revenue growth in fiscal 2025. They are anticipating a rise of 57% to 67% in revenue and a growth of 17% in earnings per share (EPS) in that fiscal year. By 2026, they anticipate revenue to grow 65% from the midpoint to $40 billion, driven by Nvidia's newest Blackwell GPUs. With a current valuation of 11 times next year's earnings, it could prove to be a substantial investment if regulatory issues are resolved.
Lyft
Lyft's stock has also experienced a substantial drop since closing at an all-time high of $78.29 on March 29, 2019, mainly due to pandemic-related challenges and slower sales growth. But in 2024, Lyft managed to surpass its pre-pandemic peak of 22.9 million active riders, ultimately reaching 24.7 million by year-end. This remarkable turnaround was fueled by new initiatives, including the expansion of Lyft Pass, relaunch of Lyft Pink, introduced Women+ Connect, and the addition of food delivery options to the platform through its partnership with Doordash.
These strategic moves have helped Lyft stabilize its business and adapt to the post-pandemic environment. For 2025, analysts are projecting revenue and adjusted EPS growth of 13% and 14% respectively. With a current valuation of 16 times forward earnings, Lyft's stock looks attractive for investors seeking exposure to the ride-hailing market.
In summary, while both Super Micro Computer and Lyft face some notable challenges, their growth potential makes them attractive investment opportunities. In the case of Super Micro Computer, addressing ongoing regulatory concerns could unlock significant value for shareholders. For Lyft, a focus on cost savings and strategic partnerships could help deliver long-term growth.
In the context of investing, Supermicro's stock, currently trading at a discount due to various challenges, could be a potential buying opportunity given its strong growth potential in the AI server market. With the anticipation of robust revenue growth and earnings per share in fiscal 2025, Supermicro's current valuation of 11 times next year's earnings might prove to be a substantial investment if regulatory issues are resolved.
Finance experts suggest that Lyft's stock, which has dropped significantly after reaching its all-time high, could be an attractive investment for those seeking exposure to the ride-hailing market. Despite pandemic-related challenges and slower sales growth, Lyft managed to surpass its pre-pandemic peak of active riders in 2024. With a focus on cost savings and strategic partnerships, analysts project revenue and adjusted EPS growth of 13% and 14% respectively for 2025. Lyft's current valuation of 16 times forward earnings makes it an appealing investment option.
Value-focused investors might find interest in the undervalued stocks of Super Micro Computer and Lyft, which are trading at discounts despite their strong growth potential. These two companies, despite facing various challenges, have the capacity to deliver long-term growth if they successfully address their issues and execute their strategies.
By focusing on value-driven stocks and combining a wise financial plan with thorough research, investors can identify undervalued opportunities in the stock market, such as Super Micro Computer and Lyft. Carefully considering such stocks' growth potential, management's response to challenges, and market trends can help make informed investment decisions.
