2 Undervalued Stocks to Buy Now

Undervalued stocks are my favorite stocks to buy.

I’ve always been this way.

I just love the idea of digging through the rubble and finding undervalued stocks that no one is paying attention to.

Indeed, this has long been one of the secrets to my success.

For example, back in 2015, I recommended a Canadian pot stock called Canopy Growth Corporation (TSX: WEED). At the time, hardly anyone was paying attention to this stock. Especially here in the U.S.

To be fair, there aren’t many people in the U.S. that follow Canadian policy developments. But I follow policy developments all over the world in an effort to uncover new investment opportunities. And boy was this a big one. Yet, at the time, it seemed as if either no one was paying attention or few investors could wrap their heads around the idea that cannabis could actually be federally legal — and that they could profit from it. 

Looking back, I can see how there would be hesitation. But after I spent a week in Canada, about a year before cannabis became legal, I knew there was a greater than 70% chance that this was going to happen. Coupling that with a handful of public cannabis companies trading at record lows, I knew that this was the recipe for a potential blockbuster investment opportunity. And I was right.

I started recommending various Canadian pot stocks right before our neighbors to the north legalized weed. And once the rumblings of passage started happening, as that day became closer and closer, we just sat back and watched our undervalued stocks shoot to the moon. 

Canopy Growth Corporation actually delivered us a gain in excess of 3,000%. Indeed, that was one of the most successful picks of my career. 

Of course, you can find undervalued stocks in any market sector, not just cannabis. In fact, I’m going to share two of those with you today.

Undervalued Stocks Ripe for the Picking

As I mentioned earlier, I absolutely love discovering undervalued stocks. Mostly because these just tend to give us the most bang for our buck.

The first I’d like to share with you today is Freeport-McMoRan (NYSE: FCX). For us, this is primarily a play on copper.

You see, based on a recent analysis by the International Energy Agency, electricity consumption from data centers, cryptocurrencies and AI could double from 2022–2026. In order to meet this demand, a massive amount of copper will be necessary. 

And despite a recent downward trend in copper futures, the long-term outlook for copper demand remains strong. Particularly as the current state of the copper market is still quite tight.

Ewa Manthey, commodities strategist at ING, hit the nail on the head in this investment note:

A copper concentrates market deficit is expected this year after supply setbacks at global mines. Most recently in Panama, Canada’s First Quantum mine ignited massive protests. Cobre Panama copper mine is one of the world’s largest sources of copper, accounting for around 1.5% of global copper output. The mine accounted for 2.5% of China’s copper concentrate imports last year.

Meanwhile, copper mines currently in operation are nearing their peak due to declining ore grades and reserves exhaustion. For example, the world’s largest copper mine, Escondida in Chile, has already reached its peak. 

In Chile, Codelco — the world’s biggest supplier of copper — is struggling to return production to pre-pandemic levels of about 1.7 million tonnes a year by the end of the decade from around 1.3 million tonnes this year. This marks the lowest level in a quarter-century amid aging assets and declining ore grade. At the same time, there is a lack of high-quality large-scale projects in the pipeline that could push the copper market into deficit as demand from the green energy sector grows.

Now, one thing to note is that electricity demand as a result of data centers will be the heaviest in the U.S., where nearly 35% of the world’s data centers are situated. We also know that the U.S. government is seeking to support domestic copper production in an effort to secure a stronger domestic supply chain. 

Last year, for the first time ever, the feds included copper as a critical material in its Critical Materials Assessment list.

To clarify, the Critical Materials Assessment evaluates materials based on whether they “serve an essential function” in the production of energy transition technologies and are considered a non-fuel mineral that has a high risk of supply chain disruption. 

Worth noting: Copper’s addition to this list means U.S. copper miners will have access to government subsidies under the Inflation Reduction Act.

So basically, we have a situation where copper demand will continue to grow rapidly over the next 3–5 years, supply disruptions outside of the U.S. will push copper futures north, and U.S. copper miners are now in a position to enjoy significant government support. 

Indeed, I’m bullish on U.S. copper. And in particular, FCX. 

Now, while FCX is one of the largest diversified mining companies in the world, it also has one of the largest footprints in the U.S. in terms of copper.

The company operates seven different copper mines in Arizona and New Mexico. These mines account for more than half of the company’s 235 billion pounds of copper resources. U.S. operations are expanding, too. 

Bottom line: The global demand for copper is strong, and the demand for domestically sourced copper is even stronger. That being said, broader market swings and concerns over a decrease in copper demand based on slowing economic growth in China have pressured the stock. So much, in fact, it’s now trading at a very nice discount. 

Truth is, even accounting for slower economic growth in China, the stock is still undervalued at current levels.

My two-year price target on FCX is $65.00. Which means a potential gain on FCX would come in at around 47%. And this does not include the dividend.

Another Undervalued Stock Trading at a Significant Discount

The second undervalued stock you should absolutely check out is Civitas Resources (NYSE: CIVI). 

Civitas Resources is an American oil and gas company with operations along the Denver-Julesburg, Delaware, and Midland basins. These are three of the highest-producing, lowest-breakeven basins in the United States.

Over the past three years, Civitas has delivered gains in excess of 115%. And that doesn’t include its very attractive 8% dividend.

The stock took a hit a few weeks ago after the company adjusted its forecasts. This, based on an oversupplied market of natural gas. The sell-off was a bit overdone, though, and now the stock is trading at discounted levels. 

My two-year price target on Civitas Resources is $86, which would give you a potential gain of 38.7%.

There are also a few other undervalued oil and gas stocks that are actually even better for your portfolio — if you get in now.

According to our in-house oil and gas guru, Keith Kohl, oil is absolutely heading to $100 a barrel. In a recent investment note, Keith wrote…

Due to the convergence of three powerful economic triggers, I believe we’re on the cusp of a multi-year bull market in oil. 

Not only will crude oil prices soar, but my research indicates they will not come back down for years. 

Most Americans will be blindsided as fuel prices reach unprecedented heights. But for smart investors who know what to do, this is a rare opportunity. That’s why I’ve recorded this urgent briefing today.

You can listen to that briefing here.