12 Best Undervalued Stocks to Buy According to Reddit

In This Article:

In this article, we discuss the 12 best undervalued stocks to buy according to Reddit. If you want to read about some more undervalued stocks, go directly to 5 Best Undervalued Stocks to Buy According to Reddit

Retail investors who often discuss their investment strategies on platforms like Reddit have become a dominant market force in recent years. According to data maintained by Vanda Research, between 2014 and 2019, inflows from retail investors at the stock market peaked at $700 million in 2015 but generally remained around $200 million. However, this figure jumped to more than $1.2 billion at the beginning of 2020. In early 2023, inflows from retail investors in stock trades were around $1.5 billion. 

A variety of factors have contributed to this rise. The advent of commission-free online trading platforms, stimulus payments from the government, and boredom induced by pandemic lockdowns have all come together to create a perfect storm for retail traders. Even as inflation battered growth stocks in late 2021 and throughout 2022 and 2023, retail investors continued piling into their favorite undervalued firms like Alibaba Group Holding Limited (NYSE:BABA), Merck & Co., Inc. (NYSE:MRK), and Cleveland-Cliffs Inc. (NYSE:CLF).

There is also reason to believe that many more Americans are leaning towards investments at the stock market in this decade as compared to the previous one. Between 2009 and 2019, only about 55% of Americans, on average, had dabbled in stock trades. This number was over 61% in the preceding decade. Since 2020, this figure has climbed back up from 55% to 58%. Part of this has to do with the boom in growth stocks that has pushed the market capitalizations of some big tech firms into trillions of dollars, boosting the brand value of the market as a whole. 

The earnings call of stock trading firm Robinhood Markets, Inc. (NASDAQ:HOOD) provides important insight into the world of retail trading. Robinhood is one of the most popular trading apps among retail investors. The average age of Robinhood users is just thirty-one and a majority of them are new to the investing world. Vlad Tenev, the CEO of the firm, recently outlined how his company has plans to expand beyond trading and also taking steps to get to customers outside the United States. 

“We're still No. 2 in retail trading market share in the US. We're at the very early stages of expanding beyond trading, with just over $1 billion of retirement assets on our platform, out of the over $12 trillion US IRA market. We're also just now beginning to take our first steps to serve customers outside the US, where we believe the need and opportunity for innovation in financial services is even greater than it is domestically.