Why Smart Investors Are Watching These 3 Undervalued Stocks

Key Points

• The market's focus has centered around technology names in the artificial intelligence space, leaving these gems behind as value plays.
• Three stocks trade at attractive prices to offer a fantastic risk-to-reward setup for investors.
• Wall Street analysts and institutional buyers agree.

The market will lose track of what matters every once in a while, and that’s where the smartest investors can really take advantage of the situation and come out winners. Today, most of the market’s attention (and capital) has centered around the technology sector, betting on higher and higher runs to be made in the world of artificial intelligence and the stocks that support its growth and development.

With that in mind, it shouldn’t come as a surprise for investors to find out that other worthy businesses may see their stocks fall out of favor as they become underrated and under-traded. In other words, companies that deserve to have proper backing suddenly fall into discounts for no other reason than that they are just not as popular at the moment. This is where a value investor’s toolkit comes into play.

Names that have fallen out of favor but that should see their prices rise in the coming quarters include basic materials sector stars like Cleveland-Cliffs Inc. NYSE: CLF to represent the steelmaking industry, as well as lithium mining company Albermarle Co. NYSE: ALB. There is also a name in the same technology space that should be getting more attention today, and that is SentinelOne Inc. NYSE: S, sharing the same characteristics as the other names on this list.

Why Institutions Bought Cleveland-Cliffs Stock

As of February 2025, institutional buyers from Dimensional Fund Advisors decided to boost their holdings in Cleveland-Cliffs stock by as much as 3.1%. This new allocation would place their net position at a high of $199.7 million today, or 4.3% ownership in the company to show investors a sign of confidence brewing up in the market.

The reason this steelmaker will see higher prices is simple: Recent trade tariffs will likely push demand for domestic production capacity to rise in order to tend to upcoming business and consumer demand. This theme has also become evident in the most recent manufacturing PMI index data.

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With this in mind, investors can begin to justify the current consensus price target of $16.7 per share on Cleveland-Cliffs stock, which would call for up to 50% upside from where the stock trades today. Considering Cleveland-Cliffs stock only trades at 49% of its 52-week high, investors have a fantastic risk-to-reward setup on their hands with this steel winner.

But the sentiment goes beyond institutions and Wall Street analysts, even bearish traders have decided that it’s not worth it to keep betting against this potential winner, and investors can see that through the 8.2% decline in short interest for Cleveland-Cliffs stock over the past month alone, clear bearish capitulation.

Albemarle Stock’s Earnings Will Drive it Higher

Typically, earnings per share (EPS) growth is what drives stock price action, and Albemarle has a few cards lined up to deliver double-digit upside in that department. Wall Street analysts now forecast Albemarle to deliver up to $2.18 in EPS for the second quarter of 2025, a significant swing from today’s net loss of $1.09.

This major boost should be accompanied by a similarly bullish view on the stock’s valuation as well, which is also the case today. The consensus price target for Albemarle stock stands at $109.7 per share, which is not quite a new 52-week high, though it does imply a net 35.4% rally from where it trades today.

Similarly to Cleveland-Cliffs, Albemarle now trades at 57% of its 52-week high, showing investors that the worst is potentially behind it now, with only upside to look forward to in the coming months and quarters. Now there are a few other benefits investors can get with this name other than double-digit upside.

A $1.62 per share payout in the form of dividends offers shareholders a yield of 2% on their investment, which is going to come in handy should volatility remain high in the S&P 500, a point that might have driven those from ProShare Advisors to up their stake in Albemarle stock up to $171.4 million as of February 2025.

A Sudden Bullish Outlook on SentinelOne Stock

As of January 2025, analysts from Oppenheimer decided to initiate coverage on SentinelOne stock, which is a bold move considering that Wall Street analysts tend to stay away from underperforming stocks. By trading at 75% of its 52-week high, SentinelOne is considered an underperforming stock compared to other technology names today.

Knowing this to be the case, investors should pay more attention to the Outperform rating placed by these analysts, alongside a valuation of up to $32 per share. This target would not only represent a new 52-week high for SentinelOne stock but also a net upside of as much as 46.2% from where it trades today.