Are you looking for some investments that have lots of potential upside in the years ahead? Three stocks that have been struggling this year and could make for underrated buys are Teladoc Health (TDOC -2.40%), Walt Disney (DIS -0.04%), and PayPal Holdings (PYPL 2.90%). Although many investors have been bearish on these stocks, they aren't in as bad shape as they appear to be. Here's why they could make for great buys today.
1. Teladoc Health
Teladoc Health is a company that has been synonymous with the rise of telehealth. Its services make it easy for patients to stay on top of chronic conditions without having to make in-person visits. That makes follow-ups easier -- and crucial for elderly patients who struggle with mobility.
The company has also come a long way since the pandemic. Through the first half of this year, it has generated nearly $1.3 billion in revenue. And although it still incurred a loss of $134.4 million, it's showing signs that it is, at the very least, moving in the right direction.
In 2019, Teladoc generated just $553.3 million in revenue, with its loss totaling $98.9 million. This year, the company still expects to post a loss, but it projects that its top line will come in at $2.6 billion or better.
What's mind-boggling is that even with all this growth, Teladoc's stock is trading below what it was at in 2019. In the past five years, it has fallen more than 70%, which is largely due to the slide it has been on since 2021 when growth stocks were trading at inflated valuations. While Teladoc Health might have been overpriced back then, now it looks incredibly cheap at a price-to-sales (P/S) multiple of around 1.5.
TDOC PS ratio data by YCharts.
For investors who are willing to be patient, Teladoc Health can be an underrated buy. The business is still growing, and it could only be a matter of time before the stock starts to rally again.
2. Walt Disney
Another stock that is struggling heavily of late is Walt Disney. Not only is it trading at its 52-week low, but it also recently hit a new nine-year low.
The company is facing multiple challenges now as its streaming service Disney+ has been losing subscribers. And with the ongoing writers' and performers' strikes in Hollywood, it might be difficult to stop that trend since new content is limited.
Plus, the company has recently announced price increases for the streaming service, which could make it even more difficult for consumers to justify keeping it.
A potential recession next year means that there could also be headwinds for its parks business, which has been the only part of its operations that has looked resilient. Through the nine-month period ended July 1, its parks, experiences, and products segment has been achieving decent 17% growth thus far, with revenue hitting $24.8 billion.
Its larger media and entertainment business has reported $42.8 billion during that same stretch, a rise of only 1%.
Disney's stock is down 6% this year. The challenges this business is facing right now aren't small, but they aren't necessarily permanent, either. The House of Mouse has strong intellectual property that it can continue to build around.
Trading at 16 times its estimated future profits, Walt Disney stock could make for a good investment to buy and hang on to for a long time. It might be one of the best bad-news buys out there right now.
3. PayPal
Fintech stock PayPal has declined 11% year to date as it also finds itself trading near multi-year lows. You have to go back to 2017 for the last time the stock was trading at consistently lower levels than where it is today.
The digital payments company is a leader in its industry, with about 400 million active consumer accounts last quarter, for the period ended June 30. Its growth hasn't been as strong as in previous years, but it's still a business that reported a solid profit margin of 14% last quarter. And with $7.3 billion in revenue, it generated 7% year-over-year growth even as consumers have been tightening up their spending.
Despite a questionable economy and competition from more payment services, PayPal continues to grow, and that's a great sign -- all while remaining profitable.
At a forward price-to-earnings multiple of 11, this is an incredibly cheap stock right now. Investors might be bearish on its short-term prospects and its recent performance, but PayPal is still a solid stock to hang on to for the long haul. Adding it to your portfolio now could result in significant returns in the future.
