Major institutions, brokerages, and banks issue price targets for companies within their surveillance. And while this isn’t the only way to identify cheap stocks, retail investors like us can learn a lot from these price targets. After all, it can be wise to use other people’s research as a starting point at least.
Standout undervalued stocks
Some of the cheapest stocks, according to analysts, tend to be early stage biotech or pharma companies. For example, micro cap Tempest Therapeutics trades 2,200% below its share price target. However, I’d be wary not to be drawn in by these figures as these stocks are typically only covered by one or two analysts. The reality with early stage biotechs is they are more likely to crash and burn than they are to be the next big winner — and that’s not reflected in the price target.
So, ignoring those anomalies, here are some companies that stand out:
| Stock | Discount to average share price target |
| Abercrombie & Fitch | 55.5% |
| Currys | 35% |
| Microstrategy | 65.9% |
| Scorpio Tankers | 78% |
| VinFast | 55.9% |
Just a starting point
These share price targets should be seen as a starting point. It’s worth recognising that analysts don’t update their outlooks all the time, and as such, there can be something of a lag. However, if I were looking to make investments in these companies, I’d certainly find this consensus data encouraging.
It may also pay an investor to pick holes in these high price targets. For example, will Currys’ shareholders look to take profits after the recent rally or are tanker stocks the right place to be as oil demand pushes lower?
Focusing in on Scorpio Tankers
Having said this, one stock investors may consider looking more closely at is Scorpio Tankers (NYSE:STNG). After retreating from previous highs, the refined petroleum shipper now trades at attractive valuations, with a trailing price-to-earnings (P/E) ratio of 3.62 as of January 2025 — 56% below its decade-long average. Analysts project modest P/E expansions to 4.75 times for FY 2024 and 6.3 times in 2025 based on consensus estimates, suggesting room for revaluation if operational strengths persist.
The company boasts a 20% return on capital employed (ROCE), outperforming industry peers by nearly 70%, while strategically expanding its market position through a recent $131.5m stake increase in VLCC operator DHT Holdings. However, there are some risks, including falling hydrocarbon demand in the near term, which could be exacerbated by climate policies.
Offsetting these concerns, Scorpio’s modern fleet (average age 8.6 years) positions it to capitalise on tightening tanker supply, with shipyard backlogs limiting new vessel deliveries. Scorpio’s fuel-efficient LR2 tankers are better equipped than most peers for emissions regulations, meaning it‘s also better positioned to bid for prime contracts. Last time I checked, I couldn’t buy this stock through my brokerage, but it’s one I’m watching closely nonetheless.
This post was originally published on Motley Fool
