The S&P 500 gained 23.3% in 2024. It is a pretty well-known fact that most of these gains have been driven by tech stocks, primarily mega-caps.
In contrast, more than half of S&P 500 stocks are now trading below their 200-day moving averages, and the equal-weight S&P 500 is down 4.4% in just the past month. This growing disconnect between the market’s winners and losers reminds me of periods that historically presented excellent buying opportunities.
I believe there’s a good chance that this divergence will reverse and the market will eventually rebalance and stocks with nosebleed valuations start trading at more normalized multiples. The profits taken from the mega-caps will likely end up in quality companies in other sectors that are available at much more reasonable valuations. Here are three undervalued stocks to look into with 50%-plus upside.
This post originally appeared at 24/7 Wall St.