Five Ultra Cheap Stocks with Strong ROI Potential

The global economic reality is undergoing significant fluctuations, but for savvy investors, opportunities still exist. Morningstar, a renowned investment analysis company, has identified five ultra cheap stocks that have not only weathered the market storms but also claim robust potential for substantial returns on investment.

In a recent report, Morningstar outlined the demanding criteria these stocks had to meet to make it onto their desired list. The stringent filters included surpassing the Morningstar US Market Index returns over the past decade, maintaining an average three-year ROI capital exceeding 20%, possessing wide or narrow Morningstar moat ratings indicating competitive advantages, and trading at least 20% below Morningstar’s fair value calculations as of November 28.

Despite the S&P 500’s 19% year-to-date growth, Morningstar believes these undervalued stocks propose compelling investment prospects for the future. The selected firms span various sectors, showcasing their resilience and potential to thrive in the coming years.

1. Taiwan Semiconductor Manufacturing (TSM) – Global Chip Leader

Morningstar Moat: Wide

Fair Value Estimate: $139

Present Price: $97.80

As the world’s most considerable contract chip maker, Taiwan Semiconductor Manufacturing (TSMC) benefits from the transition of semiconductor companies to fabrication-less designers. Analyst Phelix Lee emphasises TSMC‘s expansion potential with the increasing demand for the Internet of Things, AI and high-performance computing applications.

2. Teradyne (TER) – Technology Stalwart

Morningstar Moat: Wide

Fair Value Estimate: $147

Present Price: $91.75

As the biggest supplier of computerised test tools for semiconductors, Teradyne stands out with its market-leading capabilities across a broad spectrum of chips. Morningstar analyst William Kerr notes that Teradyne is well-positioned to produce testers for the most cutting-edge semiconductors, making it an attractive investment.

3. Edwards Lifesciences (EW) – Medical Device Pioneer  

Morningstar Moat: Narrow

Fair Value Estimate: $86

Present Price: $69.70

As a leader in medical devices for heart disease, Edwards Lifesciences has maintained its dominance through two decades of innovation in tissue heart valves. Analyst Debbie Wang underscores Edwards’ leadership in surgical heart valves and minimally invasive valve therapy, making it a compelling investment in the healthcare sector.

4. Skyworks Solutions (SWKS) – Wireless Chip Maker

Morningstar Moat: Narrow

Fair Value Estimate: $133

Present Price: $100.50

Specialising in chip manufacturing for wireless headsets, Skyworks Solutions is identified by Morningstar analyst Brian Colello as a dominant supplier to smartphone and electronics device makers. Despite a competitive environment, Skyworks is expected to thrive with the industry’s focus on 5G devices.

5. MarketAxess (MKTX) – Electronic Bond Trading Platform

Morningstar Moat: Wide

Fair Value Estimate: $305

Present Price: $264.80

An electronic bond trading platform, MarketAxess is gaining momentum as it introduces innovative features like automated trade execution. Analyst Michael Miller highlights electronic trading networks’ price and liquidity benefits over standard methods, positioning MarketAxess for sustained growth.

While the market remains unpredictable, these ultra cheap stocks, carefully selected by Morningstar, present investors with opportunities to capitalise on undervalued assets with promising returns on investment.

As always, potential investors are advised to perform detailed investigations and seek proficient financial suggestions before making any investment decisions.