Chicago, IL – January 10, 2025– Today, Zacks Investment Ideas feature highlights Align Technology, Inc.’s ALGN and Coca-Cola KO.
The early weeks of January are a wonderful time to reshuffle your stock portfolio and buy great stocks with big long-term upside.
The bull case remains firmly in place even after the stock market’s best back-to-back years since the late 1990s.
That said, the market appears a tad overheated heading into Q4 earnings season next week. There could be some selling pressure to recalibrate valuations and take some of the foam off the top of the market.
Despite tech and broader market valuations looking a bit stretched in the near term, tons of top stocks appear cheap right now.
Let’s dive into two stocks (ALGN and KO) that are trading at least 20% below their average Zacks price targets and offer great long-term value.
Align Technology, Inc.’s clear Invisalign aligners changed orthodontics forever. ALGN has helped doctors treat approximately 18.9 million patients over the past three decades. The stock has soared over 2,300% in the last 20 years vs. the S&P 500’s 430% and the Tech sector’s 800%.
This massive outperformance includes ALGN’s 70% drop from its 2021 highs. The medical tech company’s fall, mixed with its solid earnings growth outlook, has Algin trading near some of its cheapest levels in the past 15 years at 26.4X forward earnings—a discount to Tech. Align is finding support at the low end of the trading range it’s been stuck in since 2017.
Algin trades 25% below its average Zacks price target and 9 of the 13 brokerage recommendations Zacks has are “Strong Buys,” with only one “Sell.” ALGN’s balance sheet is strong, with $6.4 billion in total assets vs. $2.4 billion in liabilities and zero debt. Its Medical – Dental Supplies industry is in the top 10% of over 250 Zacks industries.
Align grew its revenue from roughly $1 billion in 2016 to $3.86 billion in 2023. Wall Street dumped ALGN on slowing sales growth and its plummeting earnings outlook following 60% sales growth in 2021—boosted by consumers flush with cash (it averaged 30% revenue growth between FY16-FY19). That growth is likely over, but Align looks like a buy as it settles into a more mature, slower-growth company.
Align expanded its reach in the key teenage demographic, successfully attracting more customers who might have otherwise used traditional metal braces. Align is also growing internationally.
Alongside its clear aligners, Align’s imaging, scanning, and services segment (17% of 2023 sales) helped it expand and improve its ability to work with dentists and orthodontists. This backdrop helped Align thrive while would-be e-commerce competitor SmileDirectClub went bust.
Align’s earnings outlook has remained flat over the last several months helping ALGN earn a Zacks Rank #3 (Hold). Align is projected to expand its sales by 4% in 2024 and 6% in FY25 to $4.25 billion. ALGN is projected to grow its adjusted EPS by 8% in 2024 and 9% in 2025.
Coca-Cola stock has tanked 15% since early September after it reached some of its most overbought technical levels of the past two decades. Coca-Cola faces continued inflation challenges alongside many other consumer staples and retail companies.
Rising internal costs and slowing consumer spending are impacting Coca-Cola. Wall Street is also worried about the possible negative impacts the Trump administration and Robert F. Kennedy Jr. might have on processed foods and sugar-heavy beverages.
Thankfully, Coca-Cola has been diversifying beyond sugary sodas for a long time to match changing consumer habits. KO stock is trading right at its 50-month moving average, where it has found support every time it tests that level since the financial crisis.
Valuation-wise, Coca-Cola is trading at a 20% discount to its highs, 11% below its 10-year median, and 8% under the S&P 500 (which KO normally trades at a premium to) at 20.6X forward 12-month earnings.
KO’s dividend yields 3.2% and roughly 75% of the brokerage recommendations Zacks has are “Strong Buys.” Plus, Coca-Cola is one of Warren Buffett’s favorite stocks and a top-five holdings at Berkshire Hathaway.
Part the reason for the long-term bullishness comes from Coca-Cola’s standing as a global brand giant alongside the likes of Mercedes-Benz, McDonald’s, Apple and others.
The beverage powerhouse’s portfolio includes Gatorade challenger BodyArmor, sparkling water standout Topo Chico, potential Starbucks rival Costa, Fairlife milk, and more beyond its core Coca-Cola and soda brands.
KO is projected to grow its sales by 1% in FY24 and 4% next year to reach nearly $50 billion. Meanwhile, it is expected to expand its adjusted earnings by 6% and 4%, respectively.
Why Haven’t You Looked at Zacks’ Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P’s +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CocaCola Company (The) (KO) : Free Stock Analysis Report
Align Technology, Inc. (ALGN) : Free Stock Analysis Report