15 Cheap Stocks That Could Launch the 'Next Big Thing'
Take a look at Morningstar analysts' nine 'exponential technology' themes and some undervalued stocks poised to benefit from them.
Identifying the "next big thing" before it takes off takes a lot of skill, a little luck, and a leap of faith. After all, if you wait until a new product or technology is flying off the shelves, investors' optimistic expectations of future growth are likely already reflected in the stock's price.
The Morningstar Exponential Technologies Index is a good place to start your search. This 200-stock index helps investors identify companies across sectors that are in the early stages of developing or using technologies that we believe will transform society. We define "exponential technologies" as advances that are likely to gain more widespread use and create outsize economic benefit for the companies that develop and use them. See the index's current holdings here.
With the help of Morningstar's equity research analysts, we currently identify nine exponential technology themes:
If your preferences lean toward high-quality companies trading at reasonable valuations (I'll gladly put myself in this camp), you might want to start your search with the Morningstar Exponential Technologies Moat Focus Index. This index uses the 200-stock Exponential Technologies Index as a starting point, but includes only the 50 cheapest wide- and narrow-moat stocks (as measured by price/fair value). You can see the holdings here.
The following table lists the 15 cheapest stocks in the Exponential Technologies Moat Focus Index currently, along with the theme or themes they are expected to benefit from.
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Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.