The Watchlist Report #1 – These 5 Stocks Are Too Cheap to Ignore
Real opportunities. No hype. Just stocks with big upside and strong fundamentals. Pure undervalued opportunities to check out.
The idea is simple:
This list consists of what I believe to be the 5 most appealing large-cap stocks today across the U.S. and European stock markets.
This list is updated twice a month to keep prices and opportunities up-to-date.
Each edition is sent to paid/PRO subscribers and will be made freely available to all subscribers after 10 days.
Some stocks could remain on this list for multiple editions as long as they remain undervalued and a great opportunity. Numbers and developments will be updated.
That’s it—simple, actionable ideas for you to look into amid current weakness.
Without further ado, let’s delve in!
1. Taiwan Semiconductor Manufacturing Company Limited (18% Return CAGR)
Current share price:
$193 (performance TTM +28%; YTD -2%; 30-day +29%)
End-of-2027 target price:
$298 (Expected return CAGR of 18% annually)
A solid buy below $210.
Developments/Reasoning
As I have argued many times before, TSMC shares continue to be mispriced by investors, with geopolitical fears much overestimated, leading to unnecessary fear priced into the shares. Meanwhile, in reality, TSMC’s significant exposure in Taiwan does leave it more vulnerable than many might prefer, but the actual threat of a Chinese invasion is relatively low, and the current discount is substantial.
In the meantime, TSMC is nailing it on all fronts. The company continues to dominate the semiconductor manufacturing industry, growing its market share thanks to its extremely advanced and dominant manufacturing technologies, which no peer can match.
It recently announced advanced node price hikes of up to 30%, and customers will likely pay the higher prices. The reality is, they have no choice. TSMC, with a market share of over 90% in advanced nodes globally, is essentially their only option. Not a single TSMC competitor is coming even close to its node quality, with its yield on 3nm and 2nm reportedly 20% and 40% higher than its closest peer, respectively.
The company has insane pricing power and a massive technological moat.
As a result, large customers like Nvidia, Broadcom, or Apple have no choice but to accept these price hikes, and TSMC fully benefits from this incredible pricing power due to its dominant and critical position.
In other words, TSMC remains a company with an unparalleled moat and a massively dominant and critical market position, which is growing at an incredible rate thanks to the proliferation of AI and skyrocketing semiconductor demand. For reference, Wall Street now expects a low-to-mid twenties revenue CAGR and a high teens EPS CAGR over the next four years.
For reference, revenue over April was up 48% YoY. That is just insane.
If this company were located in the U.S. or Europe, it would likely trade at 35- 40 times earnings, if not even higher.
Yet, TSMC is headquartered in the geopolitically sensitive Taiwan and therefore is significantly discounted, trading at just 21 times earnings, which I have a hard time justifying. In my view, it is a matter of time before global tensions ease and TSMC is valued much closer to its fair value, although a discount to actual value will always exist.
Nevertheless, thanks to this current discount, I still see room for TSMC shares to go 3x times by the end of the decade, and realize annualized returns of over 18%, making it a brilliant investment opportunity right now.
(This assumes a 25x long-term earnings multiple and conservative 2027 estimates below the current consensus.)
2. adidas AG (16% Return CAGR)
Current share price:
€219 (performance TTM -5%; YTD -7%; 30-day +10%)
End-of-2027 target price:
€322 (Expected return CAGR of 16% annually)
A solid buy below €230.
Developments/Reasoning
adidas remains a top turnaround candidate in Europe. The company has been going through a rough patch over recent years, or for much of the last decade, to be more precise, but seems to be nicely back on track today.
While headwinds such as a lack of innovation, poor management decisions, COVID-19 disruptions, and the fallout from Kanye West's departure plagued the company and its investors over recent years, adidas appears to have reinvented itself since late 2023 under a new rockstar CEO.
Today, adidas appears to be the hottest apparel brand, driven by a renewed push for innovation and significantly larger investments in branding and marketing, as highlighted by major deals with Latino artist Bad Bunny, English football club Liverpool, and the Mercedes F1 team. Additionally, the company has rekindled relations with wholesalers after a failed attempt to push into direct-to-consumer (DTC) sales, making the brand more visible and readily available today.
As a result, under its new leadership and strategy, adidas appears to be firing on all cylinders again, growing revenues by double digits and outpacing its close peers, Lululemon and Nike, while realizing strong market share gains across all regions.
In other words, the company is excelling on all fronts, yet these fundamental improvements are not yet reflected in the share price, which has remained relatively stable since August 2024, despite the company significantly outpacing estimates and tariff fears now appearing irrelevant.
As a result, adidas shares trade at 28 times this year’s earnings, which might not seem cheap, but considering adidas’ incredible expected profit growth, we’re looking at a PEG of only 0.7 times.
For now, adidas remains a great opportunity for those who believe in this turnaround, which I do.
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3. Thermo Fisher Scientific (Expected 13% return CAGR)
Current share price:
$412 (performance TTM -31%; YTD -21%; 30-day -6%)
End-of-2027 target price:
$570 (Expected return CAGR of 13% annually)
A solid buy below $430.
Developments/Reasoning
Recent weakness is largely driven by the Trump presidency and subsequent concerns over global trade, economic health, and the risks of reduced pharmaceutical capital expenditures amid potentially lower drug prices.
Yet, most of these factors at play are merely a concern or just leading to poor sentiment. Yes, the company might be facing some near-term headwinds from some of the Trump Administration's actions, but the company remains very sound fundamentally.
As for the actual near-term headwinds and risks, management reduced its 2025 profit outlook by approximately 4% after releasing its Q1 results, accounting for 2025 tariff headwinds and some policy changes that have since eased, likely leaving some upside to this guidance.
Additionally, in recent days, mounting concerns have arisen over the potential impact of Trump’s proposed price cuts for prescription medications. If implemented, these cuts could lead to a decrease in drug development capital expenditures, directly affecting TMO as one of the main suppliers of equipment and reagents.
While a fair concern, this still can’t explain a 30% lower share price, especially given that these cuts are unlikely to happen. Such a price cap would significantly impact U.S. drug innovation, which is something Trump can’t afford, only for this manufacturing to move to countries and regions like China and Europe. It makes no real sense.
In other words, while concerns are valid and warrant some caution, a 30% loss in market cap is unexplainable. I believe TMO remains one of the most compelling opportunities available.
4. PayPal (13% Return CAGR)
Current share price:
$72 (performance TTM +13%; YTD -15%; 30-day +20%)
End-of-2027 target price:
$101 (Expected return CAGR of 13% annually)
A solid buy below $75.
Developments/Reasoning
I know, PayPal is a much-discussed stock. Probably about half of you think it’s a value trap and doomed to fail, while the other half share my view and believe the company has great promise under its new CEO, Alex Chriss, and its revised long-term strategy, which is already showing some minor results.
Now, since the developments here are a lot more detailed, I’d like to refer you to my recent detailed coverage of PayPal, which you can find below, in case you missed it.
Long story short, seeing recent developments pay off, PayPal realizing growth in users, and its strategy making it much more competitive in the digital payments industry, I have become quite confident in its long-term prospects.
And whether you fully believe in its long-term prospects or not, looking at recent progress the company is making, a 14x multiple makes no sense either way.
I believe PayPal continues to be unjustly discounted purely because of poor sentiment toward the company and Wall Street waiting for clearer signs of a significant turnaround, by which most investors will be too late to step in.
Even when using conservative estimates, which leave ample downside protection, I believe PayPal shares are poised to deliver at least 13% annualized returns, which should comfortably surpass global benchmarks, making it a compelling investment nonetheless.
5. LVMH Moët Hennessy - Louis Vuitton, Société Européenne (12% Return CAGR)
Current share price:
€504 (performance TTM -36%; YTD -21%; 30-day -4%)
End-of-2027 target price:
€647 (Expected return CAGR of 12% annually)
A solid buy below €520.
Developments/Reasoning
The reasoning for LVMH being on this list is rather straightforward: This company has been oversold on near-term headwinds for the luxury industry, particularly in China, amid concerns over a potential escalation of the trade war and a subsequent weakening of the global economy.
While all legitimate concerns, I don’t think it justifies the share price weakness we have seen so far in 2025. Yes, the company might be facing some further weakness in 2025 and potentially in early 2026, which I honestly think might turn out better than estimated right now, thanks to Trump pulling back on his tariffs, likely somewhat saving the U.S. economy as well; however, more importantly, the long-term investment thesis here is untouched.
The long-term outlook for the luxury industry remains solid, and LVMH remains in pole position (an accurate comment with LVMH now the F1 title sponsor). The company is the undisputed giant in the industry, with a 25% global market share in its respective markets, through a brilliant collection of brands under its umbrella.
Through this brilliant brand portfolio and the longevity of these luxury brands, LVMH’s moat is incredible, and its size advantages are unequaled. As a result, LVMH’s long-term outlook remains pretty neat, and the company is still one of my favorite SWAN investments for the decades ahead.
So, the idea here is quite simple: Look through near-term weakness and reap the long-term rewards.
Although the company is struggling at the moment, it remains fundamentally intact.
Therefore, at below 20x earnings, LVMH shares remain really attractively priced, with room for annualized returns of at least 12%, which is pretty brilliant for a defensive cornerstone.
That’s it for now, everyone. I hope you all liked this new format, which I intend to maintain as a bi-weekly one.
If you have any thoughts you’d like to share, please let me know in the comments below!
Cheers!
