3 Undervalued Stocks Wall Street Is Getting Wrong

Key Points

• Three stocks have fallen to levels that make them too cheap to ignore based on the broader market themes and fundamentals.
• These companies give specific reasons to consider them moving forward based on their financials and business models.
• Wall Street analysts and institutional investors are showing confidence through recent boosts and buying.

The stock market is usually a pretty efficient mechanism for pricing in an economy's future expectations. In the case of the S&P 500, its mere size and liquidity usually give investors a pretty good gauge of where the future of the United States economy might be headed. However, occasionally, some market constituents will disconnect from the broader market to provide upside opportunities for investors to take advantage of.

These opportunities come in the form of discounts that, when caught in time, can make for decent additional upside in portfolios with relatively low risk profiles and a smooth ride even if the market (like today) experiences elevated periods of volatility. With this in mind, there are three stocks for investors to keep in mind for this dynamic, as trade tariff uncertainties are certain to die down eventually.

These disconnects from underlying value and quality fundamentals can be found in names like Cleveland-Cliffs Inc. NYSE: CLF, Wayfair Inc. NYSE: W, and even Reddit Inc. NYSE: RDDT to give investors the right mix between the technology sector and a healthy weight in retail as well as industrial trends for the United States economy, all with unique reasons to have a new potential rally around the corner.

The Worst Is Priced Into Cleveland-Cliffs Stock

Shares of this steelmaker have fallen to a low of 39% of their 52-week high levels, presumably pricing in some of the worst-case scenarios that could turn out for the United States' industrial sector. The trade tariff uncertainty might have brought this on, rolled out by President Trump in recent weeks.

With this in mind, it would seem that the stock has no more downside room left, especially as the effect of tariffs will inevitably subside and clear the flow of new steel orders coming out of these factories, directly benefiting the underlying earnings in stocks like Cleveland-Cliffs.

Therefore, the risk-to-reward ratio in this name significantly favors the bulls. More specifically, Wall Street analysts now agree on a consensus price target of $15.5 per share, which implies a net upside of as much as 121% from today’s low prices, making a deeply undervalued stock with strong rebound potential.

Capital Warms Up to Wayfair

Now that real estate seems to be nearing a potential bottom this cycle, some investors might be looking to catch an early rebound and uptrend in lateral areas like furnishing for homes to heat up by the time housing starts to pick back up again. This is where Wayfair stock comes into play.

Knowing that this stock, now that it trades at a low 43% of its 52-week high level, some capital has started to flow into this thesis, understanding that this is just another favorable risk-to-reward ratio favoring the buyers. As of May 2025, allocators from Charles Schwab decided to boost their Wayfair stock holdings by as much as 0.3% to express this view.

While this may not sound like much on a percentage basis, it brought the group’s net position to a high of $32.4 million today, giving investors a significantly optimistic pillar to lean on for their bullish views. Just like Cleveland-Cliffs, these institutional buyers weren’t the only ones willing to take on risk for this view.

Analysts from Mizuho decided to reiterate their Outperform ratings on Wayfair stock and place a price target of up to $50 per share on it. This implies as much as a 53% upside from where the stock has fallen to today, another significant level of upside to be considered in this undervalued basket of stocks.

Reddit’s Growth Is Undervalued

Shares of Reddit fell to follow the underlying theme in the rest of today’s list, as they have fallen to 47% of their 52-week high levels. Considering the company’s latest quarterly earnings results will help investors realize that today’s stock price is far removed from the financial performance this name has reported.

Understanding that Reddit now plays a large role in the buildout of large language models (LLMs) in the world of artificial intelligence, as it sells the naturally generated text from users on its platforms to larger platforms in the technology space, has drawn significant interest.

Investors from the Vanguard Group justified an 11.1% boost in Reddit stock holdings to build up a stake of as much as $1.1 billion today, or 5.6% ownership in the company, to showcase even more confidence in the company’s future. These factors would also explain why Citigroup analysts kept a Buy rating on Reddit stock, along with a $158 valuation, to call for a 46% upside from today’s massive discount.