The stock market is a popularity contest in the short term, but a weighing machine in the long term. At least, that’s what Warren Buffett and Benjamin Graham, the fathers of value investing, believe today. Today’s investors can see this trend in the way interest has moved from the technology sector to the world of cryptocurrencies.
Especially in the way stocks with large amounts of Bitcoin or other cryptocurrencies on their balance sheets will see extreme price action in 2024, such as MicroStrategy Corporation Nasdaq: MSTR. The stock was an industry darling while it was hot, but now that Bitcoin is starting to pull back from its highs, it has been called into question at 55% of its 52-week high.
While investors may start to fear missing out if they don’t buy this huge dip, other discounted stocks may make better buys today. One example can be made of Tesla company Nasdaq: Teslawith the auto stock falling as low as 77% from its 52-week high, or Advanced Micro Devices Company Nasdaq: AMD To give investors one of the best discounts in the semiconductor industry at 53% from its 52-week high today.
The risks behind MicroStrategy stock
MicroStrategy Today
As of 05:45 PM ET
- 52 week range
- $43.87
▼
$543.00
- Price target
- $479.25
Although the stock has traded to what could be an attractive level to buy, the business model has some inherent risks. Just as he was responsible for the stock’s success, he may also be responsible for its downfall. The reason is that the core business, based on software, doesn’t make any money.
Therefore, MicroStrategy buys Bitcoin for its balance sheet through ownership dilution. In other words, the company issues shares on the market to fund a leveraged Bitcoin buying spree. While this is great for investors as Bitcoin rises, the leverage and unsustainability of this machine is also disastrous when the currency declines.
That’s why, even though 55% of the 52-week high is attractive, MicroStrategy’s risk-reward ratio isn’t worth investors’ capital — nor their time. In this regard, these two stocks offer a very different setup in Q1 2025.
Tesla stock’s tailwinds outweigh MicroStrategy’s discount
Tesla today
As of 05:45 PM ET
- 52 week range
- $138.80
▼
$488.54
- P/E ratio
- 112.45
- Price target
- $283.39
After a Tragic explosion Including a Tesla Cybertruck outside a Las Vegas hotel, the stock fell 6.7% as investors reacted to the disturbing incident. Adding to the pressure, Tesla reported its first annual decline in sales in more than a decade, indicating that the stock is facing major challenges at the moment.
However, others who focused on value will see this Tesla sold more than 2 million cars in 2024It is second only to China BYD utcmcts:PDDF. The fact that oil prices are so low right now, driving down gas prices, is usually a cyclical headwind in electric vehicle sales.
Additionally, there are trends in consumer credit, where investors have the perfect storm to expect Tesla sales to decline. But that ends there. Wall Street analysts, especially those at Mizuho, still give the stock an outperform rating as of December 2024, this time along with a valuation of $515 per share.
To prove these analysts right, Tesla would have to rise as much as 36% from its current position. The risks to Tesla stock are priced at these discounts, giving investors a much better risk-reward setup as a potential buy going forward.
Advanced Micro Devices: The New NVIDIA
Today’s advanced micro-devices
Advanced micro devices
As of 05:45 PM ET
- 52 week range
- $117.90
▼
$227.30
- P/E ratio
- 112.95
- Price target
- $191.96
Speaking of other stocks that will make the podium, Advanced Micro Devices could take the lead Nvidia company Nasdaq: NVDA As the new head of the AI race through semiconductor manufacturing. Not only does this stock offer a discount on price, but it also offers a massive upside from Wall Street analysts.
Today, Advanced Micro Devices stock has a consensus target price of $191.96, which could warrant a net upside of up to 60% from today’s prices. This setup will provide investors with a much better view than NVIDIA’s consensus price target of $164.1 per share, which calls for only a 20% upside.
Carrying three times the upside, at a fraction of NVIDIA’s relative price movement, it has attracted some institutional investors to Advanced Micro Devices stock recently. Over the past 12 months, as much as $19 billion has flowed into the company from institutions, but the recent buying spree may be more significant for investors.
Those from State Street decided to boost their holdings in Advanced Micro Devices by 2.3% from November 2024, bringing their net position to a high of $11.5 billion today, or 4.3% ownership in the company.
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