Profit Potential: Finding Cheap Stocks in the Age of AI

The market is abuzz with optimism about the profit-boosting potential of artificial intelligence (AI) for companies across various industries. While the spotlight often falls on Big Tech, there are still opportunities to be found among lesser-known companies. The challenge lies in identifying stocks that remain affordable, as many have already experienced significant price gains.

For instance, the Invesco S&P 500 Equal Weight exchange-traded fund (ETF) has seen a modest increase of just over 7% this year. The higher valuations can be attributed to the market’s expectation of enhanced earnings, largely driven by the integration of AI technologies. According to FactSet, the aggregate sales for the ETF are projected to grow approximately 4.3% annually over the next two years, thanks to a resilient economy and the increasing likelihood of interest rate cuts by the Federal Reserve.

Furthermore, analysts forecast a remarkable annual EPS growth rate of 10.5% over the next two years, primarily due to improved operating profit margins. This expected surge can be partly attributed to the effective utilization of AI in identifying sales opportunities, reducing the need for excessive hiring and associated expenses.

In the pursuit of identifying potential investment options, strategists at Evercore have conducted a comprehensive screening of the Russell 3000. Their search criteria involved stocks trading at multiples of 2024 expected EPS that are below their five-year averages, along with expectations of bottom-line growth. Additionally, companies that have mentioned AI during their earnings calls and possess a market value of over $3 billion were given priority.

Among the names that emerged from this rigorous screening process are renowned entities such as JPMorgan Chase, T-Mobile US, Boston Properties, and Emerson Electric.

Another intriguing candidate worth mentioning is Domino’s Pizza. Currently trading at a price-to-earnings (P/E) ratio of 25, it sits below its five-year average of 28. Analysts are optimistic about its future, with an anticipated EPS growth rate of nearly 9% by 2024, totaling $15.70.

In summary, the hunt for profitable investment opportunities amidst the rise of AI is a challenge but not an insurmountable one. By focusing on stocks that remain undervalued despite their growth potential and commitment to leveraging AI capabilities, investors can position themselves for potential long-term gains.

Title: Boosting Sales and Efficiency with Artificial Intelligence

Introduction

As the global business landscape evolves, companies are seeking innovative ways to drive growth and streamline operations. Two notable examples are Domino’s and Eaton, both using artificial intelligence (AI) to enhance their strategies and stay ahead in their respective industries.

Domino’s: Personalized Experiences and Streamlined Operations

Domino’s, a renowned pizza chain, aims to bolster its sales growth by nearly 7% to reach a staggering $4.8 billion. The company plans to achieve this by expanding its store locations and capitalizing on higher prices to boost same-store sales. To successfully execute these initiatives, analysts believe that Domino’s utilization of digital sales channels, such as Uber Eats and their own app, will play a crucial role.

Moreover, Domino’s has embraced the power of AI to provide personalized user experiences through their food-ordering apps. By leveraging AI technology, the company seeks to foster customer loyalty and satisfaction. Additionally, management recognizes AI’s potential in streamlining operations, enhancing efficiency, and thus driving continuous growth.

Eaton: Empowering Energy-Efficiency with AI

Eaton, a prominent $95 billion manufacturer with expertise in energy-efficient power solutions, is poised for future success through the integration of AI in its operations. With a stock trading approximately 23 times earnings, slightly below its five-year average, Eaton anticipates a remarkable 11% growth in earnings per share (EPS), reaching $9.95 by 2024.

Driving this projected growth is both an expansion in sales and an increase in end markets. As Eaton’s customers progressively adopt AI-powered equipment, the company foresees a surge in demand. Fortunately, Eaton does not foresee a substantial rise in salary expenses to meet this demand. Wall Street analysts anticipate a decrease in general and administrative expenses by a few hundred million dollars to $576 million, effectively boosting operating profit margins.

Conclusion

In a dynamically evolving business landscape, companies are keen on using AI to improve their sales growth and operational efficiency. Domino’s and Eaton exemplify two industry leaders who are effectively leveraging AI technology to stay at the forefront of their respective sectors. By personalizing user experiences, streamlining operations, and capitalizing on AI-powered equipment, these companies are paving the way for sustained growth and success.