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3 Stocks with Upside, 2 With Downside
Kenny Goodrich
June 06, 2025
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Achieve More With Limited Resources: 15 Small Budget Success Stories
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3 Stocks with Upside, 2 With Downside
Welcome, we are 32,708 Money Masters and counting!
Markets are shifting, and Morningstar experts have identified a few standout opportunities worth watching. This week’s analysis highlights three stocks with upside potential based on valuation, brand strength, and long-term fundamentals. At the same time, two widely held names appear overvalued, with limited room for gains at current prices. For deeper investing insights, see The Money Path.
Let’s dive in.
THE MONEY IDEA💡
3 Stocks with Upside
Industry: Consumer Defensive / Packaged Foods
Current Status: Undervalued; 5-star rating, wide moat, low uncertainty
Commodity Drag – Cocoa prices have tripled, pressuring Hershey’s margins and weighing on recent results.
Long-Term Brand Power – With iconic names like Hershey’s, Reese’s, and Kisses, the company maintains high consumer loyalty.
Recovery Trajectory – Earnings are projected to rebound to 9.61 dollars per share by 2027 as cocoa supply normalizes.
Yield and Value – Offers a 3.4 percent dividend and trades at a steep discount to its historical price-to-earnings average.
Bottom Line: Hershey’s current weakness is temporary, creating a rare buying opportunity in a historically reliable business.
Industry: Basic Materials / Agricultural Inputs
Current Status: Undervalued; 4-star rating, narrow moat, high uncertainty
Seasonal Rebound Play – Shares are down 34 percent since late 2023, driven by inventory headwinds and a slow gardening season.
Brand Leadership – As the most recognized name in lawn care and gardening, Scotts benefits from consumer loyalty and recurring seasonal demand.
Management Confidence – Guidance for 2025 was reaffirmed, suggesting near-term weakness may already be priced in.
Valuation Appeal – Shares trade at a deep discount to fair value, with long-term margin recovery potential.
Bottom Line: Scotts Miracle-Gro is a cyclical value play backed by brand strength and income for patient investors.
Industry: Technology / Semiconductors
Current Status: Fairly valued; 3-star rating, wide moat, high uncertainty
Unmatched Demand – First quarter revenue rose 69 percent with second quarter guidance calling for 50 percent year-over-year growth.
Supply Expansion – Nvidia ramped up AI chip production faster than expected, easing long-standing constraints.
Massive TAM – The company is forecasted to generate over 300 billion dollars in revenue by 2030, with 20 percent compound growth.
AI Market Leader – Nvidia remains the top supplier for data centers and enterprises racing to adopt artificial intelligence.
Bottom Line: Nvidia continues to dominate the AI infrastructure space, offering scale, growth, and relevance in a rapidly expanding market.
THE MONEY IDEA💡
2 With Downside
Industry: Financial Services / Payment Processing
Current Status: Overvalued; 2-star rating, wide moat, medium uncertainty
Secular Support – Mastercard continues to benefit from the shift to digital payments worldwide.
Fund Flows – Some institutional investors are trimming positions to rotate into better-valued opportunities.
Stable but Pricey – Solid earnings growth continues, but upside is constrained by its already elevated pricing.
Bottom Line: Mastercard remains a long-term winner, but the stock looks stretched at current levels.
Industry: Communication Services / Streaming Media
Current Status: Overvalued; 2-star rating, narrow moat, high uncertainty
Mature Market – While Netflix leads the streaming space, global user growth is decelerating amid increased competition.
No Legacy Burden – Unlike traditional media peers, Netflix operates without declining cable or broadcast segments.
Profit Priced In – Margin gains and new monetization streams appear fully reflected in the stock price.
Bottom Line: Netflix remains a streaming pioneer, but current valuation limits future return potential.
Serious about your money? See our guides on investing and building wealth.
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