Have $3,000? These 3 Stocks Could Be Bargain Buys for 2024 and Beyond | The Motley Fool (2024)

Some investors might think that $3,000 isn't enough cash to get started in the market, especially when some popular stocks already cost hundreds of thousands of dollars per share. But now that most brokerages offer commission-free fractional trading, it's fairly easy to build a diversified portfolio with just a few thousand dollars.

That said, investors with limited resources shouldn't hastily chase the highest-growth stocks. Instead, they should allocate a large portion of their portfolios to undervalued blue-chip tech stocks that won't collapse in a market crash. I believe three stocks check all the right boxes right now: Oracle (ORCL 1.96%), AT&T (T -0.98%), and Baidu (NASDAQ: BIDU).

1. Oracle

Oracle is one of the world's largest database software companies. Over the past decade, it transformed many of its on-premise applications into cloud-based services. It also expanded its ecosystem with more enterprise resource planning (ERP), customer relationship management (CRM), healthcare IT management, and cloud infrastructure services.

That cloud-driven evolution, which was partly driven by big acquisitions, enabled Oracle to grow faster than many of its enterprise software peers. From fiscal 2020 to 2023 (which ended last May), its revenue expanded at a compound annual growth rate (CAGR) of 8.5% as its adjusted EPS increased at a CAGR of 10%.

For fiscal 2024, analysts expect its revenue to decline 1% and its adjusted EPS to rise just 1% as it faces tougher macro headwinds and laps its acquisition of the healthcare IT giant Cerner. But in fiscal 2025 they expect its revenue and adjusted EPS to grow 8% and 12%, respectively, as it continues to offset the slower growth of its on-premise software and licenses by expanding its higher-growth cloud-based services.

Based on those estimates, Oracle's stock still looks reasonably valued at 19 times forward earnings, and it pays a decent forward dividend yield of 1.4%. This slower-growth blue chip tech stock might not skyrocket anytime soon, but it could be a safe place to park your cash as you wait for the macro environment to improve.

2. AT&T

Back in 2021 and 2022, AT&T spun off DirecTV, Time Warner, and many of its smaller media assets as it abandoned its misguided attempt to become a media juggernaut. AT&T subsequently streamlined its business, raised more cash to reduce its debt, and doubled down on strengthening its higher-growth 5G and fiber businesses.

After that fresh start, AT&T grew its wireless postpaid subscribers by 2.9 million in 2022 and another 1.7 million in 2023. It also expanded its fiber business as more of its customers upgraded their older non-fiber broadband connections. The stable expansion of those two businesses offset the slower growth of its business wireline division.

In 2023, AT&T's revenue rose 1%, but its adjusted EPS from continuing operations fell 6% as it ramped up its 5G and fiber infrastructure investments. But it still generated $16.8 billion in free cash flow (FCF) for the year, which easily covered its $8.1 billion in dividend payments and justifies its high forward yield of 6.1%.

For 2024, analysts expect AT&T's revenue and adjusted EPS to decline 7% and 15%, respectively, as it deals with the cyclical slowdown of the 5G market and its declining business wireline sales. But in 2025 they expect its revenue and adjusted EPS to grow 1% and 3%, respectively, as those headwinds dissipate.

Those growth rates might seem anemic, but they're a vast improvement over its messy growth rates as a media company. Its stock also looks dirt cheap at eight times forward earnings, and its high yield should further limit its downside potential.

3. Baidu

Baidu owns the largest search engine in China. It's also one of the country's largest cloud infrastructure platform providers and AI software developers. From 2020 to 2023, Baidu's revenue and adjusted earnings per ADR both increased at a steady CAGR of 8%, even as it endured the pandemic and China's subsequent macroeconomic slowdown.

Baidu achieved that steady growth through two main strategies. First, it expanded its Managed Business Pages, which enable companies to run their own online stores and websites within its ecosystem, to extend the reach of its core search engine. Second, it expanded its cloud and AI ecosystems to gradually curb its dependence on ads.

Baidu still faces fierce competition from Tencent's "super app" Weixin (also known as WeChat), ByteDance's Douyin (known as TikTok overseas), and Alibaba's online marketplaces for product searches. So to widen its moat, it's expanding its namesake mobile app -- which reached 676 million monthly active users at the end of March -- into its own super app, which hosts a myriad of services within its walled garden.

For 2024, analysts expect Baidu's revenue to rise 4% and for its adjusted EPS to stay flat as it navigates the tough macro headwinds in China. But in 2025 they expect its revenue and adjusted EPS to grow 7% and 6%, respectively. Baidu's stock looks undervalued at 10 times forward earnings, but that's because its valuations are being compressed by the tensions between the U.S. and China. If those tensions subside, Baidu's valuations could rise and lift its stock a lot higher.