1 Incredible Bargain Hiding Right Under Investors' Noses

The U.S. stock market may be near its all-time high, but there are some outstanding stocks trading at attractive discounts. These are companies that are large and growing rapidly, but the market doesn't respect them at the moment, and for that reason, they are undervalued.

One of the biggest, most obvious investment opportunities available right now is Meta Platforms (NASDAQ: META). The market isn't in love with Meta's artificial intelligence (AI) spending plans, but it's already seeing some benefits from its hefty investments.

Here's why investors should consider adding it to their portfolios before the rest of the market catches on to how great a deal it is.

Image source: Getty Images.

Meta Platforms is diversifying

Meta Platforms operates some of the world's most popular social media sites, including Facebook and Instagram. The vast majority of its revenue is derived from selling advertising space on these platforms, and AI has dramatically improved how that business performs. With Meta's newer AI offerings, its clients are able to easily make multiple variations of their ads, tailored to the users who see them.

Furthermore, AI has improved the targeting portion of the ad software, which makes those ads more effective. A more effective ad is worth more, so Meta can raise its ad space prices and boost its revenue.

That's exactly what we've seen happen over the past few quarters.

META Revenue (Quarterly YoY Growth) data by YCharts.

Despite this, the market is not focusing on how strong Meta's growth is; investors instead want to zoom in on the massive amount of capital it's spending on building out its AI capabilities, and how much it has laid out for its Reality Labs division.

While it's fair to be concerned about high capital expenditures, Meta has a lot in the works in the AI arena. CEO Mark Zuckerberg noted that Meta Superintelligence Labs division is close to releasing its first model, and said it is "on track to deliver personal superintelligence to billions of people."

If Meta can do that, it can secure its place among the best AI investments in the world, as this software would be a new product that isn't accounted for in any projections yet. It's also working on other products such as AI smart glasses; if some of those are hits, those would also create additional revenue streams that nobody is yet factoring into the company's value.

Because the market isn't in love with Meta's AI strategy, the stock's valuation has slipped to a pretty cheap level.

META PE Ratio (Forward) data by YCharts.

At less than 19 times expected forward earnings, Meta is a bit cheaper than the broader market S&P 500 (SNPINDEX: ^GSPC), which trades for 21.9 times forward earnings. So despite Meta's 30%-plus revenue growth rate -- far above the market's average -- it trades at a lower valuation than the broad market. That makes Meta a strong investment opportunity, and I think it's worth buying now.

Keithen Drury has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.