Best Undervalued Stocks To Buy Right Now (January 2025)

The following stocks are our Pro Picks for this month, taken from S&P 500-listed companies with a market capitalization of more than 15 billion USD, a solid Price-to-Earnings (P/E) Ratio between 1 and 20, and a fair value upside greater than 25%, meaning that the stock is either undervalued, or a bargain (based on 5 overlaid investing models and analyst assessments).

All of these companies have also earned InvestingPro health scores of ‘Good’, ‘Great’, or ‘Excellent’, which for the last 7 years has indicated outperformance vs. the S&P 500. A score this high points to a mix of first-rate financials: excellent earnings, cash flow, and growth vs. peers in its sector.

• Market Cap ($ Billion): 134.7
• Fair Value: $130.55
• Fair Value Upside: 34.6%

PDD Holdings Inc., a multinational commerce group, owns and operates a portfolio of businesses. It operates Pinduoduo, an e-commerce platform that offers products in various categories, including agricultural produce, apparel, shoes, bags, mother and childcare products, food and beverage, electronic appliances, furniture and household goods, cosmetics and other personal care, sports and fitness items and auto accessories; and Temu, an online marketplace.

• Market Cap ($ Billion): 192.3
• Fair Value: $134.95
• Fair Value Upside: 60.0%

Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People’s Republic of China and internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others.

• Market Cap ($ Billion): 18.86
• Fair Value: $245.75
• Fair Value Upside: 35.2%

First Solar, Inc., a solar technology company, provides photovoltaic (PV) solar energy solutions in the United States, France, Japan, Chile, and internationally. The company manufactures and sells PV solar modules with a thin film semiconductor technology that provides a lower-carbon alternative to conventional crystalline silicon PV solar modules. It designs, manufactures, and sells cadmium telluride solar modules that convert sunlight into electricity.

• Market Cap ($ Billion): 54.14
• Fair Value: $52.22
• Fair Value Upside: 34.5%

Schlumberger Limited engages in the provision of technology for the energy industry worldwide. The company operates through four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. It also offers subsurface geology and fluids evaluation information. The company was formerly known as Societe de Prospection Electrique. Schlumberger Limited was founded in 1926 and is based in Houston, Texas.

• Market Cap ($ Billion): 8.21
• Fair Value: $45.8
• Fair Value Upside: 39.0%

Match Group, Inc. engages in the provision of dating products. Its portfolio of brands includes Tinder, Hinge, Match, Meetic, OkCupid, Pairs, Plenty Of Fish, Azar, BLK, and Hakuna, as well as various other brands, each built to increase users’ likelihood of connecting with others. Its services are available in over 40 languages to users worldwide. The company was incorporated in 1986 and is based in Dallas, Texas.

• Market Cap ($ Billion): 143.6
• Fair Value: $52.56
• Fair Value Upside: 38.9%

Comcast Corporation operates as a media and technology company worldwide. Its Residential Connectivity & Platforms segment provides residential broadband and wireless connectivity services, residential and business video services, sky-branded entertainment television networks, and advertising. The Media segment operates NBCUniversal’s television and streaming business, including national and regional cable networks; and Peacock, a direct-to-consumer streaming service. It also operates international television networks comprising the Sky Sports networks, as well as other digital properties. The Studios segment operates NBCUniversal and Sky film and television studio production and distribution operations. The Theme Parks segment operates Universal theme parks in Orlando, Hollywood, Osaka, and Beijing. The company also offers consolidated streaming platforms. Comcast Corporation was founded in 1963 and is headquartered in Philadelphia, Pennsylvania.

• Market Cap ($ Billion): 94.38
• Fair Value: $529.28
• Fair Value Upside: 29.5%

Elevance Health, Inc., together with its subsidiaries, operates as a health benefits company in the United States. The company operates through four segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other. It offers a variety of health plans and services to program members. The company provides its services under the Anthem Blue Cross and Blue Shield, Wellpoint, and Carelon brand names. The company was formerly known as Anthem, Inc. and changed its name to Elevance Health, Inc. in June 2022. Elevance Health, Inc. was incorporated in 2001 and is headquartered in Indianapolis, Indiana.

We’ve only listed a handful of companies that we found using the InvestingPro Advanced Screener. To compare the rest of the list, simply follow these steps:

1. Visit the InvestingPro Stock Screener tool
2. Select the following filters

3. For U.S.-centric stocks, select ‘United States’ under the ‘Trading Region’ tab drop-down, and make sure to check (select) the ‘Primary Trading Item’ option.

4. You’ll then see the list of all the companies falling in the desired screener filters’ range, arranged in a descending order.

An undervalued stock is one that is trading at a price lower than its intrinsic value, which is determined by analyzing its fundamentals such as earnings, dividends, growth potential, and financial health. Investors believe these stocks are mispriced by the market, presenting opportunities for profit when the true value is realized.

Identifying undervalued stocks involves fundamental analysis, which includes examining financial statements, valuation metrics (like P/E and P/B ratios), dividend yields, and the company’s growth potential. Comparative analysis with industry peers and discounted cash flow (DCF) analysis are also useful techniques.

Stocks can become undervalued due to various factors including negative market sentiment, lack of information or misunderstandings about the company, temporary issues affecting the company, or broader economic cycles and downturns impacting the sector.

Investing in undervalued stocks can be profitable, but it carries risks. The stock may be undervalued for a good reason, such as declining business prospects or industry challenges. It’s important to conduct thorough research and consider the company’s long-term potential before investing.

An undervalued stock has the potential to appreciate in value as the market corrects its pricing error. A value trap, on the other hand, appears cheap but continues to underperform due to fundamental problems in the business that prevent price appreciation.

Yes, undervalued stocks can offer attractive dividend yields. High dividend yields may indicate undervaluation, especially if the company has strong financial health and a sustainable dividend payout ratio. However, high yields can also signal potential trouble, so it’s important to analyze the company’s ability to maintain dividends.

The holding period for an undervalued stock depends on individual investment goals and the specific stock. Some undervalued stocks may realize their true value quickly, while others might take longer. Patience is often required, and it’s important to periodically reassess the stock’s fundamentals and market conditions.

Undervalued stocks can be found in any industry, but they are often more common in sectors experiencing temporary difficulties, economic downturns, or undergoing significant change. Cyclical industries like energy, materials, and financials may present more opportunities for finding undervalued stocks.