7 undervalued stocks to buy now

Analysts say these stocks are undervalued in this down market.

  • By Wayne Duggan,
  • U.S. News & World Report
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The S&P 500 () has struggled so far in 2022 amid macroeconomic uncertainty. Persistently high inflation, rising interest rates and concerns about a potential U.S. recession have most high-risk stocks trading well off 2021 highs, but broad market weakness has also dropped the share prices of many high-quality value stocks. Fortunately for investors, the broad market weakness has created some compelling value opportunities. If the U.S. can avoid a recession, these value investing opportunities likely wouldn't last long. Here are seven undervalued stocks viewed favorably by CFRA analysts, all with forward earnings multiples under 15.

Exxon Mobil Corp.

Exxon Mobil () is the largest publicly traded U.S. integrated oil company. The oil and gas industry has been one of the few bright spots in an abysmal market in 2022, and Exxon shares are up 54% this year as of Sept. 7. Fortunately for value investors, rising oil prices have also boosted Exxon's earnings, and its forward earnings multiple remains at just 9. CFRA analyst Stewart Glickman says Exxon has short-term bullish catalysts in Africa and the Permian Basin and long-term opportunities in clean energy initiatives. CFRA has a "buy" rating and $116 price target for XOM stock, which closed at $94.14 on Sept. 7.

Bank of America Corp.

Bank of America () is one of the largest U.S. commercial and investment banks and wealth managers. Rising interest rates are typically great news for banks' net interest margins, but Bank of America shares are down nearly 25% year to date on concerns about loan growth. CFRA analyst Kenneth Leon said loan growth is a wild card, but rising interest rates are great for earnings. Leon says the bank's net charge-off ratio is below historical averages, and the stock trades at just above 8 times forward earnings. CFRA has a "buy" rating and $39 price target for BAC stock, which closed at $33.57 on Sept. 7.

Pfizer Inc.

Pfizer () is one of the largest global pharmaceutical companies. In the past two years, Pfizer has gotten a lot of headlines and sales from its COVID-19 vaccine and booster shots jointly developed with partner BioNTech SE (). Glickman says the recent launch of Pfizer's Paxlovid oral COVID-19 treatment should be its latest pandemic-related sales catalyst. Glickman says the company's strong pipeline of mid- and late-stage drug candidates suggests that the company has plenty of long-term growth opportunities ahead. Pfizer shares trade at about 9 times forward earnings, one of the lowest multiples of the stocks on this list. CFRA has a "strong buy" rating and $66 price target for PFE stock, which closed at $46.13 on Sept. 7.

AbbVie Inc.

AbbVie () is another global pharmaceutical company, and its lead drug is rheumatoid arthritis treatment Humira. Glickman says the looming loss of exclusivity on Humira in 2023 is troubling, but immunology drugs Skyrizi and Rinvoq are projected to generate a combined $15 billion in sales by 2025, up from $4.6 billion in sales in 2021. Glickman projects 7% sales growth for AbbVie in 2022, driven by more than 50% growth in Skyrizi and Rinvoq revenue. AbbVie shares trade at 11.5 times forward earnings. CFRA has a "buy" rating and $168 price target for ABBV stock, which closed at $138.71 on Sept. 7.

Merck & Co. Inc.

Merck () is yet another of the world's leading biopharmaceutical companies. Glickman says Merck's decision to spin off its slow-growth businesses into Organon & Co. () has left the parent company leaner and meaner, with a higher growth profile and more focus on key growth drivers, including its Molnupiravir oral COVID-19 treatment. In addition, Glickman says Merck's acquisition of Acceleron Pharma helps expand its presence in the growing cardiovascular disease treatment market. Merck shares trade at just 11.5 times forward earnings, making the stock an attractive value. CFRA has a "strong buy" rating and $101 price target for MRK stock, which closed at $86.87 on Sept. 7.

Broadcom Inc.

Broadcom () is a diversified global semiconductor device developer and supplier. Tech stocks have been hit hard in 2022, but Broadcom isn't the typical high-growth, low-profit tech stock. Broadcom generated more than $3 billion in net income in the most recent quarter, trades at about 12 times forward earnings and pays a 3.3% dividend. In May, Broadcom announced a $61 billion buyout of VMware Inc. (). Analyst Angelo Zino says VMware gives Broadcom greater software exposure and could improve overall margins and visibility. CFRA has a "buy" rating and $580 price target for AVGO stock, which closed at $505.13 on Sept. 7.

Cisco Systems Inc.

Cisco Systems () specializes in networking, security, collaboration, cloud computing and other technologies. For investors looking for high-quality value stocks to buy on the dip in 2022, Cisco has taken a particularly hard hit. Cisco shares are down 29% in 2022 as of Sept. 7, making it the worst-performing stock on this list. Analyst Keith Snyder says the WiFi 6 cycle and global 5G network upgrades are long-term tail winds for Cisco. Cisco shares trade at less than 12 times forward earnings. CFRA has a "strong buy" rating and $60 price target for CSCO stock, which closed at $45.02 on Sept. 7.

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