The S&P 500 has performed well in 2023, and many stocks are now trading far higher than their 2022 lows. However, there are still plenty of high-quality stocks trading at attractive valuations. If the Federal Reserve can avoid a hard landing for the economy, these value investing opportunities may not last for long. But if inflation and rising interest rates ultimately trigger a recession, value stocks may be the best way to play defense against a stock market downturn.
Here are seven undervalued stocks to buy, according to CFRA Research, with forward price-to-earnings ratios of less than 15
| STOCK | FORWARD P/E RATIO AS OF SEPT. 14 | IMPLIED UPSIDE OVER SEPT. 13 CLOSING PRICE |
| JPMorgan Chase & Co. (ticker: JPM) | 10.1 | 19.5% |
| Chevron Corp. (CVX) | 11.8 | 8.3% |
| Merck & Co. Inc. (MRK) | 12.8 | 15% |
| Cisco Systems Inc. (CSCO) | 13.3 | 6.6% |
| Pfizer Inc. (PFE) | 10.4 | 26.2% |
| Comcast Corp. (CMCSA) | 10.9 | 10.6% |
| T-Mobile US Inc. (TMUS) | 14.4 | 23.7% |
JPMorgan Chase & Co. (JPM)
JPMorgan Chase is one of the world’s largest banks and financial services companies, with roughly $3.9 trillion in assets. A string of bank failures in early 2023 has weighed on the financial sector. In early May, JPMorgan stepped in to acquire First Republic Bank after it failed and was seized by the Federal Deposit Insurance Corporation, or FDIC. Analyst Kenneth Leon says the $92 billion in deposits and $30 billion in securities JPMorgan acquired in the First Republic deal are clean, high-quality assets. CFRA has a “buy” rating and $175 price target for JPM stock, which closed at $146.41 on Sept. 13.
Chevron Corp. (CVX)
Chevron is a global oil company that operates exploration and production, refining and marketing, and petrochemical businesses. Analyst Stewart Glickman says Chevron’s PDC Energy acquisition in August was attractively priced and will boost the company’s proved reserves by about 10%. He says Australian liquefied natural gas, deepwater operations in the Gulf of Mexico, and production in both the DJ and Permian Basins provide growth opportunities for Chevron. In addition, Glickman says Chevron will expand its low-carbon and renewable energy business in the long term. CFRA has a “buy” rating and $180 price target for CVX stock, which closed at $166.20 on Sept. 13.
Merck & Co. Inc. (MRK)
Merck is one of the world’s largest pharmaceutical companies. Merck recently reported 3% year-over-year revenue growth in the second quarter, including 19% sales growth from leading cancer drug Keytruda. Sales for Merck’s HPV vaccine Gardasil were also up 47%. Analyst Sel Hardy says the second half of 2023 will be challenging for Merck, but the company will be better positioned for growth starting in 2024. Hardy is anticipating the recent acquisition of Prometheus Bioscience will start to have a positive impact on Merck’s numbers next year. CFRA has a “buy” rating and $124 price target for MRK stock, which closed at $107.81 on Sept. 13.
Cisco Systems Inc. (CSCO)
Cisco Systems specializes in networking, security, collaboration, cloud computing and other technologies. Analyst Keith Snyder says Cisco is battling short-term headwinds, including component shortages, that will weigh on the company’s revenue growth. However, he says the Wi-Fi 6 upgrade cycle and ongoing 5G core deployments will continue to be long-term demand drivers for Cisco. Growth in bandwidth consumption and the rise in data center solutions should also be growth catalysts for Cisco. Snyder projects 1.6% revenue growth in fiscal 2024 and 2.7% growth in 2025. CFRA has a “buy” rating and $60 price target for CSCO stock, which closed at $56.28 on Sept. 13.
Pfizer Inc. (PFE)
Pfizer is one of the largest global pharmaceutical companies. Pfizer has gotten plenty of headlines and sales from its COVID-19 vaccine and booster shots, which it jointly developed with partner BioNTech SE (BNTX). However, the stock is down 33.5% through Sept. 13 in 2023, the worst performance on this list. Slumping sales of Pfizer’s COVID-19 vaccines and drugs will weigh on growth this year, but Hardy says the company’s long-term future looks bright as Pfizer has 19 drugs in development that could potentially generate $20 billion in revenues by 2030. CFRA has a “buy” rating and $43 price target for PFE stock, which closed at $34.08 on Sept. 13.
Comcast Corp. (CMCSA)
Comcast is a media conglomerate with a diversified portfolio of cable and broadcast television assets, including NBCUniversal, the Peacock streaming service and Universal Films. Comcast shares are up 26.2% this year, the best performance of any stock on this list. Snyder says Comcast’s advertising, theme parks, and TV and film businesses recovered significantly in the first half of 2023. He projects revenue will drop 1% in 2023, but says Comcast should sustain returns on invested capital in at least the high-single-digit range over the next several years. CFRA has a “buy” rating and $50 price target for CMCSA stock, which closed at $45.19 on Sept. 13.
T-Mobile US Inc. (TMUS)
T-Mobile is one of the top three U.S. wireless providers by market share. Snyder says T-Mobile will continue to gain market share from peers, and he’s bullish on its free cash flow and churn. Snyder says T-Mobile’s 5G network is at least a year ahead of the 5G networks of Verizon Communications Inc. (VZ) and AT&T Inc. (T). He says T-Mobile has successfully used aggressive pricing strategies and promotional offers to lure customers from competitors. Snyder projects T-Mobile’s revenue will decline 0.9% in 2023 but rebound to 3.8% growth in 2024. CFRA has a “strong buy” rating and $175 price target for TMUS stock, which closed at $141.50 on Sept. 13.
https://money.usnews.com/investing/stock-market-news/slideshows/undervalued-stocks-to-buy
