Predicting the future price of a stock is tough, especially determining the best value stocks to invest in. No matter how well you know a stock and the company it represents, there are too many variables that can foil your prediction. That’s why most people are better off buying index funds or blue-chip stocks, investments that have a proven track record.
However, returns on these assets can leave something to be desired for certain investors, as some want the best performance possible. One way to do that without going down the perilous road of trying to time the market is value stocks.
Value stocks are stocks that are currently trading at a price less than their intrinsic value, which is usually determined by looking at the fundamentals. For example, you may look for stocks that have a lower price-to-earnings (P/E) ratio than competitors’ stocks. Most importantly, it is best to compare apples to apples because different industries can have very different P/E ratios.
Best Value Stocks to Buy
With that being said, we’ll take a look at some of the stocks that are currently the best value stocks and whether you should consider buying them.
- UWM Holdings (NYSE: UWMC)
- United States Steel Corporation (NYSE: X)
- Gilead Sciences, Inc. (Nasdaq: GILD)
- Merck & Co. (NYSE: MRK)
- Vale S.A. (NYSE: VALE)
No. 5 UWM Holdings, Inc.
UWM Holdings is the holding company behind United Wholesale Mortgage, a large provider of mortgage loans. The company’s headquarters is in Pontiac, Michigan. As a wholesaler, UWM works with mortgage brokers to help people purchase and refinance mortgages. It is also a servicer of the loans it packages for mortgage brokers.
UWM went public in early 2021 and its market cap is almost $10 billion today. However, its stock, UWMC, is selling at a discount with a price of just over $6. It has a very low P/E ratio of 0.42, making it one of the best value stocks right now. It has an earnings per share (EPS) of 14.48, and it pays a dividend with a recent yield of 5.73%. With its low price, expect this stock to increase in value. One thing to keep in mind is its fundamentals have been a bit rocky lately; its net income for Q3 2021 is $25 million a significant increase from $1.3 billion in Q4 2020.
No. 4 United States Steel Corporation
United States Steel Corporation is the second-largest producer of steel in the United States, second only to Nucor. The company is based in Pittsburgh, a city well-known for its steel-producing prowess. It was also founded by big names back in 1901, Andrew Carnegie, J.P. Morgan and Charles Schwab. Today, the company has more than 23,000 employees.
The company’s stock, X, has a market cap of nearly $6 billion and an EPS of 11.93. With a P/E ratio of 1.86, it is trading at a steep discount. It also pays a modest dividend, recently paying 0.90% to shareholders. Back in June of 2008, shares of X were briefly trading at nearly $185. While that peak was brief, it is highly undervalued at its current price and likely to increase over the next 12 months. This stock is definitely one to add to your list of best value stocks.
No. 3 Gilead Sciences, Inc.
Gilead Sciences is a biopharmaceutical company based in Foster City, California. It focuses on the research and development of antiviral drugs for the treatment of conditions such as HIV, hepatitis and the flu. In all, it has a portfolio of 24 products, including Truvada, Tamiflu and Sovaldi.
Gilead’s stock, GILD, has a market cap of nearly $90 billion. Its P/E ratio of 12.15 could seem a bit high for this list of best value stocks, but it is still considered undervalued. It has an EPS of 5.84 and recently paid a 4.03% dividend. In 2015, shares of GILD was trading at nearly $120; now, its price is just over $70. However, analysts expect a slight increase in its share price over the next 12 months.
Best Value Stocks No. 2 Merck & Co. Inc
Merck is another pharmaceutical company that is based in Kenilworth, New Jersey. The company is named after the Merck family which set up Merck Group in Germany all the way back in 1668. The current business entity was founded in 1891 and produces medicines and vaccines for the treatment of diabetes, HPV, chickenpox and other conditions.
As for its stock, MRK has a market cap of nearly $190 billion. This stock, too, has a seemingly high P/E ratio of 26.51. However, the stock is extremely high-quality with good growth prospects. In early November 2021, MRK briefly traded over $90 per share; it has come down to $75 since then. Most importantly, it has been increasing since falling to around $73 and that trend could very well continue. As an added bonus to one of the best value stocks, it recently paid a dividend of 3.74%.
Best Value Stocks No. 1 Vale S.A.
Vale S.A. engages in metals and mining and is one of the largest logistics operators in Brazil. It is also the largest producer of iron ore and nickel in the world. In addition, it produces several other types of metals and alloys. The company was founded in 1942 and is based in Rio De Janeiro, Brazil.
Vale S.A. stock, VALE, has a market cap of over $65 billion. Its P/E ratio is just 4.07 and it is one of the best value stocks today. It has an EPS of 3.31 and it recently paid a lucrative dividend of 19.79%. In June 2021, shares of VALE traded over $22 but have since fallen to around $13.50. The stock is considered highly undervalued at this price and analysts expect it to increase over the next 12 months. Vale is also a highly profitable company; in each of the last three quarters, it posted a net profit margin of 30% or higher.
About Bob Haegele
Bob Haegele is a personal finance writer who specializes in investing and planning for retirement. His hefty student loan burden inspired him to pay off his loans, and now he’s helping others get their finances in order. When he’s not writing, he enjoys travel and live music.
