7 Undervalued Stocks to Buy Now

Take advantage of market softness with these top value stocks.

The S&P 500 got off to a hot start to 2023, but it has lost ground in recent weeks amid growing macroeconomic uncertainty. Persistently high inflation, rising interest rates and concerns about a potential U.S. recession have weighed on high-risk stocks. But broad market weakness has also hurt the share prices of many high-quality value stocks, as well. Fortunately for investors, that weakness has also created some compelling value opportunities. If the Federal Reserve can avoid a hard landing for the economy, these value investing opportunities likely won’t last for long. Here are seven undervalued stocks to buy with forward earnings multiples of less than 15, according to CFRA Research.

JPMorgan Chase & Co. (ticker: JPM)

JPMorgan Chase is one of the world’s largest banks and financial services companies, with about $3.8 trillion in assets. Rising interest rates are typically good news for bank net interest margins, but only if the U.S. can avoid a severe recession. Analyst Kenneth Leon says JPMorgan should have no trouble navigating a shallow recession in 2023 and should be well positioned for the next economic expansion period. Leon is bullish on the bank’s investments in growth-driving technology and consumer banking applications. CFRA has a “buy” rating and $156 price target for JPM stock, which closed at $140.93 on Feb. 24.

Bank of America Corp. (BAC)

Bank of America is one of the largest U.S. banks and wealth management services providers. Leon says the company is firing on all cylinders ahead of what he anticipates will be a healthy rebound in lending and investment banking in the second half of 2023. Higher interest rates will boost Bank of America’s net interest income, and Leon says the company’s leading retail deposit market share among consumers and small businesses creates value for investors. He projects 8.5% revenue growth in 2023. CFRA has a “buy” rating and $43 price target for BAC stock, which closed at $34.21 on Feb. 24.

Merck & Co. Inc. (MRK)

Merck is one of the world’s leading biopharmaceutical companies. Analyst Stewart Glickman says Merck’s decision to spin off its older, slower-growth businesses into Organon & Co. (OGN) should help unlock value in Merck’s remaining higher-growth segments. Management has said the spinoff should help improve Merck’s operating efficiency by $1.5 billion by 2024. In addition, Glickman says Merck’s $11.5 billion acquisition of Acceleron Pharma helps beef up its serious and rare disease therapies portfolio, and increase its exposure to the growing cardiovascular disease treatment market. CFRA has a “strong buy” rating and $121 price target for MRK stock, which closed at $109.89 on Feb. 24.

Pfizer Inc. (PFE)

Pfizer is one of the largest global pharmaceutical companies. In the past two years, Pfizer has gotten plenty of headlines and sales from its COVID-19 vaccine and booster shots, which it developed with partner BioNTech SE (BNTX). Pfizer’s stock is down 18.5% this year through Feb. 24, however, which is the worst performance among the stocks on this list. Glickman says Pfizer estimates that it has about $17 billion in revenues at risk from loss of drug patent exclusivity between 2025 and 2030, but he thinks the company’s development pipeline is strong enough to offset those losses. CFRA has a “buy” rating and $52 price target for PFE stock, which closed at $41.75 on Feb. 24.

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, but its long-term outlook is positive. Snyder says Wi-Fi 6 and 5G upgrade cycles are demand drivers for Cisco, and component shortage issues will only be a short-lived drag on revenue growth. Cisco will benefit from secular growth in bandwidth consumption, and growth in cloud networking and data center usage should create value for Cisco investors. Snyder projects 5.6% revenue growth in fiscal 2023. CFRA has a “strong buy” rating and $60 price target for CSCO stock, which closed at $48.48 on Feb. 24.

Wells Fargo & Co. (WFC)

Wells Fargo is another one of the largest U.S. banks, and it has a mostly domestic loan portfolio. Wells Fargo’s 12.9% gain through Feb. 24 this year is the best performance of any stock on this list. Its forward earnings multiple of just 8.9 is also the lowest on this list, making it particularly attractive to value investors. Leon says Wells Fargo is on the right track for profitable growth. Removal of the Federal Reserve’s punitive asset cap could also be a significant bullish catalyst for Wells Fargo. CFRA has a “buy” rating and $50 price target for WFC stock, which closed at $46.62 on Feb. 24.

Comcast Corp. (CMCSA)

Comcast is a media conglomerate with a diversified portfolio of cable and broadcast television assets, including NBCUniversal Media, the Peacock streaming service and Universal Films. Snyder says NBCUniversal’s advertising business recovered in 2022, and its TV and film production and theme park businesses have benefited from pent-up demand. Snyder says Comcast’s broadband connectivity strategy has gained market traction, and the company has plenty of financial flexibility to remain adaptive as the media landscape evolves in coming years. He projects revenue will decline by 1% in 2023. CFRA has a “buy” rating and $50 price target for CMCSA stock, which closed at $37 on Feb. 24.

7 undervalued stocks to buy now:

— JPMorgan Chase & Co. (JPM)

— Bank of America Corp. (BAC)

— Merck & Co. Inc. (MRK)

— Pfizer Inc. (PFE)

— Cisco Systems Inc. (CSCO)

— Wells Fargo & Co. (WFC)

— Comcast Corp. (CMCSA)

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