Investors love a good bargain—and in the world of stocks, “cheap” doesn’t necessarily mean “risky.” As we move into 2025, some U.S. equities are flying under the radar, quietly offering long-term value while the spotlight shines elsewhere.
While the overall U.S. market wrapped up 2024 with a respectable 24% gain, according to the Morningstar US Market Index, analysts caution that the margin for error is tightening. With the market trading at about 4% above its estimated fair value at the beginning of the year, smart positioning matters more than ever.
As one seasoned market strategist recently noted, the last time the market consistently traded at such a premium was in very specific, high-growth windows. Translation: this isn’t the time to chase trends blindly—but rather, to look where others aren’t.
Here’s a deep dive into the 33 undervalued U.S. stocks that could quietly outperform in the year ahead, categorized by sector and style.
A Market of Contrasts: Growth vs. Value
Let’s start with the big picture. Small-cap value stocks are currently the most attractively priced, trading 27% below fair value. On the other end of the spectrum, high-growth names—think trendy tech stocks—are looking a little rich, with valuations soaring 28% above fair value.
Sector-wise, consumer discretionary and financial services are considered overheated, while real estate and energy are offering compelling discounts.
33 Top Undervalued Stocks for 2025
Here’s the curated watchlist of underappreciated gems:
- O. Smith (AOS)
- Albemarle (ALB)
- Alphabet (GOOGL)
- Baxter International (BAX)
- Caterpillar (CAT)
- Comcast (CMCSA)
- Corteva (CTVA)
- CVS Health (CVS)
- Dollar General (DG)
- Dow (DOW)
- Duke Energy (DUK)
- Estee Lauder (EL)
- Evergy (EVRG)
- Exxon Mobil (XOM)
- HF Sinclair (DINO)
- Healthpeak Properties (DOC)
- Huntington Ingalls Industries (HII)
- Kilroy Realty (KRC)
- Kohl’s (KSS)
- Kraft Heinz (KHC)
- MarketAxess (MKTX)
- Microsoft (MSFT)
- Moderna (MRNA)
- NXP Semiconductors (NXPI)
- Paramount Global (PARA)
- PayPal (PYPL)
- Polaris (PII)
- Schlumberger (SLB)
- STMicroelectronics (STM)
- Sun Communities (SUI)
- S. Bancorp (USB)
- Under Armour (UA)
- WEC Energy (WEC)
Digging Into the Sectors
Basic Materials: Strong Fundamentals, Low Prices
Albemarle, a key player in lithium, is trading at just 38% of its fair value—a striking discount, albeit with high volatility. Dow and Corteva also remain below fair value, offering solid economic moats in chemicals and agriculture.
Communication Services: Still Room to Run
Despite a strong 2024, this sector remains reasonably priced. Alphabet (GOOGL) is slightly undervalued at a 13% discount, while Paramount Global and Comcast are trading at even deeper discounts, albeit with higher risk.
Consumer Cyclical: Selective Buys Only
This sector is currently 19% overpriced—so tread carefully. That said, Polaris (outdoor equipment), Kohl’s, and Under Armour offer compelling entry points for long-term value seekers.
Consumer Defensive: Unfashionable, But Full of Potential
While these stocks lagged in 2024, they offer attractive opportunities now. Dollar General, Estee Lauder, and Kraft Heinz are trading well below fair value, with consistent demand in tough times.
Energy: Out of Favor—But Not Out of Steam
Energy names like Exxon Mobil and Schlumberger are being overlooked as global demand remains uncertain. Yet, these stocks offer double-digit discounts and solid fundamentals, especially in integrated oil and gas.
Financial Services: Not All Overvalued
Yes, the sector as a whole is trading above fair value, but there are bright spots. MarketAxess, PayPal, and U.S. Bancorp provide value for those willing to navigate short-term rate volatility.
Healthcare: Defensive Plays With Long-Term Growth
This is one of the few sectors where bargains meet resilience. Stocks like CVS, Baxter, and Moderna are trading at significant discounts. For anyone with a long time horizon (or anyone with aging parents), these names are worth serious consideration.
Industrials: Look Beyond the Headlines
The sector may be 5% overpriced, but companies like Caterpillar and Huntington Ingalls Industries offer robust economic moats and are key players in infrastructure and defense.
Real Estate: Quietly Undervalued
Real estate stocks saw a resurgence in 2024, but they’re still trading around 11% below fair value. Properties like Kilroy Realty and Sun Communities may benefit from stable rental income and long-term demographic trends.
Technology: Few Deals, But Some Exist
Tech had a massive year, and most names are now overpriced. However, Microsoft, NXP Semiconductors, and STMicroelectronics are exceptions—offering reasonable entry points in an otherwise frothy sector.
Utilities: Dependable, But Dull?
With modest 8% returns over the past three years, utilities aren’t going to light up your portfolio. But for income seekers, Evergy, Duke Energy, and WEC Energy offer stability and predictable dividends.
So, How Do You Spot an Undervalued Stock?
It’s part science, part intuition. Look for stocks trading below their intrinsic value—often measured by price-to-earnings, price-to-cash flow, or even price-to-book ratios. Watch for names trading below their 52-week highs, especially if their fundamentals remain intact.
Think of it like thrift shopping: sometimes, the best finds are the ones others overlook.
Final Thoughts
Finding undervalued stocks in a slightly overpriced market is like digging for gold in a crowded mine. The nuggets are there—but you’ve got to look closely, stay patient, and trust the numbers. Whether you’re an index investor looking to add a touch of alpha or someone building a high-conviction portfolio, these 33 names deserve a spot on your radar for 2025.
Let the market do its thing—but don’t forget to do yours.
