The S&P 500 trades around 26x trailing earnings as of late June 2026, well above its long-term average near 17. That keeps the broad market near its most expensive levels in decades. For investors looking for stocks priced below their fundamental value, the search requires looking beyond the mega-cap tech names driving the index higher. We screened over 200 large-cap U.S. stocks and narrowed the list to seven based on trailing P/E ratios, price-to-book values, free cash flow generation, and balance sheet quality.
Value investing means buying companies whose stock price underestimates their earning power, asset base, or competitive position. The stocks on this list trade at single-digit to mid-teens earnings multiples, generate consistent cash flow, and operate businesses with clear advantages. Most also pay dividends.
How We Picked These Stocks
We started with all U.S.-listed companies above $20 billion in market cap. From there, we filtered for trailing P/E ratios under 20, price-to-book ratios under 3.5 (with exceptions for asset-light models), positive trailing free cash flow, and no major accounting restatements or going-concern warnings. We excluded companies whose low valuations reflect structural decline rather than temporary mispricing. The result is seven companies spanning financials, healthcare, consumer, media, and automotive sectors.
The List
Berkshire Hathaway (NYSE:BRK-B)
Why it made the list: Berkshire Hathaway is the largest value stock in the world by market cap. The company owns more than 60 operating subsidiaries spanning insurance, railroads, energy, and manufacturing, plus a $300 billion-plus public equity portfolio anchored by Apple, American Express, and Coca-Cola. It trades around 1.5x book value, near the level where management has historically stepped up share buybacks.
The bull case: CEO Greg Abel inherits a machine that generates $40 billion-plus in annual operating earnings, holds over $300 billion in cash and short-term Treasuries, and has the firepower to make transformative acquisitions during a downturn. The insurance float provides permanent, zero-cost capital.
The risk: Berkshire's sheer size makes it difficult to deploy capital at high returns. The post-Buffett era introduces execution uncertainty, even with Abel's deep operational background.
Key number: Over $300 billion in cash and short-term investments, the largest corporate war chest in history.
Bank of America (NYSE:BAC)
Why it made the list: Bank of America is the second-largest U.S. bank by assets and trades at roughly 12x trailing earnings with a 1.3x price-to-book ratio. The bank benefits directly from higher interest rates, which widen the spread between what it pays depositors and what it earns on loans. Net interest income has expanded steadily as the rate environment normalized.
The bull case: BAC's consumer banking franchise includes 67 million customers and 41 million active digital users. The wealth management division (Merrill Lynch) generates steady fee income that smooths earnings through credit cycles. Higher rates continue to support net interest margins.
The risk: A recession would push loan losses higher and compress the multiple further. The bank also carries unrealized losses on its held-to-maturity bond portfolio from the 2020-2021 era, though these are shrinking as bonds mature.
Key number: Return on equity above 10%, the highest sustained level in the bank's post-crisis history.
Pfizer (NYSE:PFE)
Why it made the list: Pfizer trades near $24 per share, a price that implies the market expects its post-COVID revenue base to flatline or shrink. The company's oncology pipeline tells a different story. The $43 billion Seagen acquisition in 2023 added nine approved cancer drugs and a deep clinical pipeline. Pfizer's non-COVID revenue base has stabilized above $50 billion annually, and the dividend yields above 7%.
The bull case: Pfizer is transitioning from a COVID windfall company into an oncology-focused pharma giant. The Seagen portfolio should contribute $10 billion-plus in peak annual revenue. Its late-2025 Metsera acquisition also bought a seat at the GLP-1 and metabolic table, the hottest category in pharma. At a P/E around 20 and a yield above 7%, the stock prices in almost no pipeline success beyond what is already approved.
The risk: Patent cliffs on legacy drugs (including Eliquis, which loses exclusivity in the next few years) could offset Seagen revenue gains. Debt from the Seagen and Metsera deals remains elevated.
Key number: 7.2% dividend yield, the highest on this list and among the highest in the S&P 500.
Comcast (NASDAQ:CMCSA)
Why it made the list: Comcast trades at roughly 5x trailing earnings after completing the spinoff of its cable television networks into a separate company. What remains is a broadband-and-theme-parks business anchored by Xfinity (the largest U.S. internet provider by subscribers), NBCUniversal's film and theme park divisions, and Sky in Europe. The stock trades near book value and yields above 5%.
The bull case: Broadband is a recurring-revenue utility with 80%+ gross margins. Theme parks (Universal Studios) generate strong free cash flow and are expanding, after Epic Universe in Orlando opened in 2025. The post-spinoff company is simpler, more focused, and easier for the market to value.
The risk: Broadband subscriber growth has stalled as fixed wireless competitors (T-Mobile, Verizon) chip away at the low end of the market. Cord-cutting continues to pressure the legacy video business, though this matters less after the cable network spinoff.
Key number: Price-to-book of roughly 1.0, meaning the stock trades at the accounting value of its net assets.
General Motors (NYSE:GM)
Why it made the list: General Motors trades at a price-to-book ratio near 1.2, among the cheapest large-cap industrials on the U.S. market. The company posted Q1 2026 adjusted EPS of $3.70, beating the $2.62 consensus by 41%, while absorbing up to $1 billion in tariff-related costs. Full-size trucks and SUVs remain enormously profitable. The trailing P/E appears elevated due to one-time charges in prior quarters, but the forward earnings run rate suggests a single-digit multiple.
The bull case: GM's truck and SUV lineup prints high-teens operating margins. The company has pulled back on unprofitable EV spending, focusing capital on hybrids and its most competitive electric models. Share buybacks have reduced the float meaningfully over the past two years.
The risk: Tariffs on imported vehicles and parts remain a margin headwind. A consumer recession would hit auto sales directly. The stock's cheapness partly reflects the market's persistent skepticism about Detroit automakers.
Key number: Price-to-book of 1.2, meaning shares trade barely above the net asset value of GM's factories, inventory, and financial operations.
Target (NYSE:TGT)
Why it made the list: Target is a Dividend King, meaning it has raised its dividend for more than 50 consecutive years. Shares fell from $180 to below $90 in 2025, then recovered to around $140 as a new CEO, a revamped merchandising strategy, and stabilizing comparable sales took hold. The stock still sits below the market multiple and yields roughly 3.3%. Even Walmart stumbled recently, reminding investors that no retailer is immune to macro pressure.
The bull case: Target's owned-brand portfolio (Good & Gather, Threshold, All in Motion) generates higher margins than national brands. The company's store network doubles as a fulfillment center for same-day delivery, giving it a structural cost advantage in last-mile logistics. Comparable sales have stabilized and management is guiding toward positive traffic growth.
The risk: Consumers are trading down and reducing discretionary spending as inflation lingers. Target's mix of home goods and apparel is more discretionary than Walmart's grocery-heavy model, making it more sensitive to economic slowdowns. The dividend payout ratio has climbed above 80%, leaving less cushion if earnings slip.
Key number: 57 consecutive years of dividend increases, one of the longest active streaks among U.S. retailers.
Constellation Brands (NYSE:STZ)
Why it made the list: Constellation Brands owns Corona, Modelo Especial, and Pacifico, three of the fastest-growing beer brands in the United States. The stock trades at roughly 15x trailing earnings despite operating margins above 30% and a dominant position in the premium beer segment. Modelo Especial is the best-selling beer brand in the U.S. by dollar sales, a position it took from Bud Light in 2023 and has held since.
The bull case: Beer remains the company's growth engine while competitors lose share. Constellation's wine and spirits divestiture has simplified the business and freed capital for buybacks and debt reduction. The company is effectively a pure-play premium beer business trading at a mid-teens multiple.
The risk: The company's entire beer supply chain depends on Mexican brewing facilities. Trade tensions, tariff escalation, or supply disruption at the border would hit production capacity directly. Softer U.S. beer consumption pushed management to trim its sales outlook, and the shift toward low-alcohol and non-alcoholic drinks could slow volume growth over time.
Key number: Operating margins above 30%, among the highest in the global beer industry.
Value Stocks at a Glance
Sector Overview
Value stocks have underperformed growth stocks for most of the past decade, but the gap has started to narrow. Rising interest rates have compressed the multiples on speculative, cash-burning growth companies while lifting earnings for financials, insurers, and asset-heavy industrials. The S&P 500 Value Index trades at roughly 18x forward earnings compared to around 30x for the Growth Index, a spread that historically precedes periods of value outperformance.
The current environment favors companies with pricing power, tangible assets, and steady cash flow. Bond yields remain elevated, which increases the discount rate applied to future earnings and makes stocks with near-term cash flow more attractive than stocks whose value depends on earnings years away. Persistent inflation also benefits companies like Constellation Brands and Target that can pass cost increases through to consumers.
The stocks on this list span five sectors and share three traits: they generate more cash than they need to sustain operations, they trade below the market multiple, and they have competitive moats that protect margins through downturns.
What to Watch
- Federal Reserve rate path: The Fed's late-July meeting will signal whether the rate backdrop keeps favoring value stocks with current earnings over growth names priced on earnings years away.
- Second-quarter earnings: Results roll in through July and August. Bank of America reports in mid-July, General Motors in late July, and Target in August, each a fresh read on consumer and credit health.
- Consumer spending data: Retail sales and consumer confidence reports in July and August will show whether companies like Target and Constellation Brands can sustain pricing power through a potential slowdown.
- Berkshire Hathaway's capital deployment: With over $300 billion in cash, any large acquisition or accelerated buyback program from Berkshire would likely re-rate the stock and signal broader confidence in value opportunities.
Bottom Line
The seven stocks on this list trade at a fraction of the S&P 500's 26x trailing multiple, five of seven pay dividends, and all operate businesses with durable competitive advantages. Value investing requires patience. These companies may not double in a year, but they generate consistent cash, return capital to shareholders, and trade at prices that leave room for upside when the market eventually recognizes what the fundamentals already show.
Frequently Asked Questions
What are value stocks?
Value stocks are shares of companies that trade below what their fundamentals suggest they are worth. Investors identify them using metrics like price-to-earnings ratio (how much you pay for each dollar of earnings), price-to-book ratio (how the stock price compares to the company's net asset value), and dividend yield (how much income the stock pays relative to its price). A stock with a P/E of 12 and consistent earnings growth may be considered undervalued compared to the S&P 500 average around 26.
What is the best value stock to buy right now?
Berkshire Hathaway (BRK-B) is the strongest all-around value pick on this list. It trades at 14x trailing earnings, holds over $300 billion in cash, owns more than 60 operating businesses, and has the financial flexibility to capitalize on market dislocations. The lack of a dividend is offset by share buybacks and book value compounding.
Are value stocks better than growth stocks?
Neither category is inherently better. Value stocks tend to outperform during periods of rising interest rates, elevated inflation, and economic uncertainty because their earnings are more immediate and predictable. Growth stocks tend to outperform in low-rate, risk-on environments. A balanced portfolio often includes both. Over very long periods (50+ years), value and growth have delivered similar total returns with different patterns of outperformance.
How do you find undervalued stocks?
Start with quantitative screens: trailing P/E below the sector average, price-to-book below 2.0, positive free cash flow, and a dividend yield above the market average. Then verify the numbers are not distorted by one-time charges or accounting quirks. Look at the business fundamentals: does the company have a competitive advantage, stable or growing revenue, and manageable debt? A low P/E alone does not make a stock a good value if earnings are declining.
Is Pfizer a good value stock?
Pfizer trades at roughly 20x trailing earnings and yields above 7%, making it one of the cheapest large-cap pharma stocks. The key question is whether the Seagen oncology pipeline and the newer Metsera metabolic portfolio can offset patent expirations on legacy drugs like Eliquis. At current prices, the market is pricing in minimal pipeline upside, which creates an opportunity if even a few clinical programs succeed.
