Top Most Undervalued Stocks Right Now

Top Most Undervalued Stocks Right Now

If you are hunting for real bargains, the most undervalued stocks right now are not hiding in the index headline. They are concentrated in value names, small caps, and a few international leaders that trade below defensible fair values. Fresh valuation dashboards show the overall market near fair to slightly rich, so selection matters more than timing.

In this article, we’ll show a simple screen to find the most undervalued stocks right now, share a research-ready shortlist across the U.S. and international markets, and explain how to keep your picks fresh each quarter.

What Undervalued Means In 2025

A stock is undervalued when its price sits below a reasonable estimate of intrinsic value. Morningstar’s live Price To Fair Value view is a useful macro compass, and its latest quarterly outlook notes the market is hovering around a premium to composite fair values, with small caps screening more attractive than mega caps. Use this context to guide idea generation before you look at single names.

Where value clusters today

• Style and size Small caps and classic value cohorts continue to look cheaper than the broad market on mainstream composites and factor work.
• Regions and sectors Adding international stocks widens the opportunity set and surfaces discounts in banks, defense contractors, and semiconductors.

A Simple Screen To Avoid Value Traps

1. Price versus value
   Look for forward P/E below the industry average, EV EBITDA in the lower bands, and free cash flow yield from six to seven percent or higher.
2. Business quality
   Positive free cash flow through the cycle, ROIC at or above WACC, stable margins, and manageable net debt.
3. Catalyst in the next year
   Margin recovery, portfolio simplification, buybacks or dividend growth funded by cash flow, or easing regulatory and cyclical headwinds.

Use a “live valuation” note in your doc with the Morningstar fair value page so your shortlist stays current.

Top 10 Most Undervalued Stocks Right Now

These are research-ready illustrative ideas sourced from reputable roundups and screens published in late September and early October 2025. Apply the screen above before acting.

U.S. Large Caps

1. Berkshire Hathaway (BRK.B)
   Diversified cash engine across insurance, BNSF rail, and Berkshire Hathaway Energy; 2Q25 operating results underscore momentum, and Berkshire just announced a $9.7B OxyChem acquisition, expanding its industrial footprint.
2. Target (TGT)
   Dividend $1.14 per share quarterly (233rd consecutive payment); yield ~5% on recent screens, while shares still sit near low-teens forward P/E in rundowns, supporting a “repair then rerate” thesis if margins keep normalizing.
3. Micron Technology (MU)
   AI memory cycle drives pricing power. Morgan Stanley upgraded to Overweight with a $220 PT, citing multiple quarters of double-digit price increases; Micron also touted HBM4 leadership with 2.8TB/s bandwidth. Valuation remains modest vs growth (recent notes put ~10–11x forward P/E).
4. British American Tobacco (BTI)
   Cash-rich with high margins and a large dividend (recent yields ~5.7–6.3% depending on source/date). 2023’s $31.5B non-cash impairment reset U.S. brand values, but cash flows still support payouts as the model pivots toward reduced-risk products.
5. Lennar (LEN)
   Leveraged to U.S. housing undersupply while trading at undemanding multiples. Q3 FY25: home-sales revenue $8.2B, 21,584 deliveries, ASP $383k; incentives pressured margins, but volumes/backlog provide line-of-sight as rates ease.

International

6. Banco Santander (SAN)
   Single-digit P/E with diversified earnings across Europe and the Americas and continuing buybacks. H1’25 attributable profit €6.83B, +13% YoY, the best first half on record, while capital and fee income remain supportive.
7. Huntington Ingalls Industries (HII)
   U.S. naval prime (aircraft carriers, subs) with rarefied capabilities. Q2’25 revenue $3.1B and record backlog $56.9B after $11.9B in awards, showing clear multi-year visibility.
8. ASML Holding (ASML)
   EUV lithography leader with durable moat. Q2’25 net sales €7.7B and 53.7% gross margin; export noise caps sentiment, but fundamentals remain strong. A classic “great business at a discount” setup.

Canada Picks

9. Whitecap Resources (WCP.TO)
   Canadian oil & gas producer still screening on single-digit trailing P/E with robust cash generation. 2024 CFO C$1.83B; Q2’25 production ~293k boe/d. Commodity sensitivity is the key risk. Size accordingly.
10. Suncor Energy (SU.TO)
    Integrated energy “paid-to-wait” name: quarterly dividend C$0.57 (mid-single-digit yield depending on price) and ongoing deleveraging/buybacks supported by upstream and refining cash flow.

How To Use This List Without Chasing Headlines

Run your screen by industry

Use sector-aware bands for P/E and EV EBITDA and prioritize FCF yield.

Cross-check with fair value

Compare picks to an external fair-value framework to avoid single-metric bias.

Demand quality

Confirm ROE and ROA for that industry and verify leverage is trending better.

Add a catalyst

Look one to four quarters out for what closes the gap. Earnings inflection, margin normalization, asset sales, buybacks, or dividend growth.

Refresh quarterly

After each earnings season, retest valuation and thesis durability.

Benefits And Risks To Keep In Mind

Benefits

• Potential rerating outperformance as price converges to value
• Often higher dividend yields when prices are depressed

Risks

• Value traps where structural decline keeps compressing earnings
• The stock can stay cheap longer than expected
• Macro shifts can push multiples lower despite steady fundamentals

Conclusion

The most undervalued stocks right now are a moving target, not a static list. Start with valuation, then test quality and catalysts so price has a clear path to converge toward intrinsic value. Use the simple screen in this guide to compare P/E, EV/EBITDA, and free cash flow yield, then confirm ROIC, balance sheet strength, and margin durability to avoid value traps.

Keep your shortlist alive. Refresh after each earnings season, cross-check against live fair value dashboards, and rebalance when names rerate to fair value. Blend U.S., international, and Canada exposure to reduce home bias and widen your opportunity set. With a steady process and patient sizing, today’s discounts can become tomorrow’s outperformance.