Top Three Undervalued S&P 500 Stocks the Market Rally Left Behind

The S&P 500 Index has performed well this year, rising by over 10% and trading near its all-time high. Technology, energy, and industrial companies have driven this rally. This article looks at some of the top undervalued stocks that the rally has left behind.

PayPal

PayPal (NASDAQ:PYPL)/a> stock has been one of the top laggards in the S&P 500 Index in the past few years. It has slumped by over 78% in the last five years, while the index has soared by over 71%.

This crash has left it highly undervalued, with its forward price-to-earnings ratio falling to 9.9 and its price-to-free-cash-flow ratio moving to 6.15.

PayPal’s stock has slumped because of its ongoing revenue and profitability slowdown. Its last results showed that its revenue rose by 5% in the second quarter to $8.7 billion, while its active customers remained unchanged at 439 million.

PayPal’s stock recently dropped after Stripe and Advent decided to end their pursuit. On the positive side, the company has a new CEO who is working to turn around the brand. It is also using its strong balance sheet to repurchase its stock aggressively, with the average basic outstanding shares falling from over 1.15 billion in 2022 to 877 million today. /p> div class="bz-read-next-block" data-variant="list" data-news-mode="manual" >

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Honeywell

Honeywell (NASDAQ:HON)/a> is another highly undervalued company in the S&P 500 Index. It has dropped by over 21.5% from its highest point this year and reaching its lowest level since January this year.

Honeywell’s sell-off continued recently after President Donald Trump threatened to block the sale of Bombardier planes in the US. This is important because Honeywell is a major supplier to the company. Also, the company reduced its forward guidance, and now expects its sales to be between $19.8 billion and $20 billion, down from between $19.9 billion and $20.2 billion.

Honeywell’s sell-off has made it relatively undervalued, with its trailing twelve months (TTM) price-to-earnings ratio falling to 11. As a result, while analysts have lowered their target, their forecast is still higher than where it is today.

Comcast Corporation

Comcast (NASDAQ:CMCSA)/a> stock has also underperformed the market this year. It has slumped by 10% this year and 20% in the last 12 months. As a result, the company’s forward price-to-earnings ratio stands at 7.17, lower than the communications sector median of 12.

Comcast’s business continues to do relatively well as management continues to turn around the company. Its main strategy was to spin off its media business into Versant Media, which is now valued at over $5 billion. The management is also working to fix its broadband business and boost the profitability of its Peacock business.

Comcast continues to return funds to shareholders. It made over $4.6 billion in free cash flow and returned $2.1 billion to investors. Analysts remain largely optimistic about the company, with the average estimate being $32, up by 30% from the current level./p> div class="bz-read-next-block" data-variant="list" data-news-mode="manual" >

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