These 5 US stocks are trading at significant discounts this Black Friday

Black Friday is nearly upon us, and retailers (and others) are bombarding us with marketing messages about the “ bargains” to be had. But potentially the most valuable bargains are these US stocks trading at a discount to what they may actually be worth.

We’ve put together this list and expert analysis of US stocks that are trading at a discount and are potentially undervalued.

Discounts in the stock market come in a wide range of forms, and can appear for a variety of reasons, some are persistent and others can be as fleeting as Black Friday offers.

Underperforming stocks

Stocks that are under performing a benchmark, be that at a sector or market level, is one type of stockmarket discount.

A screen of the S&P 500 constituents reveals that there are more than 150 stocks that have underperformed the index by at least -20.0% or more, over the year to date.

The worst of these Walgreens Boots Alliance WBA, has underperformed by almost -93.0% with the WBA stock price falling more than 68.00% in 2024.

What’s more WBA‘s share price is also down over the last quarter, month and week, suggesting there will be no Santa rally here.

However, the second biggest underperformer in the S&P 500, drug and vaccine maker Moderna MRNA, has a different story to tell.

Moderna’s share price has undershot the index by -86.00% year to date, and its stock price had fallen -61.50% during 2024.

Yet the stock has started to show signs of life that coincide with US broker Jefferies, suggesting that we have now passed peak negativity around the prospects of US Healthcare stocks under the incoming Trump administration.

MRNA jumped by +6.20% on Monday taking their 5-day gains to almost +13.0%.

I note that Moderna is one of a handful of companies that are developing vaccines against HN51 or Bird Flu, which has been spreading throughout livestock populations in the US for a number of years.

However, more recently the virus has transitioned into Humans, with some 55 cases now confirmed in the US, 29 of those in California.

It’s early days of course but if HN51 becomes more of a threat, could Moderna come back into demand?

The stock currently trades at $43.90 but I note that it traded above $497.00 in 2021.

Another stock that trades at a discount to the S&P 500 Index is Oil Services Group Halliburton HAL.

Which has underperformed the wider market by -36.56% year to date.

HAL’s stock price has fallen by -11.87% in that time.

In fact Halliburton traded down at $27.26 on October 28th, however, back on April 4th it printed at $41.56.

The Halliburton stock price chart looks ripe for recovery. Indeed that process is already underway with Halliburton’s share price jumping by +14.20% over the last month, and +5.95% in the last 5 days, to trade at $32.00.

The stock has moved back above the downtrend line that extends lower from the April 2024 highs.

We have also seen a bullish MA crossover in the chart, with the faster 10-day moving average crossing up through and beyond the slower moving 50-day average.

President Trump’s appointment of fracking veteran Chris Wright, to head the US Dept of Energy will likely mean a sharp rise in US crude oil production.

That might not be good for oil prices themselves, but it should ensure that Haliburton and its sector compatriots are kept busy.

Stocks with PE Discounts

The price-earnings or PE ratio is widely used to value stocks, or at least provide us with a yardstick against which we can compare valuations and sentiment.

The higher a PE ratio for a stock is, then the higher the multiple of future earnings, investors are prepared to pay to own that stock.

High PE multiples tend to be associated with Growth stocks and low PE multiples with Value plays.

Right now the S&P 500 trades on a forward PE ratio of around 22.0 times earnings.

A figure that is above both the 10-year and 5-year averages, which sit at 18.1 and 19.6 times earnings respectively, according to research from Factset.

Screening the S&P 500 we find that there are 23 stocks with a forward PE ratio of less than 12 times.

In fact the list is much longer than that.

The number 23 arises because I also have filtered for stocks which have a 5-year positive track record of earnings, revenue, and dividend growth.

In other words stocks you might want to own, and not complete basket cases.

Here is that list:

Symbol	Name	P/E fwd	5Y Rev Growth	5Y Earnings Growth	5Y Dividend Growth
DHI	D.R. Horton	11.27	109.18%	234.27%	100.00%
EG	Everest Re Group	6.34	97.73%	1327.74%	28.30%
ELV	Elevance Health Inc	11.96	86.03%	108.56%	97.33%
CVS	CVS Corp	10.26	83.87%	23.45%	21.00%
LEN	Lennar Corp	11.90	66.41%	124.41%	837.50%
PHM	Pultegroup	9.93	57.65%	226.46%	78.95%
ADM	Archer Daniels Midland	11.78	46.00%	99.43%	34.33%
MOS	Mosaic Company	11.66	42.86%	68.40%	900.00%
DVN	Devon Energy Corp	7.89	42.15%	342.64%	856.67%
STT	State Street Corp	11.25	41.57%	6.09%	48.31%
EOG	Eog Resources	11.76	40.00%	111.01%	663.16%
BG	Bunge Ltd	9.55	30.16%	402.21%	34.38%
HIG	Hartford Financial Services Group	11.59	29.40%	105.08%	59.09%
CMCSA	Comcast Corp A	9.94	28.64%	56.08%	23.91%
GL	Globe Life Inc	8.88	26.58%	73.74%	39.68%
CAG	Conagra Brands Inc	10.24	26.34%	32.84%	64.71%
FOX	Fox Corp Cl B	11.71	22.75%	30.42%	126.09%
FOXA	Fox Corp Cl A	11.63	22.75%	30.42%	126.09%
AES	The Aes Corp	7.13	18.00%	41.94%	26.92%
SYF	Synchrony Financial	9.77	15.04%	38.77%	33.33%
IPG	Interpublic Group of Companies	9.80	12.09%	60.75%	47.62%
F	Ford Motor Company	6.10	9.89%	54.62%	71.23%
SJM	J.M. Smucker Company	11.43	4.35%	19.90%	26.13%

One industry that is well represented in this group is US housebuilders, which has three names in the list.

The one that caught my eye was D.R. Horton DHI, which as of Friday’s close was on a forward PE of 11.27 times. It has grown earnings by +234.0% over the last 5-years, revenues by +109.0% ,and its dividend by +100.0% over the same period.

DR Horton’s share price was up by +5.75% in Monday’s session and traded as high as $175.92, and it looked like being well on the way to wiping out its three month losses. The year to date high for the stock is $199.85.

House building and construction is another industry that could do well under President Trump’s tenure.

Discount to Book Value Stocks

Now let’s look at another group of discounted stocks. Those that trade at less than their book value. Once again I have screened amongst the S&P 500 stocks to identify those names which are trading below the face value of their business.

As you can see there are 15 names in this list, however the one that I want to highlight is Citigroup C.

Symbol	Name	P/E fwd	Div Yield	Price/Sales	Price/Cash Flow	Book Value	Price/Book
PARA	Paramount Global Cl B	5.56	1.94%	0.23	0.43	25.60	0.40
WBA	Walgreens Boots Alliance	5.43	12.06%	0.05	1.45	13.91	0.60
WBD	Discovery Inc Series A	N/A	0.00%	0.56	1.11	14.70	0.65
C	Citigroup Inc	11.72	3.27%	0.83	7.80	110.98	0.67
MOS	Mosaic Company	11.66	3.31%	0.59	3.67	37.54	0.68
IVZ	Invesco Plc	10.24	4.75%	1.36	3.23	34.10	0.69
KHC	Kraft Heinz Company	10.16	5.23%	1.39	8.11	40.08	0.76
VTRS	Viatris Inc	4.88	3.68%	1.01	2.49	16.58	0.79
ARE	Alexandria Real Estate Equities	11.03	4.98%	6.33	16.32	129.82	0.80
GM	General Motors Company	5.33	0.87%	0.35	2.83	67.44	0.82
BEN	Franklin Resources	8.93	5.77%	1.33	6.26	25.32	0.85
CFG	Citizens Financial Group Inc/Ri	14.40	3.65%	1.67	10.29	56.57	0.89
CVS	CVS Corp	10.26	4.77%	0.20	4.59	59.68	0.93
TAP	Molson Coors Brewing Company	10.51	2.89%	0.90	6.94	64.81	0.94
F	Ford Motor Company	6.10	5.43%	0.25	3.15	11.16	0.99

Citi is the fourth largest of the US major banks in terms of market cap, coming in at $132.0 billion dollars but it ranks mid table at best when it comes to share price performance among its peers.

Year to date Citi stock price is up by +37.54%.

That sounds impressive until you realise that Wells Fargo WFC has seen its stock price rally by more than 56.0% in the same period.

For added context JP Morgan’s share price has rallied by +47.14% and Bank of America stock price by +41.80%.

I think that Citi looks cheap on a price to book value of 0.67 times.

JP Morgan trades on a ratio of 2.13 times Wells Fargo 1.50 times, and BofA at 1.31 times book.

I also think that discount is too wide and should be closed, especially when you realise that Wall Street analysts are predicting that banks will be the sector with the highest earnings growth for Q4 2024.

Amazingly, the sector could see earnings growth of as much as +180% year-over-year, thanks to the regulatory provisions they made in the same quarter, a year ago.

Citi is forecast to report $1.21 in earnings in Q4 2024, versus a loss of -$1.16 in Q4 2023.

We can see how Citi has traded relative to its peers over the last 6 months in the chart above.

Citi is trying to streamline and rationalise its operations by, for example, removing tiers of management and complex remuneration practices in divisions like wealth management, to create a flatter, more efficient structure. These changes should start to show in the firm’s numbers over the coming quarters.