Top-tier U.S. stocks with premier fundamentals and valuations that scream “buy” are hard to come by. When such stocks are discovered, they often skyrocket higher, and I’d argue that most companies that once were undervalued (that have the sort of balance sheets and growth prospects investors are looking for) don’t have valuations that beg investors to hit the bid.
Allstate (ALL), Synchrony Financial (SYF), and HP Inc. (HPQ) trade at 5-7 times earnings with strong fundamentals: Allstate generated 12% revenue growth with expanding margins, Synchrony posted $4.5B net income with 28% operating margins, and HP grew revenue 4% last quarter while generating $1.1B in free cash flow.
These three financial and consumer companies remain depressed despite a steepening yield curve and flight-to-safety dynamics that typically benefit their sectors, creating valuation disconnects investors can exploit for long-term returns.
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Indeed, the U.S. stock market is, by most measures, extremely expensive. Historically, stocks trading at these levels leave little room for significant upside over the course of the coming decade, so there’s plenty of healthy skepticism being baked into some top names right now.
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That said, I’d also argue that there are a few pockets of value investors can pursue to amplify their long-term returns. Here are three of my top picks as overlooked gems right now.
A leading U.S. insurance giant, Allstate (NYSE:ALL) is among the leaders in providing coverage across most major insurance categories. From property and casualty insurance products to a range of insurance products including auto, homeowners, and commercial coverage, Allstate serves millions of customers (primarily in the U.S.) under its Allstate Protection and Esurance banners.
I think many in the market may have given up on Allstate, given the fact that ALL stock is currently roughly flat over the course of the past year. Many companies in the financials industry have risen considerably over this time frame, for a number of key reasons. From a steepening yield curve (making the long-duration portfolios of insurance companies like Allstate more attractive) to an increasingly prescient flight-to-safety trade building in the market, I would have thought Allstate would have seen a bigger bump by now.
That hasn’t been the case. In fact, this stock has remained depressed, with a trailing price-earnings ratio around 5-times. That’s hard to find in this market, and makes Allstate among the cheapest large-cap stocks in the market (that is investment worthy) in my books.
With top-line revenue growth of 12% last year and expanding operating margins, this is a stock I think could have big upside in 2026 and beyond. Those thinking long-term may want to consider accumulating some ALL stock on this dip, and continue doing so for some time. I am.
Along the same lines, and a key player in the financials space, Synchrony Financial (NYSE:SYF) is another stock I think is widely overlooked by most market participants.
Why, you might ask? Well, Synchrony Financial also has a similarly-cheap valuation multiple, trading at less than 7-times earnings. And like Allstate, the consumer finance giant saw meaningful earnings growth of around 3% last year, with net income coming in around $4.5 billion. That’s impressive, considering this stock trades at a valuation of just $23 billion.
With operating margins around 28% and efficient funding costs, the outlook for this store card and personal loan issuer remains strong. Of course, there are concerns that more “cockroaches” (Jamie Dimon’s term, not mine) may be proliferating in the consumer lending and private credit sectors. That’s something I do think we’ll see play out.
But in terms of companies that have both the staying power and balance sheets to weather whatever could be ahead, SYF stock looks like a very reasonably-priced bet worth making right now.
Finally, we come to personal computer and printer company HP Inc. (NYSE:HPQ).
I know, this isn’t the “sexiest” of companies in the most attractive of industries. That’s for sure. However, HP is also a stock I think is criminally undervalued, trading at just 7-times earnings with a whopping 6.5% dividend yield.
That’s definitely hard to find in this market, particularly among companies with notable brands most consumers can recognize. I haven’t personally owned an HP laptop in some time, but that was my go-to in college, as I’m sure many can relate. And with a still-robust brand, strong differentiation between HP and its competitors, and a real value offering in this sector, I think the company’s underlying fundamentals support a much higher valuation.
Impressively, HP was able to grow its revenue by 4% this past quarter on a year-over-year basis, with operating margins improving considerably (by 130 basis points). Additionally, free cash flow hit $1.1 billion, and the company did announce buybacks on these results. Despite this fact, the stock is down more than 30% this year, and has a tremendous amount of negative momentum.
That may be scary for some investors to buy into, and I get that. But in terms of real value in this market, I think HP is one company that’s worth considering as a small portfolio position today.
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