The Most Undervalued Stocks So Far in 2021

When the stock market is making new highs seemingly every day, it can be hard to find stocks that most analysts consider “undervalued.” However, there are always stocks that either aren’t keeping up with others in the same industry or just haven’t yet found favor with investors. In some cases, such as a poor earnings outlook, this disfavor may have merit. But in many cases, stocks may have a lot of potential but simply haven’t turned the corner yet in terms of earnings visibility or investor popularity. The stocks on this list may fall into the latter category, although you should always consult with your financial advisor before making any major changes to your portfolio.

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Ford (F)

Stock Price as of Feb. 12, 2021: $11.45

Ford has been losing out in the stock market race to rival General Motors lately, but it may play catch-up in the New Year. GM has benefited from a well-publicized partnership with software giant Microsoft to develop a line of electric cars, and Ford may see the same boost in 2021. Ford partnered with electric truck start-up Rivian in 2019, and in 2020 the company rolled out its flagship Mustang-Mach E. The new year will bring to market its electric F-150 truck, continuing the old-line automaker’s move towards eco-friendly vehicles. Coupled with a new CEO and strong cash flow of $3 billion, Ford looks poised to move.

Intel (INTC)

Stock Price as of Feb. 12, 2021: $61.81

Intel Corporation was the wrong chip stock to bet on in 2020, with shares falling over 16% while rivals like Nvidia shot up to triple-digit gains. By standard valuation measures, Intel certainly ranks as undervalued, with a forward P/E ratio of less than 13x and a dividend yield of 2.25% as of mid-February, 2021. Yet, the underlying fundamentals of the stock seem promising as well. Intel reported revenue and earnings above analyst expectations in its most recent earnings release, and it has released a new line of CPUs due to hit the market in 2021.

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Bank of America (BAC)

Stock Price as of Feb. 12, 2021: $33.37

Bank of America is one of the largest banks in the world, and even with the effects of the coronavirus, one might expect that the stock might keep up with the overall market. However, Bank of America has yet to recover its all-time highs of $54.90 per share, set, in 2006 before the housing crisis of the late-2000s.  There has certainly been lots to keep the stock down, from anti-bank investor sentiment to record-low interest rates to loan volume drying up during the pandemic. However, support from the Federal Reserve, more than a decade of deleveraging and a yield of over 2% and a forward P/E of about 14x make Bank of America a value.

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LyondellBasell (LYB)

Stock Price as of Feb. 12, 2021: $96.14

LyondellBasell may not exactly be a household name, but the company sports a market cap north of $29 billion and is one of the world’s largest names in the specialty chemicals industry. The energy-related company, which primarily sells plastics and petrochemical products, took a beating in 2020 as demand for fuel, including gasoline and jet fuel, fell off a cliff. The stock has been steadily recovering since the early-2020 selloff but remains attractively valued with a forward P/E of about 12x and a sizable dividend yield of 4.37% as of mid-February, 2021. LyondellBasell stands ready to benefit from a global recovery in demand if and when the effects of the pandemic recede.

Find Out: 11 Stocks To Avoid Right Now

IBM (IBM)

Stock Price as of Feb. 12, 2021: $120.80

If you’re searching for a cheap, undervalued blue-chip stock, look no further than IBM. The tech giant, which formerly dominated its space, is still a member of the venerable Dow Jones Industrial Average, attesting to its long-term staying power. The company’s stock has been punished in recent years, not only failing to keep up with the market averages but actually dropping by over 20% over the past four years. However, the company is a value player’s dream, as it trades at just 11 times forward earnings estimates and pays a whopping dividend yield of about 5.4%.

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Simon Property Group (SPG)

Stock Price as of Feb. 12, 2021: $109.26

Simon Property Group may be a bit riskier than some of the other names on this list, even though as a real estate investment trust it holds numerous properties for diversification. The company’s stock has rightfully been hit hard during the coronavirus pandemic, as mall traffic all but evaporated due to ongoing shutdowns and stay-at-home orders. Yet, if and when the economy recovers, names like Simon Property Group are poised to benefit greatly. The company sports an attractive 4.76% dividend yield as of mid-February, 2021, and prior to the pandemic, Simon Property’s profitability was on the rise, with positive free cash flow in eight of the 10 previous years. The stock is clearly a post-pandemic recovery play, but it could be a good value if life returns to normal sooner rather than later.

Read More: 25 Pandemic-Proof Stocks

Macy's (M)

Stock Price as of Feb. 12, 2021: $14.88

Much like Simon Property Group, Macy’s is to a large degree a bet on a post-pandemic economic recovery. As with most retailers, Macy’s went into the tank in 2020 as malls shut down and consumers stayed home. Yet, Macy’s has already begun a transformation, with rapidly increasing online sales. The stock has already begun its recovery, more than tripling off its 2020 lows as vaccine distribution becomes more widespread and hopes for a recovery rise. However, the stock remains well below its all-time high of $72.80 in July 2015. That lofty height might not be reached anytime soon — if ever — but the stock could still continue to run if more positive news about a return to normalcy spreads.

Find Out: Every Stock That Warren Buffett Owns, Ranked

Lockheed Martin Corporation (LMT)

Stock Price as of Feb. 12, 2021: $337.73

Lockheed Martin is the largest defense contractor in the world. Even with the Democratic Party now taking control of the White House, defense spending is likely to remain high. Combined with its space systems division, Lockheed Martin doesn’t have many competitors in its space, and the barriers to entry are high. Since the start of the millennia, the company’s stock has been a consistent performer, and it now trades over 20% below its February 2020 all-time high of nearly $440. In 2020, the company actually posted record sales and earnings growth of over 20% per share, and it maintains a dividend yield in excess of 3%. Put it all together and Lockheed Martin is still considered undervalued by some analysts.

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Carnival Cruise Lines (CCL)

Stock Price as of Feb. 12, 2021: $20.60

It’s hard to generate profits and stock gains when your main product is out of commission. Carnival Cruise Lines, along with so many travel and leisure companies, felt that pain in 2020 and into 2021. With all of its ships grounded since early 2020, Carnival has literally been scrambling to stay afloat, raising money through stock and bond sales and selling off some excess ships.

Obviously, Carnival is a play on a post-coronavirus recovery, with its stock having fallen from a January 2018 all-time high of about $72 to its current price in the teens. Cruising was the most popular it had ever been right when the company shut down its operations, and it’s likely to recover strongly once vaccine distribution reaches a saturation level. Of course, while Carnival may very well prove to be undervalued, it remains a risky play, as post-pandemic cruising is still a wild card as of mid-February 2021.

Learn More: Stocks To Keep in Your Portfolio for the Next 30 Years

Southwest Airlines (LUV)

Stock Price as of Feb. 12, 2021: $51.34

Southwest Airlines is one of America’s most beloved carriers, but even with its iconic “LUV” stock ticker, the company has been feeling anything but love since the pandemic struck. In January 2021, Southwest reported a fiscal year total loss of $3.1 billion, a year-over-year decline of about 60%. Yet, the company still ended the year with more liquidity than debt. As Southwest is primarily a domestic, point-to-point air carrier, it may be one of the airlines to recover most rapidly as the pandemic eases. Many international and legacy carriers rely on high-paying business class passengers to fund their operations, but Southwest is an all-economy class airline that may draw in passengers as consumers begin to travel again. The airline itself is hoping for break-even or better cash flow in 2021, and it has shifted some of its routes to better capture revenue going forward.

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About the Author

John Csiszar

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.

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