3 Undervalued Stocks To Buy Before 2025, According to Experts
Written by
Sean Bryant
Edited by
Zuri Anderson
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With the holidays approaching, it might be time to get a head start on your shopping list. However, instead of Christmas gifts, we’re talking about stocks to add to your portfolio.
With the fourth quarter typically being one of the best times of year for the stock market, now is a great time to add some new positions.
To find companies with the best chance for success, GOBankingRates looked for undervalued stocks to buy. These companies have strong fundamentals, but their stock price doesn’t reflect their overall health. To find the best undervalued stocks to buy, GOBankingRates looked for companies with a low price-to-earnings (P/E) ratio and a significant amount of free cash flow compared to the stock price.
Here are three undervalued stocks to buy before 2025.
Federated Hermes (FHI)
After recently being upgraded to a buy rating from Zacks, FHI’s stock price has risen. However, even with the price increase, Ulrich Ebensperger, co-Founder and CEO of Ziggma.com, still thinks FHI is a great undervalued stock to have in your portfolio.
“FHI is an attractive value stock on multiple accounts,” said Ebensperger. “First of all, priced at 9x 2025 earnings, FHI is a very inexpensive stock. Secondly, Federated Hermes is one of the most profitable companies in its industry.
“With a 15% return on assets, it handily beats well-known peers, such as Blackrock or Blackstone, on account of profitability. I’d like to highlight the strong focus on shareholder value as shown by consistent share buybacks. Furthermore, FHI’s shareholders benefit from 5.95%.”
Beyond its attractive P/E ratio, FHI also has a PEG below one, meaning its price is inexpensive when adjusted for earnings growth. Many experts also consider the company’s price-to-book (P/B) value when determining whether a stock trades at a value. With a P/B of 3, FHI is significantly below some of its biggest competitors.
United Therapeutics (UTHR)
During its recent earnings call, pharmaceuticals company United Therapeutics reported record revenue of $715 million for the second quarter of 2024 — 20% higher than the same period a year earlier.
This is one of several reasons why UTHR is trading near its 52-week high. Even so, Ebensperger felt this company is still trading at a value and could be poised to move even higher.
“UTHR’s forward PE ratio is just 13.2x, despite a very strong track record in revenue and earnings growth,” said Ebensperger. “The company’s strong position in the market for pulmonary arterial hypertension (PAH) treatment, combined with the projected annual market growth rate of 5.5%, sets UTHR up for continued value creation.
“I like the company’s excellent financial strength, as available cash exceeds liabilities.”
Paypal (PYPL)
Even though its stock price is up significantly in 2024, PayPal has struggled to regain its dominance since hitting a high in 2021.
However, after its recent earnings release, many analysts believe the company might finally turn the corner. The company’s year-over-year (YoY) net revenue increased by 8%, while its GAAP operating income was up 17%.
“PYPL’s PE ratio and Price/Sales are both at or close to all-time lows,” said Ebensperger. “After being out of favor for years, the stock broke out to the upside in August, driven by first signs that cost-cutting and restructuring efforts are paying off. After cutting its global workforce by 9%, operating margins were up 231 basis points, reaching 18.5% as of the most recent reporting period.”
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