When attempting to build a portfolio of reliable entities, you probably can’t go wrong with undervalued S&P 500 stocks. Featuring the market performance of 500 of the largest companies listed on stock exchanges in the U.S., you’re dealing with proven winners. To be fair, you might not receive a blistering performance. At the same time, these ideas are less likely to leave you stranded on the road.
In addition, ChatGPT points out that the best S&P 500 stocks to buy offer diversification. Specifically, by acquiring undervalued securities within the index, investors can potentially benefit from the performance of a diverse range of companies and industries, mitigating risks associated with individual stocks or sectors.
As well, the artificial intelligence-powered chatbot mentions the potential for reversion to fair value as a benefit for cheap S&P 500 stocks. Basically, enterprises that are undervalued now may carry the potential to their fair value over time. As market inefficiencies correct themselves, undervalued stocks can experience price appreciation as the market recognizes their true worth. So, if you’re ready to start winning consistently, these may be the best S&P 500 stocks for June.
Archer Daniels Midland (ADM)
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An American multinational food processing and commodities trading corporation, Archer Daniels Midland (NYSE:ADM) makes an excellent case for undervalued S&P 500 stocks to buy. Fundamentally, no matter how advanced we become as a civilization, certain things will never change. Of course, the most critical is our need for nutritional sustenance. Thus, long-term investors may treat ADM’s loss of over 18% this year as irrationality.
No matter, when the market is giving you one of the best S&P 500 stocks to buy at a discount, you take it. Over the trailing one-year period, ADM slipped over 11%, which seems like overkill given the underlying relevance. More importantly, the market prices ADM at a forward multiple of only 10.55. As a discount to projected earnings, the company ranks better than 81.7% of the competition.
It’s no slouch on the operational metrics either. For example, its three-year revenue growth rate pings at 16.4% (on a per-share basis), above 76.8% of its peers. Also, its Piotroski F-Score comes in at 7 out of 9, indicating solid operational efficiency. Thus, it’s easily one of the S&P 500 stocks for June.
CF Industries (CF)
Headquartered in Deerfield, Illinois, CF Industries (NYSE:CF) is an American manufacturer and distributor of agricultural fertilizers, including ammonia, urea, and ammonium nitrate products. Given the geopolitical flashpoint in Eastern Europe and implications for the global food supply chain, agricultural entities such as CF command extraordinary relevance. However, exposure to geopolitics has many investors worried, with CF shedding over 17% since the Jan. opener.
Nevertheless, those with a patient view might consider the agro firm as one of the undervalued S&P 500 stocks. True, the present circumstances don’t seem enticing at all. Plus, in the past 365 days, CF stock gave up more than 26% of market value. Still, at some point, circumstances will eventually normalize. Plus, the red ink presents much food for thought.
Mainly, the market now prices CF at a trailing multiple of 4.53. As a discount to earnings, CF ranks better than 90.61% of its peers. Also, shares now trade at a price-earnings-growth ratio of 0.12. In contrast, the sector median value stands at a loftier 0.72 times. Therefore, it’s worth consideration as one of the cheap S&P 500 stocks.
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Based in Cambridge, Massachusetts, Biogen (NASDAQ:BIIB) is a multinational biotechnology firm specializing in the discovery, development, and delivery of therapies for the treatment of neurological diseases to patients worldwide. Thanks to its permanently relevant business, BIIB ranks among the best S&P 500 stocks to buy. Since the Jan. opener, shares popped just over 10%.
Despite its performance in the charts, however, BIIB also ranks among the undervalued S&P 500 stocks. At the moment, the market prices shares at a trailing multiple of 13.93. As a discount to earnings, Biogen ranks better than 72.7% of companies listed in the drug manufacturing industry. Also, BIIB trades at 0.95 times the projected free cash flow. In contrast, the underlying sector median value is 1.58 times.
Just as well, the company benefits from excellent profitability metrics. For example, its trailing-year net margin clocks in at 31%, outflanking 95.87% of its rivals. With a Piotroski F-Score of 7 out of 9, Biogen delivers an operationally efficient business. Thus, it’s a solid candidate for S&P 500 stocks with upside.
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Hailing from Kenosha, Wisconsin, Snap-on (NYSE:SNA) is an American designer, manufacturer, and marketer of high-end tools and equipment for professional use in the transportation industry. This includes solutions for automotive, heavy-duty, equipment, marine, aviation, and railroad industries. To be fair, SNA is one of the boring entities among undervalued S&P 500 stocks. Still, that shouldn’t be confused with underperforming.
Since the beginning of this year, SNA gained over 18% of its equity value. In the trailing one-year period, it popped up over 33%. Thanks to its everyday relevance, Snap-on offers resilience and predictability for its stakeholders. Despite the robust gains, however, SNA offers a discount for those seeking S&P 500 stocks for June.
Notably, the market prices SNA at a forward multiple of 15.86. As a discount to projected earnings, Snap-on ranks better than 62.4% of companies listed in the industrial products sector. Also, SNA trades at 0.8 times discounted cash flow, ranking better than 60.2% of the competition.
Marathon Petroleum (MPC)
Headquartered in Findlay, Ohio, Marathon Petroleum (NYSE:MPC) is a petroleum refining, marketing, and transportation firm. Mostly specializing in the downstream and midstream components of the hydrocarbon energy value chain, MPC could benefit from rising relevancies. As society continues to normalize, traffic volume should rise. On paper, this framework should benefit MPC.
So far, though, the market doesn’t really seem to appreciate this thesis. Since the Jan. opener, MPC gained less than 1%. Nevertheless, this lack of mobility in the charts might make MPC one of the undervalued S&P 500 stocks. Significantly, the market prices Marathon shares at a forward multiple of 6.08. As a discount to projected earnings, the company ranks better than nearly 63% of its oil and gas peers.
Also, MPC trades at 0.32 times sales. In contrast, the sector median stands at 0.91 times. That’s noteworthy because Marathon’s three-year revenue growth rate clocks in at 27.1%, above 80.28% of its rivals. As well, its EBITDA growth rate during the same period pings at 60.9%. Thus, it’s a great idea for cheap S&P 500 stocks with upside potential.
Valero Energy (VLO)
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A downstream petroleum specialist, Valero Energy (NYSE:VLO) mostly focuses on manufacturing and marketing transportation fuels. As well, it produces other petrochemical products and power. As with Marathon Petroleum above, Valero should benefit from rising social normalization trends. However, the market has a dim view of VLO, with shares fading nearly 7%. Over the trailing one-year period, it’s down almost 13%.
Still, the red ink might make Valero one of the compelling undervalued S&P 500 stocks to buy. On the valuation front, the market prices VLO at a forward multiple of 5.26. As a discount to projected earnings, the company ranks better than 71.08% of its oil and gas compatriots. Also, shares trade at 0.25 times sales. In contrast, the sector median again stands at 0.91 times.
Nevertheless, Valero performs very well on the operational side. Its three-year revenue growth rate pings at 19.4%, above nearly 70% of its peers. Also, its Piotroski F-Score lands at a perfect 9 out of 9, indicating superior operational efficiency. Combined with an Altman Z-Score of 5.77 (indicating low bankruptcy risk), VLO makes a strong case for the best S&P 500 stocks to buy.
General Dynamics (GD)
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Although a bit on the controversial side for some investors for its aerospace and defense business, General Dynamics (NYSE:GD) technically meets the qualifications for undervalued S&P 500 stocks. Despite its relevant business profile – and gaining relevance, unfortunately – the market doesn’t believe in GD stock. Since the start of the year, shares tumbled nearly 15%. Over the past 365 days, GD is almost 3% below parity.
Nevertheless, rising instability in the geopolitical realm could see demand for General Dynamics rise. In the meantime, the market prices GD at a forward multiple of 16.82. As a discount to projected earnings, the company ranks better than 66.67% of enterprises in the aerospace and defense industry. Also, GD trades hands at 14.43 times operating cash flow. In contrast, the sector median stat is 18.89 times.
Aside from its value proposition, General Dynamics enjoys strong profitability metrics. Its trailing-year net margin clocks in at 8.5%, above 70.76% of its peers. Also, it’s worth mentioning that its Piotroski F-Score lands at 7 out of 9, indicating decent operational efficiency. Overall, then, it makes a solid case for S&P 500 stocks for June.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.