Dig a little deeper and it’s not difficult to find undervalued stocks that are trading under the radar of most investors. These sleeper stocks can be expected to rise in time as the market eventually discovers that they have cheap valuations and strong underlying fundamentals. Many of the most undervalued stocks also pay sizable dividends.
Long-term investment success often depends on uncovering these hidden gems and then holding them for very long periods of time. And even though the stock market is currently at an all-time high and many stocks are splitting after doubling or tripling their share price, there are still bargains to be found.
Here are the three most undervalued sleeper stocks to buy in July 2024.
Delta Air Lines (DAL)
A buy-the-dip opportunity looks to have formed in Delta Air Lines (NYSE:DAL) after the company’s justreleased second quarter earnings. DAL stock fell 7% after the air carrier issued forward guidance that fell short of Wall Street’s expectations. Executives forecast record revenue for the current third quarter due to strong summer travel. But the outlook still missed analysts’ lofty estimates, sending Delta stock lower.
DAL stock is now down 10% over the last 12 months and trading 30% below its pre-pandemic levels of five years ago. Delta stock looks super cheap right now trading at just five times future earnings estimates. Other reasons to remain bullish on the long-term outlook for the airline are its quarterly dividend payment of 15 cents a share and the fact that Delta is the most profitable U.S.-based airline after the Covid-19 crisis.
Also, Delta noted in its Q2 print that corporate travel continues to recover from pandemic lows and that it expects corporate travel to continue rising going forward.
General Motors (GM)
Automotive giant General Motors (NYSE:GM) has enjoyed a nice rally this year with its share price having gained 33%. Yet even with that big move higher, GM stock is still trading at a rock bottom price-earnings ratio of five times future earnings estimates. This makes the automaker’s stock look undervalued even as it trades near a 52-week high. Investors who buy the stock now are getting it a very cheap valuation.
Now looks to be a great time to buy General Motors stock with the company on an upswing. GM just reported its best quarterly sales in nearly four years, driven by a 40% increase in sales of its electric vehicles (EVs). In mid-June, GM announced a new $6 billion stock buyback program. Management also boosted the quarterly dividend payment to stockholders by 33% to 12 cents a share at the start of this year.
United Parcel Service (UPS)
Shares of United Parcel Service (NYSE:UPS) are available at fire sale prices with the stock having declined 25% in the last 12 months. Trading at 20 times future earnings, UPS stock is not as cheap as Delta or GM. But it’s about as low as the company’s P/E ratio has been since the onset of the pandemic in 2020. UPS also pays a monster dividend of $1.63 per share, giving it a yield of 4.72%.
UPS stock has taken a hit over the last year due to a decline in e-commerce shipments and a costly new labor agreement with its workers. That said, good things are also happening at the company. UPS has struck a deal to become the primary air cargo provider for the U.S. Postal Service, replacing rival Federal Express (NYSE:FDX). The Postal Service contract had paid FedEx about $1.75 billion a year. UPS just sold its third-party logistics business to RXO (NYSE:RXO) for $1 billion.
On the date of publication, Joel Baglole 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.