When stock markets fell off a cliff in late March 2020, the v-shaped recovery that followed quickly took away any undervalued stocks that were buying opportunities. That said, compounding problems is the disconnection between the stock market rebound and the lack of an economic recovery.

Investors may blame the Federal Reserve for pumping trillions into the stock market and rising valuations. And in the very long-term, inflation is a potential risk for markets. If the world ever figures out a way to contain the novel coronavirus — be it through a vaccine discovery or enhanced contact tracing — then the overheated economy will drive a company’s profits higher.

So, what are the undervalued stocks that investors may choose from in anticipation of an eventual recovery?

Investors may consider the following seven undervalued stocks to buy:

• Carnival Corporation (NYSE:CCL)
• ViacomCBS (NASDAQ:VIAC)
• Enel Americas (NYSE:ENIA)
• Allstate (NYSE:ALL)
• Simon Property Group (NYSE:SPG)
• Wells Fargo (NYSE:WFC)
• Flowserve (NYSE:FLS)

These stocks may have favorable valuations from a price-earnings (P/E) ratio measure. They could also trade at reasonable levels today, but its prospects are vastly better in the future — making them stocks that are undervalued for tomorrow.

Undervalued Stocks to Buy: Carnival Corporation (CCL)

Carnival is trading a sharp discount from its 52-week high for obvious reasons. The coronavirus lockdown led to a travel advisory that banned Carnival from sailing from U.S ports since March. At the time, the Centers for Disease Control and Prevention issued a No Sale Order that extended to July 24, which suggests that the cruise line may resume sailing for eight of its ships from Texas and Florida. And in August, it will open up more cruises.

Moreover, as shown below, technical charts suggest some selling pressure ahead. After a surge in trading volume on the March Bottom, and a moving average convergence divergence (MACD) “buy,” Carnival stock buying is easing:

Carnival will not likely face a weakening in bookings following a re-opening. Customers will take a chance in sailing, especially if the cruise line offers a big discount. Initially, the lack of capacity will create a shortage of supply. So, Carnival stock may respond positively to an increase in bookings.

Additionally, a spike in Covid-19 cases in Florida is a major setback not only for the cruise ship business, but also for airlines. If consumers become wary of booking a flight, then they may hesitate in going on a cruise. Therefore, Carnival is heavily dependent on the U.S. increasing coronavirus testing, practicing social distancing and curbing the spread of the virus. Otherwise, consumers will not risk taking a cruise.

In a 5-year discounted cash flow growth exit model, Carnival stock has a fair value of over $22. This assumes a discount rate of 9% and a perpetuity growth rate of 4%. And with all of this in mind, CCL stock is one of the great undervalued stocks to buy.

ViacomCBS (VIAC)

In the entertainment sector, ViacomCBS trades at too low a P/E multiple to ignore. The company holds billions in debt, but has no problem refinancing it. For example, on June 10, VIAC sold $1.74 billion in securities. By lowering its interest costs on debt and monetizing its intellectual property, VIAC is an undervalued stock that investors should consider.

In the first quarter, ViacomCBS posted revenue falling by just 6% to $6.67 billion. GAAP net earnings fell by 74% to $508 million — and after adjustments, its earnings fell by 22%. The COVID-19 pandemic also hurt advertising revenue, which fell by 19% year-over-year. Still, though, last year the company benefited from the Super Bowl and the NCAA Tournament.

Additionally, a MACD crossover as its stock rises suggests the stock may create an entry price in the low $20s.

So as the economy re-opens, investors may expect ad revenue and theatrical revenue to recover. On Wall Street, analysts are neutral on the upside prospects of ViacomCBS stock, with the price target at $24.06. Similarly, based on its Enterprise Value to EBITDA, Stock Rover has a fair value of $23.42.

	VIAC	Industry	S&P 500
Quality Score	84	54	79
Gross Margin	38.80%	47.70%	29.10%
Operating Margin	16.00%	14.30%	13.20%
Net Margin	7.40%	9.50%	8.70%

Data courtesy of Stock Rover

In the table above, VIAC trails the industry in gross margin. However, the net margin is not too far off from the S&P 500 average. So for these reasons, VIAC stock is another under-the-radar buy.

Enel Americas (ENIA)

Currently, Enel Americas trades at a P/E in the single digits, and pays a dividend in the 7% range.

Additionally, the utility company reported a decent first-quarter revenue decline of 10.3% YOY to $3.22 billion. Enel also reported EBITDA falling by 6.7% mainly due to lower results in Brazil. Argentina and Peru also hurt results, partly offset by improving results from Columbia. In fact, if the company did not face unfavorable foreign exchange rates, EBITDA would have grown by 9%.

Moreover, Enel’s operating revenue topped $545 million. And although it recorded impairment losses on accounts receivable, it also posted lower depreciation and amortization costs. The strong net income of $208 million also  suggests that the company has enough cash flow to cover its dividend obligations.

On its balance sheet, Enel’s debt grew to $3.84 billion. But with lower interest rates, refinancing should lower the cost to manage debt — adding another reason to why ENIA stock is a large-value, low-cost buy.

Allstate (ALL)

At the moment, Allstate is stuck in a trading range in the $100 level. The insurance giant is also valued at a P/E ratio in the single digits, and has a market cap of $31 billion.

To help its customers, the company extended its lockdown discount through the end of the month. Its Shelter-in-Place Payback will continue through June 30 for personal auto insurance customers. Due to a drop in accidents as customers drive less during the pandemic, Allstate may discount monthly premiums by 15%. However, Allstate’s catastrophe losses of $627 million during April are part of the costs of the insurance business.

Additionally, on Stock Rover, Allstate stock has a value score of 97/100. Its quality score is 86, based on the following:

	ALL	Industry	S&P 500
Quality Score	86	58	79
Net Margin	9.40%	5.40%	8.70%
Return on Assets	3.50%	2.30%	6.00%
Return on Equity	16.30%	11.10%	24.40%

Analysts are also bullish on the company, with the average price target being around $118.38. And for all these reasons, ALL stock is another undervalued stock to buy for investors.

Simon Property Group (SPG)

The real estate investment trust market is still a risky segment despite stocks rallying in this space. However, Simon Property Group is insistent on its commercial tenants paying its rent. And although it will not get all the rental income owed, partial recoupment will help lift its revenue.

Moreover, on June 4, Simon Property sued Gap (NYSE:GPS) for skipping its rent payments. Gap owes more than $65.9 million, and blames the coronavirus pandemic for closing its stores. So when the two companies go to court, the firms may come to an amicable agreement on settling the amount owed.

Overall, Simon stock trades at a low P/E multiple, and its dividend is also in the double digits. So as businesses reopen, Simon’s rental income will recover. And if the economy rebounds back to pre-Covid-19 levels, the stock will rebound back to the $100 levels in a hurry.

Wells Fargo (WFC)

Financials and energy stocks are the first to get punished when investors get nervous about the economy’s health. Wells Fargo fell to a low of $22 in May, and again last week on worries of a re-emergence of the coronavirus infections in the U.S. That said, the original expectations for a smooth re-opening are questionable.

Collectively, though, Wells Fargo is a diversified bank whose shares are trading at too big a discount to ignore. The dividend yield is higher than its peers, including Bank of America (NYSE:BAC) and Citigroup (NYSE:C). Furthermore, Wells Fargo has the highest margin of safety compared to its peers:

Last week, selling in Wells Fargo stock intensified when the Fed said it did not expect rates increasing for at least until the end of next year. 0% interest rates are hurting interest rate spreads for banks, as banks make less on deposit income at these rate levels. Still, however, investors may bet against the Fed’s interest rate policy by holding WFC stock at a steep discount.

Flowserve (FLS)

Flowserve is building an uptrend that began in March. The specialty industry machinery firm pays a decent dividend that yields almost 3%. In the first quarter, the company posted revenue that exceeded analyst estimates. However, earnings per share of 21 cents (non-GAAP) missed estimates by 19 cents.

Furthermore, Flowserve reported a book-to-bill of over 1.09, while its backlog grew by 1.2%. The company also reported free cash flow of $30 million despite a weak seasonal period. Flowserve said that COVID-19 and the related temporary site shutdowns cost 19 cents per share in earnings.

Collectively, though, the combination of strong liquidity of over $1.3 billion and an eventual rebound in its business suggests that the company is undervalued. And its current price means it is one of the top undervalued stocks to buy.

Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns. As of this writing, Chris did not hold a position in any of the aforementioned securities.