Investors wanting to buy good quality S&P 500 stocks at great prices should consider the following seven stocks. Even better, Morningstar analysts have assigned 5-star ratings to all seven of these picks, indicating that each is severely undervalued.

S&P 500 Stocks: U.S. Bancorp (USB)

U.S. Bancorp (NYSE:USB) sometimes flies under the radar compared to some of the country’s other too-big-to-fail banks. But at a market cap of more than $50 billion, USB stock firmly slots in among the nation’s dominant financial institutions.

The company operates on a national scale and has leading positions in fee-generating businesses such as mortgage originations, trusts, wealth management, and payment processing. The bank has also stood out due to its unmatched efficiency. It routinely scores among the best-run large banks in terms of key operating metrics such as efficiency ratio and return on equity. It spreads that wealth with its shareholders; USB currently pays a 5.51% dividend yield.

While the stock has underperformed — thanks. to a slowdown in business lines, such as mortgage lending — these are short-term concerns. With a good deal of negativity priced in, investors can pick up USB at a discount.

Wells Fargo (WFC)

Wells Fargo (NYSE:WFC) is one of America’s largest banks. It has a diversified business model, operating both the nation’s fourth-largest bank by assets along with its large investment banking division.

The firm ran into dramatic problems with its fake account scandals at the end of the 2010s. However, the bank cleaned up shop, replacing the management team and letting a bunch of people go. Wells Fargo has paid huge fines and done other work to remediate the situation. Despite turning over a new leaf, WFC stock remains in the penalty box. Investors seem fixated on the bank’s past issues and its elevated costs related to legal expenses for that matter. However, as these things clear up, Wells Fargo’s true value will become apparent.

Shares are trading around the same price they did a decade ago, even as the bank has grown its size and earnings power considerably. This leaves the firm at 8x today’s earnings and an even cheaper multiple once its earnings power normalizes in the coming years. Throw in a chunky share repurchase program, and the upside could be dramatic.

S&P 500 Stocks: Verizon (VZ)

Verizon (NYSE:VZ) is a steady blue-chip telecom. Income investors have long relied upon VZ stock for its outsized dividends. To that point, Verizon currently offers a tremendous 7.8% dividend yield. Verizon shares have fallen sharply over the past couple of years. This has come amid rising competition, a heavy 5G spending cycle, and the negative impact of higher interest rates.

Investors have feared the worst and are worried that Verizon might follow peer AT&T (NYSE:T) in cutting its dividend. However, Verizon’s profits have been stable; the company earned a tremendous $21 billion over the past 12 months. Shares trade at just seven times forward earnings.

Notably, management believes that it’s past the peak of its spending related to 5G and other enhanced infrastructure and that costs will fall and cash flow rise in 2024. That makes shares a bargain ahead of this turn in the company’s trajectory. Morningstar’s Michael Hodel believes VZ shares are worth $54 each, which would represent more than 50% upside from today’s price.

Estee Lauder (EL)

Estee Lauder (NYSE:EL) is one of the world’s largest cosmetics companies. The firm initially saw a massive rise in its stock price as people latched onto it as a global economic reopening play. Naturally, people leaving the lockdowns wanted to look their best when returning to social functions.

However, that momentum has long since passed. After a series of disappointing earnings reports, driven by profound weakness in the Asian market, EL stock has full-on crashed. Shares are down from a peak of more than $350 per share to just $154 today.

Is that warranted? Probably not. Analysts still project Estee Lauder to grow revenues at 6% this year despite the poor results in various international markets. Meanwhile, revenue growth is expected to accelerate again in 2024 with earnings surging as well. Shares go for just a projected 22x 2025 earnings, which is a more than fair price for a luxury company like this with such a successful track record.

S&P 500 Stocks: Kraft Heinz (KHC)

Kraft Heinz (NYSE:KHC) is one of the world’s largest packaged food companies. The firm appeared to be on top of the world a decade ago as it was building a global conglomerate funded by 3G Capital’s aggressive leverage and cost-cutting approach.

However, Kraft’s business went stale as management arguably failed to invest enough in marketing and innovation. This left Kraft with a struggling product line-up as consumers wanted more fresh and interesting food offerings.

That said, Kraft could be set for a resurgence. With the rise in inflation and consumers looking to save money, Kraft Heinz’s cost- and value-focused business model could find renewed resonance with customers. And, if nothing else, Kraft’s ruthless cost efficiency positions it well for dealing with a prolonged period of rising input and labor costs. With the recent drop, KHC stock is deep into value territory. Shares go for 12 times forward earnings and offer a nearly 5% dividend yield.

Realty Income (O)

Realty Income (NYSE:O) is a leading triple-net REIT. Triple nets are a type of real estate trust where the tenant — rather than the landlord — pays key expenses such as taxes, insurance, and maintenance. These fare well in inflationary environments as the landlord isn’t on the hook for sharp increases in those costs.

Regardless of this advantage, O stock has sold off along with the rest of the REIT industry. Higher interest rates are scaring investors. For one, REITs such as Realty Income have to pay higher interest expense on their debts going forward. For another, with higher interest on risk-free fixed-income investments, investors demand more yield from their dividend stocks.

That said, with O stock down 18% over the past year and hitting fresh new 52-week lows in September, this has become an overreaction. Shares now yield 5.5%. And Morningstar’s Kevin Brown sees fair value up at $76, a considerable increase from today’s $55 price.

Albemarle (ALB)

Albemarle (NYSE:ALB) is one of America’s larger specialty chemical companies. In recent years, it has focused on lithium, with its lithium production operations spanning the United States, Australia, and Chile.

It’s no secret that the world will need far more lithium in the future to build all the batteries that will power electric vehicles.

That said, ALB stock has sold off in 2023. Traders have dumped Albemarle and other lithium companies because the price of lithium has slumped as a result of weak demand from the Chinese market. That’s a short-term headwind but will make little difference to the firm’s fundamental value. Shares go for less than seven times forward earnings today.

On the date of publication, Ian Bezek held a long position in ALB, EL, VZ, and WFC stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.