3 Hidden-Gem Value Stocks to Buy and Never Let Go


  • Here are three top hidden-gem value stocks long-term investors may ant to consider right now.
  • Chevron (CVX): It’s robust cash flows surged to $35.6 billion in 2023 and $6.8 billion in Q1 alone. 
  • SiriusXM (SIRI): Offers diverse content to a loyal consumer base, and has a rock-bottom valuation. 
  • Pfizer (PFE): The pandemic is over, but this drug giant remains well-positioned for continued cash flow growth. 
hidden-gem value stocks - 3 Hidden-Gem Value Stocks to Buy and Never Let Go

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In the volatile stock market, investing in undervalued stocks is generally a good way to go. There are plenty of hidden-gem value stocks out there, though by nature, something that’s hidden needs to be uncovered. Finding small-cap stocks and other companies that haven’t been picked over is fun, and can certainly be a place where there’s lots of alpha generation potential. But in this article, I’m going to point to three larger-cap companies I think are hidden gems hiding in plain sight.

These are companies I’d each put in the intrinsically undervalued bucket. These are companies with a solid margin of safety during times of market turbulence, with signficant potential to outperform the market in bull markets.

Most value investors prioritize positive returns and strong cash flow generation over beating the market. The thing is, these companies can provide both, and are trading at attractive multiples as we speak.

Let’s dive into why these three hidden-gem value stocks ought to be on your list.

Chevron (CVX)

a Chevron (CVX) gas station
Source: Trong Nguyen / Shutterstock.com

Chevron Corporation (NYSE:CVX) shares have risen 45% over the past three years, outperforming the market’s 13% return. However, more recent returns have been modest, with a 2.4% gain over the past year, including dividends (of course, the market is up much more over this time frame). Given the fact that oil stocks appear to be now out of favor, the question many have is whether this is a dip worth buying or not.

I think it is. Chevron is a company that’s shown incredible stability in recent years. This past year was no different, with the company navigating macroeconomic challenges well.

With anticipated interest rate cuts on the horizon, the outlook for oil is mixed. On the one hand, interest rate cuts should weaken the dollar, which is good for commodities. On the other, Federal Reserve officials are only likely to cut if we see recessionary forces take hold.

The company’s results have been stellar, with Chevron’s Hess acquisition expected to boost the company’s cash flow moving forward. Chevron’s strong balance sheet and high-quality assets resulted in $35.6 billion operating cash flow in 2023 and $6.8 billion in Q1 2024. Higher oil prices could be the catalyst to take this stock out of the shadows once again, but I think now is a good time to start getting bulled up on CVX stock.

Sirius XM Holdings (SIRI)

The Sirius XM (SIRI) mobile app logo on a smartphone screen.
Source: Shutterstock

Although Sirius XM (NASDAQ:SIRI) has seen a decline this year and is off of all-time highs, I think this is another hidden-gem value stock worth considering right now. Impressively, SIRI stock trades at roughly half its 2023 valuation, and investors can now pick up shares of this satellite radio company at only 7-times earnings.

That’s cheap. Indeed, I think this stock defines what a value stock is in this market.

Despite displaying robust financials this past quarter, with a slight 0.55% revenue dip in fiscal year 2023, countered by a 4.1% profit increase, I think this is a company that could be the slow and steady cash flow producer investors are looking for. The company’s management team has been increasingly focused on efficiency. And with 41% growth anticipated by analysts, this concern for the bottom line could translate into some big returns for investors who are patient enough to wait out this transition.

Revenue growth has been modest, and while we’ve seen a recent uptick, this is a company that certainly carries considerable risk. That said, I think the market in general is brushing this name off right now. That could be a mistake.

Pfizer (PFE)

blue Pfizer logo on the windows of a corporate building PFR stock
Source: photobyphm / Shutterstock.com

Pfizer (NYSE:PFE) boasts a substantial dividend yield of 5.7%, making this the value stock on this list I’d consider most for its yield. The company’s revenue did decline 19% on a year-over-year basis tied to reduced demand for the company’s Covid-19 vaccines. However, the company’s adjusted gross margin did increase 5.3% to 79.6% in the first quarter, reflecting the company’s impressive focus on cost control.

It’s this focus, as well as the company’s upcoming pipeline of new drugs and treatments that has me excited about Pfizer’s future. The drug giant expects to save around $4 billion in net costs by the end of 2024, underscoring the company’s resilient financial performance and strategic cost-management efforts. These factors position Pfizer as a strong contender among dividend stocks that should be considered as portfolio staples.

Pfizer’s fundamentals have deteriorated since the days of the pandemic, but that makes sense. Times are a bit tougher right now. But with the right cost-first approach in place, this is a company that can make the best out of a tight situation.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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