The market consistently offers opportunities in value stocks for bargain hunters willing to do the work and take risks. Most of the work is done here for you as I have identified value stocks that are cheaply priced. Those willing to take the risk and establish a position stand to be rewarded handsomely.

There are many reasons to  consider investing in value stocks and undervalued shares overall. For one, discounted prices suggest substantial potential for upside appreciation. Secondly, purchasing shares at discounted prices provides a buffer against losses since they’re already priced cheaply. 

Furthermore, almost all of the companies discussed below are well established and relatively well known. They tend to be less risky overall as a result. For the most part these are fundamentally sound companies with what look to be temporary issues. That suggests that there is strong potential for upside appreciation moving forward. Let’s take a look at those companies and their shares.

Pfizer (PFE)

Pfizer (NYSE:PFE) stock is modestly undervalued at the moment but poised to potentially explode in the future. That combination of factors makes the equity too cheap to ignore at the moment. 

Let’s begin by putting some numbers to Pfizer and its stock in order to understand its value. Pfizer is expected to provide $2.37 of earnings per share in 2024. At a forward P/E ratio of 13.6 that suggests the price of PFE shares should and 2024 somewhere in the neighborhood of $32.25. (13.6 x S2.37). 

That isn’t substantially higher than Pfizer’s current price of $30. So, at first blush Pfizer doesn’t look like such a great opportunity. However, investors have to consider a few factors including its dividend. It adds another $1.68 to total returns. That yield of 5.6% significantly changes the calculus of investing in Pfizer. 

Furthermore, Pfizer is well positioned to benefit from the growth of oncology-based pharmaceuticals following its acquisition of Seagen. The company also has potential weight loss drugs in its pipeline and is worth considering as it pivots away from pandemic-based revenues. 

Altria (MO) 

Altria (NYSE:MO) stock is expected to rise as high as $56 in the future. It currently trades for $49 and when its substantial dividend included truly is too cheap to ignore. The simple math suggests that MO shares possess up to 21% upside with the inclusion of the dividend. 

I believe investors should assume that MO stock is undervalued by 11% currently. That 21% figure I just mentioned is a best case scenario. It’s more likely that MO shares are worth 11% more than their current price. 

The company is expected to produce $5.25 of earnings per share in 2024. With a forward P/E ratio of 9.83 that equates to a price of $51.60 at fair value. Add in $3.92 of dividends and total value rises to $55.53 and an 11% return. That’s a pretty good return and as the company continues to pivot away from cigarette-based revenues it can continue to rise in demand prompting stronger P/E ratios moving forward. 

Bristol-Myers Squibb (BMY)

Now is a great time to establish a position in Bristol-Myers Squibb (NYSE:BMY) stock for investors. Allow me to use that same calculation as above to show you why Bristol-Myers Squibb makes so much sense as a share to buy and hold through 2025. 

BMY shares currently trade for $45, just about as low as they’ve been in 5 years. Sales are in decline and the company is dealing with patent expirations and other issues that make it less attractive overall. The consensus is that BMY shares are worth $58 now. 

I’d guess it’s worth closer to $51 based on the notion that the company will produce 57 cents in earnings in 2024 with a forward P/E ratio near 90. Add in $2.40 in dividends and its value is roughly $53.50. That’s not a huge return at a price of $45 but it gets more interesting. 

Bristol-Myers Squibb is expected to produce $7 in per share earnings in 2025. Its P/E ratio will come down but not enough to prevent it from rising in value substantially. 

Johnson & Johnson (JNJ)

Johnson & Johnson (NYSE:JNJ) stock is worth approximately $170 by the same calculation. The analysts covering the stock have given it a consensus share price of $172. That’s a positive for bargain hunters as JNJ shares currently trade for $159 following a Q2 earnings beat. 

Per share earnings reached $2.82 which was higher than the $2.71 Wall Street had been expecting. Those results suggest that the $170 share price I mentioned above may be an underestimate as per share earnings strengthen. 

Johnson & Johnson shares are inexpensive at the moment as the dark cloud of litigation hangs over the company’s head. It looks like those clouds are parting and Johnson & Johnson will be on the hook for $8 billion. 

Investors really should consider the opportunity in Johnson & Johnson stock at the moment. The raw numbers suggest that there’s value in the shares and that doesn’t consider the dividend. The value of that dividend adds an additional $5 onto total returns further suggesting value in J&J shares at the moment.

McDonald’s (MCD)

McDonald’s (NYSE:MCD) continues to deal with the effects of inflation on its business and stock. There are several reasons to believe it’s too good to ignore now. 

McDonald’s is no longer experiencing the double digit sales growth of 2023 as the effects of inflation have slow foot traffic to its stores. In response the company launched its popular $5 value meal recently. It has decided to extend that deal as it has returned the perception of value to the fast food giant to some degree. 

Investors are going to have to wait to see how that plays out in relation to earnings and sales for the remainder of 2024. 

The analysts covering McDonald’s assign it a consensus price of $305 currently. That assumes rising demand for shares moving forward because forward earnings and forward P/E ratios suggest $251 is more accurate. The point here is that the value meal is driving more foot traffic into McDonald’s restaurants. Some portion of those customers are going to overspend on higher margin items and meals. The effect is a return to stronger earnings that should raise MCD share prices. 

Nextracker (NXT)

Nextracker (NYSE:NXT) provides tracking control systems that increase the efficiency of  utility scale solar projects. The stock is undervalued based on analyst consensus view. it currently trades for $46 but benefits from a consensus price of $58.

I calculated that it should be worth approximately $46 using the same process as noted above. However, I think Nextracker is the beneficiary of analyst optimism for several reasons. 

For one, the company is focused on the utility scale solar market. That’s important because utility scale solar projects are not as susceptible to rate hikes as commercial scale projects. The utility scale focus is important for another reason as well. A lot of attention has recently shifted on to the solar sector as a potential provider of clean energy for the AI boom. AI hyperscalers are consuming greater and greater amounts of electricity while simultaneously promising lower carbon footprints. Utility scale solar and wind projects are an obvious beneficiary of that rising demand.

NextEra Energy (NEE)

NextEra Energy (NYSE:NEE) is either a fairly priced stock or an undervalued opportunity with income potential at the moment. 

I believe the latter scenario is more likely to be true as NextEra Energy is positioned to be a beneficiary  of the aforementioned opportunity in clean energy. The company operates the largest wind and solar project globally while also operating a massive utilities firm simultaneously. 

That combination of operating segments positions NextEra Energy uniquely in relation to the AI energy supply opportunity. 

The stock is fairly priced at the moment according to analysts. I think investors should consider it undervalued but establish a position and take advantage of the income opportunity through its nearly 3% dividend. 

The stock has been volatile over the past few years as clean energy stocks rise and fall in demand. The shares have gotten hot in the past and may be gearing up to do so again. If not, they’re simply fairly priced and provide a nice extra chunk of income to investors. 

On the date of publication, Alex Sirois 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.