6 Most Undervalued Stocks To Buy In October 2024 (2024)

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Did you hear the news? Interest rates will start ratcheting down soon. It's sure to be a positive change for the economy and holders of variable debt—but cash investors will see their yields drop. That's a great excuse to shift into dividend stocks for income, especially when you can find those stocks at the right prices.

To give you some inspiration, let's introduce six undervalued stocks with good dividend yields to consider as potential candidates for your portfolio.

How We Chose These Undervalued Stocks

To find stocks that are undervalued right now, I started with a screen on these metrics:

Dividend yield of 3% to 5%. The low end of this range is more than double the dividend yield of the S&P 500.
Price-to-earnings or P/E ratio below 15. The definition of a "good" P/E ratio varies by industry. The average P/E ratio of the S&P 500, however, is nearly 30.
Price-to-book ratio or P/B ratio below 2. Investors looking for the most undervalued stocks like to see P/B ratios below 1. However, an ultra-low P/B ratio in the absence of positive profitability and return metrics can be a red flag. As well, there are companies with slightly higher P/B ratios that still deliver nice returns for shareholders. To balance those factors, we screened for P/Bs below 2.
Analyst support. The stocks below have at least six analysts covering them, and the average ratings are 'moderate buy' or higher.
Upside of 10% or more. Based on consensus price targets, the stocks below have at least 10% upside.

The list produced by the above screens was then trimmed to eliminate direct industry redundancies. Without this step, the options would be heavily skewed towards oil and gas stocks. Finally, I ordered the undervalued stocks from largest to smallest in terms of market capitalization and selected the top six of them.

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6 Top Undervalued Stocks To Buy In October 2024

The table below includes the six largest and best stocks generated from the methodology described above.

Table data source: Stockanalysis.com.

For more value-oriented investing ideas, see our list of best value stocks for 2024 and best small-cap value stocks.

1. ExxonMobil (XOM)

Here's a look at ExxonMobil's business model, key metrics and factors to know before investing.

ExxonMobil Business Overview

Exxon explores and produces crude oil and natural gas in the United States and internationally.

Pricing, dividend yield, valuation ratios and upside potential are:

Stock price: $113.18
Dividend yield: 3.4%
P/E ratio: 13.6
P/B ratio: 1.9
Price target upside: 18.89%

Why XOM Is A Top Choice

Oil and gas companies are inherently volatile because they're at the mercy of gas prices and demand. XOM, like its competitors, had a big year in 2022 when prices spiked. Prices have eased since then, but Exxon continues performing—and easily funding its rising dividend. The company has also shored up its cash reserves and reduced leverage.

For the 12 months ending June 30, Exxon generated $48 million in operating profits on revenues of $345 million. Diluted EPS was $8.35.

2. Comcast (CMCSA)

Now let's turn to Comcast with a quick review of its business, metrics and the characteristics that should appeal to investors.

Comcast Business Overview

Comcast provides residential broadband, wireline voice and wireless services. The company also runs NBCUniversal, which produces and delivers film and television content through its studios, owned broadcast networks and streaming service Peaco*ck. Comcast additionally owns and operates Universal theme parks.

Key metrics for CMCSA are:

Stock price: $39.80
Dividend yield: 3.2%
P/E ratio: 10.6
P/B ratio: 1.8
Price target upside: 18.14%

Why CMCSA Is A Top Choice

Comcast routinely delivers earnings surprises on slow-and-steady revenue growth, which points to disciplined efficiency. The company also generates roughly $25 billion in operating cash flow annually. The cash production easily funds share buybacks and a healthy, growing dividend.

Comcast's buyback yield is strong at 5.8%. Combining that with the 3.2% dividend yield equates to a total shareholder yield of 9.0%.

In the last 12 months, Comcast has produced $121 billion in revenues and diluted EPS of $3.76.

3. Corebridge Financial (CRBG)

Corebridge Financial is our next undervalued stock to discuss. The business overview, key metrics and performance highlights are below.

Corebridge Financial Business Overview

Corebridge Financial provides annuities, mutual funds and life insurance as well as retirement plan administration and compliance services.

CRBG's pricing, dividend yield, valuation ratios and upside are:

Stock price: $27.63
Dividend yield: 3.3%
P/E ratio: 8.5%
P/B ratio: 1.6%
Price target upside: 22.44%

Why CRBG Is A Top Choice

Corebridge Financial did miss second-quarter revenue expectations but outperformed on earnings. Setting aside the sometimes-volatile results in the company's investment portfolio, Corebridge has been growing premiums and deposits, particularly in its retirement businesses. Company-wide, this important revenue line grew 17% in the most recent quarter and 26% in fiscal year 2023.

Like Comcast, Corebridge funnels a lot of money into dividends and share buybacks. The annual dividend of $0.92 equates to a 3.3% yield. Share buybacks over the last 12 months have totaled $977 million, which adds 3.5% to the total shareholder yield of 6.8%.

4. CNH Industrial, N.V. (CNH)

Next up is U.K.-based CNH Industrial. Here is a review of what this company does, key numbers to know and the latest business developments.

CNH Industrial Overview

CNH designs, produces and sells agricultural and construction equipment to customers in the U.S. and around the world.

The pricing, dividend yield, valuation ratios and price target upside percentage for CNH are as follows:

Stock price: $10.13
Dividend yield: 4.6%
P/E ratio: 6.6
P/B ratio: 1.7
Price target upside: 43.14%

Why CNH Is A Top Choice

CNH stock has slumped due to earnings declines and a negatively revised outlook for 2025. The primary challenge ahead is predicted weak machinery sales next year. The slump may have created a buying opportunity for the patient investor, however.

The company is addressing the soft outlook with reductions in cost of goods sold and selling, general and administrative expenses, plus a focused capital allocation program. These efforts will position the company to benefit when market dynamics improve. CNH's capital priorities are organic growth, balance sheet health, shareholder returns and acquisitions where they make sense.

Leadership has also said it will operate its construction business independently "for greater agility and optionality." This could mean a sale as CNH moves to make the agriculture business its priority.

In the last 12 months, CNH has produced $23 billion in revenue and diluted EPS of $1.55.

5. Unum Group (UNM)

Unum Group is the fifth largest company that matched our screening methodology. Below is a look at what Unum does, key metrics and the favorable characteristics investors should know.

Unum Group Business Overview

Unum Group sells group life insurance and related financial products, primarily to employers for the benefit of their employees.

Stock price: $55.26
Dividend yield: 3.1%
P/E ratio: 8.1
P/B ratio: 1.0
Price target upside: 15.09%

Why UNM Is A Top Choice

Unum has a strong and liquid balance sheet, good margins and growing premium revenues. On the strength of positive business momentum, the company made two compelling announcements in its second-quarter 2024 earnings release. Unum raised its 2024 tax-adjusted operating EPS outlook and announced a $1 billion share buyback authorization. The company also recently raised its dividend by 15%.

Unum's trailing 12-month operating income is $1.9 billion, off $12.6 billion in revenues.

6. Webster Financial (WBS)

Webster Financial is the last undervalued stock I'll profile with a review of the business, numbers to know and why WBS could be investable.

Webster Financial Business Overview

Webster Financial is the holding company for the regional Webster Bank, National Association. Webster provides consumer and commercial banking and lending services, as well as health savings accounts and flexible spending accounts. The bank's locations are in Connecticut, Massachusetts, Rhode Island and New York.

Here are the numbers for WBS:

Stock price: $55.31
Dividend yield: 3.6%
P/E ratio: 9.7
P/B ratio: 0.9
Price target upside: 23.57%

Why WBS Is A Top Choice

Most undervalued stocks have some issue that's spooking investors. One pressing issue for Webster Financial is a disappointing second-quarter earnings report. The financial company missed expectations on revenue and EPS. Credit quality also worsened; non-performing assets and the provision for credit losses both rose significantly. Bright spots included growth in loan origination and deposits.

Analysts have lowered their price targets since that earnings release. Here's the good news: After those adjustments, the consensus price target still implies almost 24% upside for WBS. Contributing to the optimism is the bank's positive outlook across its commercial banking, consumer banking and HSA bank businesses. WBS's investor day presentation in 2023 predicted mid-to-high single-digit CAGR in loans, deposits and accounts through 2026.

The miss in the second quarter may mean a longer wait for Webster to deliver—but the 3.6% dividend yield is a reasonable incentive for now.

Over the last year, WBS has produced diluted EPS of $4.60 from revenues of $2.4 billion.

Bottom Line

Falling interest rates could give undervalued dividend stocks a boost later this year and into 2025. Now's the time to make some moves into this category, while there's still ample opportunity to secure good yields from solid companies.