Best undervalued stocks to watch in 2025
Undervalued stocks trade for less than their intrinsic value. Consider some of the top undervalued stocks to invest in with us.
Undervalued stocks in brief
‘Undervalued’ stocks refers to companies sporting a market capitalisation which is less than what is presumed to be their true intrinsic value — where intrinsic value is based on an analysis of a company's fundamentals, such as its assets, earnings, and cash flow, rather than market sentiment or speculation.
It’s often calculated through discounted cash flow analysis, a dividend discount model or a comparison of the company’s price-to-earnings ratio to the sector average. Buying undervalued stocks is the keystone of all value investing strategies, including Warren Buffett’s investing philosophy.
The general idea with undervalued stocks is that the market has made an error in its valuation of the stock, and that the investor can take advantage of the resulting gap between the intrinsic value and the market price, by buying the shares when they sit below intrinsic value.
Of course, as with all investing strategies, there are downsides. Even if your analysis is correct, there is no knowing how long it will take an undervalued stock to start closing the gap. And while you may believe a stock to be fundamentally undervalued, this is not an objective statement, but a subjective opinion based on your own analysis — which may be flawed.
It’s also worth noting that simply because a stock appears to be undervalued does not mean it cannot become more undervalued, especially where it is already falling, and sentiment is negative. And beyond this, the concept of undervalued stocks conflicts with the efficient market hypothesis, which posits that share prices tend to reflect all publicly available information.
Stocks can become — or more accurately be perceived to become — undervalued for many reasons.
Negative stories in the media, market sector crashes, or even a slow slide in a ‘boring’ segment all feature. It’s perhaps important to consider when an undervalued stock might return to intrinsic value — a near-term catalyst or strong growth prospects may make a potential investment more attractive.
As ever, undervalued stocks may be best acquired as part of a well-diversified portfolio as the subjectivity needed to select them may make them higher risk than your personal bias suggests.
How to invest in undervalued stocks with us
- Learn more about undervalued stocks
- Download the IG Invest app or open a share dealing account online
- Search for undervalued stocks on our app or web platform
- Choose how many shares you’d like to buy
- Place your deal and monitor your investment
Investors look to grow their capital through share price returns and dividends - if paid.
But the value of investments can fall as well as rise, past performance is no indicator of future returns, and you could get back less than your original investment.
We also offer many undervalued-focused ETFs, including the iShares Edge MSCI World Value Factor UCITS ETF, which tracks value stocks from developed countries worldwide based on price-to-book value, price-to-forward earnings and enterprise value-to-cash flow from operations. This ETF's total expense ratio amounts to a reasonable 0.25% per year.
Top undervalued stocks to watch
The following 10 shares were the top holdings of the iShares Edge MSCI World Value Factor UCITS ETF as of December 2024.
Cisco Systems (NASDAQ: CSCO)
Cisco Systems is a multinational technology business specialising in networking hardware, software, and telecommunications. It provides routers, switches, and cybersecurity tools for companies — and is a key name in computer security.
Cisco is also expanding its portfolio into areas such as cloud computing, artificial intelligence, and hybrid work technologies, making it a key player in the global cyberspace.
The company currently has a trailing 12 month price-to-earnings ratio of 26.
International Business Machines (NYSE: IBM)
IBM is perhaps best known as one of the early forces behind the personal computer revolution. It created the IBM Personal Computer in 1981, which came with a massive 16 kilobytes of RAM, VisiCalc for spreadsheets and EasyWriter for word processing. Its open systems rapidly became the industry standard and the PC was instrumental in spreading the Microsoft Disk Operating System.
Nowadays, IBM focuses on cloud services, artificial intelligence and — perhaps surprisingly, business consulting. The company is heavily invested in AI-driven innovations including its Watson platform and has transitioned to focus on hybrid cloud solutions.
The company currently has a trailing 12 month price-to-earnings ratio of 33.
Qualcomm (NASDAQ: QCOM)
Qualcomm is a global player in the semiconductor and telecommunications industries, which designs and manufactures chips for smartphones. It may be best-known for its Snapdragon processors which are widely used in premium smartphones.
Qualcomm is also arguably the market leader 5G technology, providing essential components and licensing intellectual property that powers mobile connectivity worldwide. Its business model merges hardware sales with licensing fees from its patented tech, creating a defensive moat of revenue.
The company currently has a trailing 12 month price-to-earnings ratio of 19.
Toyota (NYSE: TM)
Toyota is one of the world's largest car manufacturers — its vehicles are viewed by many drivers as the most reliable on the road. The company was a trailblazer in hybrid technology with its flagship Prius model — and it’s also investing heavily in electric vehicles, early-stage hydrogen fuel-cell technology and autonomous vehicles.
The company currently has a trailing 12 month price-to-earnings ratio of 9.
AT&T (NYSE: T)
AT&T is perhaps the most well-known telecommunications provider in North America, controlling large segments of the mobile, broadband, and video services sector to consumers and businesses.
The company also owns significant media assets media, including WarnerMedia. AT&T’s current focus is on expanding its 5G network infrastructure in addition to next-generation connectivity, fibre-optic broadband and streaming services. The company has also launched several strategic mergers and acquisitions to grow its footprint.
The company currently has a trailing 12 month price-to-earnings ratio of 18.
Intel (NASDAQ: INTC)
Despite trailing far behind Nvidia, Intel remains a leading manufacturer both of semiconductors, and of processors that power personal computers and servers. The company is known for its innovations in microprocessor technology and arguably has fallen behind its fundamentals.
Like many of the undervalued stocks on this list, Intel is also heavily investing in artificial intelligence, autonomous vehicles, and quantum computing, in part to diversify its business beyond traditional computing.
The company currently has an undefined trailing 12 month price-to-earnings ratio due to negative earnings in recent months.
Verizon (NYSE: VZ)
Verizon is one of the largest telecommunications companies in the United States, offering wireless services, broadband and video content through its Fios network.
As a direct competitor to AT&T, the company is also a major player in the 5G rollout — but also also owns Yahoo and AOL, which is helping with its expansion into media and advertising. The company has a specific strategic focus on integrating 5G with Internet of Things solutions, which may generate significant growth over the longer term.
The company currently has a trailing 12 month price-to-earnings ratio of 17.
HSBC (LON: HSBA)
HSBC is one of the largest banking and financial services organisations in the world, offering a wide retail banking, commercial banking, investment banking and wealth management to clients across both China and western markets. HSBC also has a large footprint in emerging markets and is investing heavily in digital banking to better serve its global customer base.
The company currently has a trailing 12 month price-to-earnings ratio of 8.
Comcast (NASDAQ: CMCSA)
Comcast is pure-play global media and technology company, known for its cable, broadband and entertainment packages. It owns NBCUniversal, which controls several television networks including NBC and Universal Pictures — alongside a handful of theme parks. It also owns the Peacock streaming platform, and is currently delving into smart home tech.
The company currently has a trailing 12 month price-to-earnings ratio of 10.
British American Tobacco (LON: BATS)
British American Tobacco is global tobacco company which controls several popular brands, including Dunhill, Lucky Strike and Camel. The business is struggling with the declining global smoking trend — but is investing in alternatives such as vaping, nicotine pouches and smokeless tobacco. For context, BAT was forced to write off billions in value in its North American brands, but its non-combustibles range continues to grow as a percentage of global revenue.
The company currently has an undefined trailing 12 month price-to-earnings ratio.
Undervalued stocks summed up
- Undervalued stocks are companies sporting a market capitalisation which is less than what is presumed to be their true intrinsic value
- Intrinsic value is based on an analysis of a company's fundamentals, such as its assets, earnings, and cash flow
- The concept of ‘undervalued stocks’ assumes that the market has made an error in its valuation of a company, and that the investor can take advantage of the resulting gap between the intrinsic value and the market price
- As with all investing strategies, this is not infallible
- Stocks can become undervalued for many reasons, including negative stories in the media, market sector crashes
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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