Stocks to buy

The 7 Most Undervalued S&P 500 Stocks to Buy in January

The S&P 500 has some of the best stocks and biggest names that are worth adding to your portfolio. 2024 has begun on an optimistic note and we could see several stocks hitting new highs this year. Many of these are mega-cap stocks – analysts love them and they have shown steady growth and revenue. With the economy improving, we could expect rate cuts soon and this will help the companies achieve stronger growth. Even the upcoming fourth-quarter earnings could give a boost to these undervalued S&P 500 stocks. Let’s take a look at them. 

Undervalued S&P 500 Stocks: Airbnb (ABNB)

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Airbnb (NASDAQ:ABNB) has become a household name and the company is enjoying some of its best days. It has recovered from the effects of the pandemic and is generating impressive cash today. 

The travel industry is massive and Airbnb has a huge addressable market. After the pandemic, travelers are preferring to stay at an Airbnb instead of a hotel. Its user base is growing, and the company saw an 18% year-over-year (YOY) revenue growth in the recent quarter. This is one company that will remain relevant for years to come. 

Yes, ABNB stock isn’t cheap. It is trading for $137 but still looks undervalued to me. It is much lower than the 52-week high of $154 and has dropped 5% in the past six months. Airbnb is a cash flow machine that will report impressive fourth-quarter results driven by the holiday season. Buy the stock before it soars higher. 

Starbucks (SBUX)

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There are multiple reasons to like Starbucks (NASDAQ:SBUX), and it is one of the top stocks to hold in 2024. SBUX stock is down 10% in the past year and trading at $93, below the 52-week high of $115. 

The company is a well-established business with a global presence and it has an aggressive plan to expand in India this year. It aims to open two stores each week in India and this could give it a strong market share in the most populous nation in the world. In the recent quarter, it saw an 11.4% rise in revenue and a 38% rise in net income. 

Without a doubt, the brand is a global name, and its management wants to achieve 55,000 locations by 2030, up from the current 38,000 locations. It is a resilient company with massive growth potential, and buying the stock below $100 is a great deal. 

Undervalued S&P 500 Stocks: NextEra Energy (NEE)

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One of the top renewable energy stocks, NextEra Energy (NYSE:NEE) could rebound this year. 2023 hasn’t been a good year for energy stocks, but as the economy improves and the transition towards green energy gains momentum, NextEra Energy will benefit. The company is both a utility company and a renewable energy company.

As the largest renewable energy utility company in the U.S., it ensures steady income flow throughout the year. The company has enough backlog to keep itself busy in the coming years. Trading at $57 today, the stock is highly undervalued and is also one of the top dividend stocks to own. It has a dividend yield of 3.24% and has been steadily increasing dividends for the past 28 years.

NextEra Energy has a strong balance sheet, and the company expects high earnings growth in the coming quarters. Additionally, as interest rates come down, we could see the stock soar higher. It is trading at a discount today and is worth adding to your portfolio this month. 

Caterpillar (CAT)

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A manufacturer in the field of mining, construction, and engineering equipment, Caterpillar (NYSE:CAT) is a well-known name in the industry with a strong balance sheet. The company saw a 12% rise in revenue in the recent quarter, and EPS came in at $5.45. Its solid earnings allow the management to reward the shareholders which makes CAT one of the best dividend stocks to own.

It has a history of increasing dividends for 31 consecutive years and enjoys a dividend yield of 1.84%. It is currently one of the most undervalued S&P 500 stocks and is highly resilient. CAT will bring stability to your portfolio. Its future looks bright, and the company operates in an industry where it can never go out of business.

Furthermore, CAT is a leader in the industry and has a massive market to cater to. Additionally, it is adopting technology and artificial intelligence (AI) to ensure that its products are the best out there, and Caterpillar is successful in making it happen. 

Oracle (ORCL)

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A well-known name in the software industry, Oracle (NYSE:ORCL) is the largest database company right now and it offers cloud-based services to several organizations. To remain relevant, the company acquired many companies over the past few years, and this expansion has led to significant growth.

While Oracle is not at the top of its game, it is standing strong and could be a long-term winner. Trading at $108, the stock is up 26% over the past year and has been moving upwards since December. In the recent quarter, it saw a 5% YOY increase in revenue and an 11% rise in EPS.

Its cloud revenue increased by 25%, and this is one sector that will continue to show growth. Oracle has a long way to go, and the stock looks highly undervalued to me at the current level. It could be an ideal addition to your portfolio this month. 

Coca Cola (KO)

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A global giant, Coca-Cola Co (NYSE:KO) has been thriving despite a pandemic, inflation, and low consumer spending. However, the company continues to grow and enjoys a large market share. It hiked the prices of several products and yet reported an 11% organic revenue growth.

Coca-Cola is a stock to buy and hold forever. The company’s brand value, global presence, and wide umbrella of products make it one of the best stocks to own. Trading at $60 today, the stock is highly undervalued.

It enjoys a dividend yield of 3.06% and pays a quarterly dividend of $0.46. While the stock hasn’t moved much in 2023, it will bring stability to your portfolio and ensure consistent returns. The company has increased the full-year earnings outlook and expects an even better 2024. At $60, KO stock is one of the best buys and this is one stock you will never regret owning. 

Advanced Micro Devices (AMD)

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Many thought that Advanced Micro Devices (NASDAQ:AMD) would die a slow death after the dominance of Nvidia (NASDAQ:NVDA), but the company proved everyone wrong. It has bounced back with a new chip and GPU updates which have brought it back to the limelight.

While AMD suffered due to the drop in PC demand, it has bounced back with the latest AI chip MI300X and tech companies including Microsoft (NASDAQ:MSFT) have shown interest in using them. It has also launched AI-compatible accelerators and believes that the new product line could bring in a revenue of $2 billion in 2024. However, I believe the revenue could be higher than that. 

There is a bullish sentiment around the stock which is exchanging hands for $162. It isn’t cheap but it is only going to move upwards from here. Analysts are highly optimistic about the future of the company and have revised the price targets. 

On the date of publication, Vandita Jadeja did not hold (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.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.

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