Most Undervalued S&P 500 stocks \ stacker news ~Stacker

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564 sats \ 10 comments \ @gmd 28 Feb Stacker_Stocks

I've been playing around with ChatGPT's DeepResearch tool... I get 10 queries a month on the plus plan. I thought I would get it to analyze which stocks are the most undervalued. I'm not sure yet how to use my queries so I might try tweaking my prompts and doing this on a weekly basis to see what insights it can generate.

Unfortunately the results aren't very sexy, GOOGL is the only tech stock on the list- a lot of my friends have been buying that dip but I can't get myself to buy in when search to me is clearly being eaten by AI.

You can see the full report with reasoning behind each company's inclusion here: https://chatgpt.com/c/67c10db6-3e8c-8000-a6d7-e3c4ca79cd80

Methodology and Key Valuation Criteria:

P/E Ratio (Price/Earnings)
P/B Ratio (Price/Book)
EV/EBITDA
Free Cash Flow Yield
Dividend Yield & Stability
Debt and Financial Health

Top 10 Undervalued S&P 500 Stocks (Ranked):

Alphabet (GOOGL) – Communication Services (Internet)
PayPal Holdings (PYPL) – Information Technology / Fintech
Arch Capital Group (ACGL) – Financials (Insurance)
Caterpillar (CAT) – Industrials (Machinery)
Albemarle (ALB) – Materials (Lithium)
CVS Health (CVS) – Healthcare (Retail Health & Insurance)
Exxon Mobil (XOM) – Energy (Integrated Oil & Gas)
Lennar Corporation (LEN) – Consumer Discretionary (Homebuilders)
General Motors (GM) – Consumer Discretionary (Automobiles)
Comcast Corporation (CMCSA) – Communication Services (Media & Broadband)

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203 sats \ 1 reply \ @Bell_curve 28 Feb

I hate all these choices lol

10 sats \ 0 replies \ @gmd OP 28 Feb

haha yup me too. i had gpt4o write the prompt and accidentally hit enter before I edited it to give me the top 20 results instead of the top 10. I think next time I will also ask it to give more tech or growth companies more likely to have home run potential.

79 sats \ 0 replies \ @gmd OP 28 Feb

Here's the prompt I used (which gpt4o wrote this for me). Would welcome any feedback for how to tweak the next run.

Conduct an in-depth analysis to identify the most undervalued companies in the S&P 500 based on fundamental valuation metrics. The goal is to determine which stocks currently present the best value for purchase.

Key Criteria for Valuation:

Price-to-Earnings (P/E) Ratio: Identify companies with below-average P/E ratios compared to their sector peers and historical averages.
Price-to-Book (P/B) Ratio: Look for stocks trading below their book value, particularly in asset-heavy industries.
Discounted Cash Flow (DCF) Analysis: Estimate the intrinsic value of stocks using a DCF model and compare it to their current market price.
Enterprise Value-to-EBITDA (EV/EBITDA): Identify companies with low EV/EBITDA ratios relative to historical norms and competitors.
Free Cash Flow Yield: Prioritize stocks with strong free cash flow (FCF) and high FCF yield, indicating sustainable profitability.
Dividend Yield & Stability: Consider companies offering attractive dividend yields with a history of consistent payouts.
Debt Levels & Financial Health: Analyze debt-to-equity and interest coverage ratios to assess financial stability.

Additional Considerations:

Exclude companies experiencing severe financial distress, regulatory issues, or major earnings declines.
Favor companies with strong revenue growth, increasing margins, and improving operational efficiency.
Take into account macroeconomic factors (interest rates, inflation, industry trends) that may affect valuations.

Deliverables:

A ranked list of the top 10 undervalued S&P 500 stocks based on the criteria above.
A brief summary for each company explaining why it is considered undervalued.
Key risks and potential catalysts for stock appreciation.

76 sats \ 1 reply \ @BlokchainB 28 Feb

I own some of these CAT and Exxon have been solid investments that pay a dividend

172 sats \ 0 replies \ @gmd OP 28 Feb

hmmm maybe i need to look into these a little more. i might be close minded because of tech goggles.

66 sats \ 0 replies \ @SHA256man 1 Mar

where are the ~~new~~ freshly reintroduced technology stocks? hovercrafts, laser guns, thorium-based nuclear reactors, giant furry cows?

66 sats \ 3 replies \ @Satosora 28 Feb

I wonder if it is programmed to tell you these results, especially google.

20 sats \ 2 replies \ @gmd OP 1 Mar

Had a few friends buy GOOG this past week arguing it is undervalued I just don't see how they escape gradual yahoo style death from AI...

Deep Research's Case for GOOG:

Why it’s undervalued: Alphabet (Google’s parent) trades at a P/E ratio around 20–22, which is below its own 5- and 10-year historical averages (24–28) and well under peer multiples (Apple and Microsoft trade ~30+ P/E). In fact, its forward P/E near 21 is lower than the S&P 500 average and significantly below other tech giants. This muted multiple comes despite double-digit growth in Google’s core advertising and cloud segments. Alphabet also boasts a strong balance sheet (net cash) and massive free cash flows – its price-to-cash-flow metrics rank favorably against big-tech peers. Overall, the market appears to be undervaluing Alphabet’s stability and growth, possibly due to overblown fears of digital ad slowdown or competition in AI search. DCF valuations suggest upside: for example, Alphabet’s stock trades at only ~0.87 of Morningstar’s fair value estimate, implying about 15% undervaluation. Key risks: Regulatory pressures (antitrust cases in search and app stores) could weigh on sentiment. Competition in AI (e.g. Microsoft’s push into AI-powered search and cloud) poses a threat if it erodes Google’s dominance. Heavy investments in experimental projects (like Waymo or other “Other Bets”) or AI could drag margins if not monetized. Potential catalysts: Continued growth in Google Cloud (which saw revenue +35% YoY and a big jump in operating profit) will highlight Alphabet’s expanding business beyond advertising. Improvement in ad spending or successful monetization of YouTube Shorts/Reels could boost earnings. Any positive resolution of regulatory cases, or demonstration that Google’s search business remains resilient against AI competition, may prompt a re-rating. Alphabet’s ongoing share buybacks (over $70B authorized) also provide support to EPS and the stock.

54 sats \ 1 reply \ @Satosora 1 Mar

Im not 100% sure, but google wont be failing anytime soon. How many people depend on their services? Ai is just a small portion of what they are doing.

0 sats \ 0 replies \ @gmd OP 2 Mar

IIRC search ad revenue is their cash cow accounting for ~2/3rds of their revenue.

AI is vastly superior to search and will slowly cannibalize this business, dividing the attention pie amongst the various AI providers, for which google is a player but not the leader currently, and slowly getting commoditized.

Outside of youtube, their remaining businesses cloud etc are hotly contested.