Best Undervalued Stocks to Watch in March 2025

Why Are These the Top Undervalued Stocks?

Our screen for the best undervalued stocks includes firms listed on either the New York Stock Exchange (NYSE) or the Nasdaq and with a price of at least $5 per share, a daily trading volume of 100,000 or more, and a market capitalization of $300 million or more. From that list, we ranked the companies in our screen by 12-month trailing P/E ratio and then selected the stock with the lowest P/E ratio from each sector.

While there are many different metrics used in value investing, P/E ratio is one of the most common. It is a measure of the price of a company’s shares against its earnings. A low P/E ratio often suggests that a firm’s recent earnings have performed well relative to its price, meaning that it is undervalued in the market.

When looking for undervalued stocks, investors should keep in mind that P/E ratio is just one of many measures of a company’s value. It’s important to look at the firm’s financials as well as other metrics like P/S ratio (for firms that have yet to achieve profitability), price-to-book ratio, and price/earnings-to-growth ratio for a fuller picture. That said, it is also inherently difficult to calculate a company’s intrinsic value, and market unpredictability means that even legitimately undervalued firms may never see a stock price increase in the future.

What Should Investors Look For in Undervalued Stocks?

While we looked at trailing P/E ratio in our screen, forward P/E ratio is also a helpful metric to use to identify undervalued stocks. The forward P/E ratio makes use of Wall Street analyst predictions of a company’s future earnings. It can be a helpful way to take stock of how developments on the horizon could impact the company’s performance, although it’s also important to note that forward P/E ratio is intrinsically speculative.

Another way of comparing price and earnings is the price/earnings-to-growth ratio, which also includes an estimate of future earnings growth. This may provide investors with a better sense of how a company is likely to fare with regard to future earnings, as well as whether the firm may be undervalued relative to potential earnings growth.

Price-to-book ratio is a measure of a company’s share price against its net value (assets less liabilities). By looking at the firm’s book value per share, investors can get a fuller view of a company’s financial wellbeing. The price-to-book ratio suggests how much investors may be willing to pay for each dollar of the company’s net value.

Finally, regardless of which metrics one uses to evaluate a company, it’s essential to consider a benchmark. When it comes to value investing, it’s impossible to determine whether a company is undervalued unless one has a sense of how it compares to peers in its industry or sector. Because P/E ratios differ significantly from one sector to another, this information helps investors make the most educated guesses possible about a company’s underlying value.

The Bottom Line

Undervalued companies may have the potential to experience outsized returns if the market corrects the price to more closely match their underlying value. Investors seeking a value play might look to metrics like 12-month trailing P/E ratio as one indicator. Our screen has revealed a selection of stocks across sectors that could be undervalued, although there is no guarantee that investors in these stocks will achieve better-than-expected results.

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As of the date this article was written, the author does not own any of the above stocks.