2 Stocks Too Cheap for Investors to Ignore Any Longer -- Why Now Is the Perfect Time to Buy

Buying cheap stocks can be a great strategy. It's often referred to as value investing, and it's a powerful way for individual investors to spot inefficiencies in the market before Wall Street does. Simply put, a company trading at $2 has greater potential to double or triple in value than a household-name tech stock trading at $200. Here are two juggernaut companies trading at cheap valuations that certainly deserve more attention than they are getting.

1. Eating shares like Cookie Monster

General Motors (NYSE: GM) is consistently misunderstood by Wall Street and is trading at a cheap forward price-to-earnings (P/E) ratio of only about 6. Thanks to its cheap valuation, management has been decisive about buying back shares. In fact, GM has repurchased tens of billions of dollars' worth of shares and significantly reduced its outstanding share count, as you can see in the graph below.

GM data by YCharts

The auto industry might be known for razor-thin margins, but GM has separated itself from most rivals by dominating full-size trucks and SUVs, which yield far better margins than traditional sedans. That said, the company is forward-focused enough to ensure it has a strategic path in electric vehicles (EVs) and to set up a future that can continue to boost free cash flow, share buybacks, and margin improvement.

It's also important for investors to better understand GM's Super Cruise and OnStar businesses, which are increasingly becoming a cornerstone of an investor thesis. Traditional vehicle sales check in with a thin 4-10% profit margin, but GM's software business is keeping closer to $0.70 of every single dollar, and the company is pushing to offer these services as part of the vehicle purchase price. This makes its potential consumer base as wide as possible, which will pay off in the long run.

Image source: General Motors.

2. A communications stock for cheap

Following months of selling, Comcast (NASDAQ: CMCSA) is also trading at a paltry 7 times P/E ratio, giving risk-accepting and patient investors an opportunity to scoop up shares of this communications stock on the cheap. It's fair to say that headwinds from consumer cord-cutting and increasing broadband competition are concerning, but the sell-off and stock price have its dividend ratio at a lucrative 6.1%. It's also fair to note that Comcast, as a massive conglomerate, has a long history of consistently increasing its dividend payouts -- but as you can see below, its payout is as high as ever.

CMCSA Dividend data by YCharts

Comcast is also doing its best to shed the "conglomerate" narrative that seems to weigh on its valuation. Comcast spun off Versant Media earlier this year and has announced plans to spin off its core NBCUniversal media assets and theme parks into a stand-alone public entity with its own valuation.

Comcast also delivered its highest quarterly result in history, adding 448,000 domestic wireless lines to reach a total of 10.2 million. It also boasted a turnaround in its Peacock streaming service, reporting its first-ever profit with adjusted earnings of $189 million during the second quarter.

Are they buys?

Both General Motors and Comcast are legacy businesses that are entrenched in their respective industries. Both also have incredible histories of returning value to shareholders, with General Motors' relentless share buybacks and Comcast's lucrative dividend at a record ratio.

While investors won't be adding these companies to a high-growth portfolio, they still offer immense value for patient long-term shareholders, who enjoy returns from buybacks, stable earnings, and industry dominance. General Motors and Comcast could be great cornerstone stocks in a well-thought-out portfolio.

Daniel Miller has positions in General Motors. The Motley Fool recommends Comcast and General Motors. The Motley Fool has a disclosure policy.