Black Friday Stock Sale: 3 Dirt Cheap Stocks to Buy While They're On Sale.

Stock prices have risen sharply over the past year. The S&P 500 has rallied nearly 15% while the tech-heavy Nasdaq-100 Index has surged over 20%. As a result, many stocks look expensive these days.

However, there are some stock bargains worth buying this Black Friday. Energy Transfer (NYSE: ET), Realty Income (NYSE: O), and UPS (NYSE: UPS) currently trade at dirt cheap levels. Those bargains might not last much longer, making them enticing deals right now.

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A bottom-of-the-barrel valuation

Energy Transfer currently trades at less than nine times earnings. That's dirt cheap, even compared to its closest peers in the undervalued energy midstream sector, where the average is around 12 times earnings. Energy Transfer's bottom-of-the-barrel valuation is one reason why it currently has a dividend yield of more than 8%, several times higher than the S&P 500's 1.2% yield.

The master limited partnership's (MLP) tax complexities (it sends investors a Schedule K-1 Federal Tax Form each year) are one reason why it has a lower valuation compared to the broader market. However, it's hard to justify its low value compared to other MLPs. Energy Transfer is one of the largest players in the industry and is in the strongest financial position in its history.

It also has an abundance of growth coming down the pipeline. Energy Transfer has a multi-billion-dollar backlog of commercially secured expansion projects under construction. Additionally, it has several more projects in development. These projects should grow the MLP's cash flow at a solid rate in the coming years, giving it more fuel to increase its high-yielding distribution.

This high-quality REIT is on sale

Realty Income currently trades at about 13 times its earnings. That's well below the 18 times average of other large-scale real estate investment trusts (REITs) in the S&P 500. That low valuation is a big reason why Realty Income has such a high dividend yield (currently 5.7%).

The REIT should trade at a premium valuation compared to its peers, rather than at a discount. Realty Income has delivered a higher total operational return (dividend yield plus FFO per share growth rate) than other blue chip REITs over the past one-, three-, and five-year periods.

Realty Income is in a strong position to continue growing shareholder value. It boasts one of the best financial profiles in the REIT sector, giving it ample flexibility to continue investing in income-producing real estate. The company has one of the sector's most consistent growth track records, with more than 30 consecutive years of dividend increases.

Showing early signs of turning things around

Shares of UPS have gotten shellacked in recent years. Its stock price currently sits more than 50% below where it was three years ago. That slump is a big reason why UPS' stock has a nearly 7% dividend yield.

The logistics company has been battling several headwinds, including challenging market conditions due to tariffs and other factors. It's also reducing the volume it ships for its top customer, Amazon. As a result, its revenue, earnings, and free cash flow have declined. The company only generated $2.7 billion in free cash flow through the first nine months of this year, not nearly enough to cover its $4 billion dividend outlay.

However, UPS is working to realign its operations to match its lower volumes, while focusing on growing more profitable business lines such as healthcare logistics. These moves are showing early signs of improvement. It's on track to deliver $3.5 billion in cost savings by the end of this year, which should boost its profitability. Analysts expect the company to earn more than $7.00 per share next year, up from $6.44 in 2024. That has the company trading at around 13 times forward earnings, significantly below the S&P 500's forward PE ratio of over 21 times.

Black Friday bargains

Energy Transfer, Realty Income, and UPS are currently trading at very low valuations. That makes them appealing options for investors seeking a bargain in today's more highly valued stock market. Even better, investors who buy now can lock in an attractive income stream, enhancing the potential total return they can earn on these investments.

Matt DiLallo has positions in Amazon, Energy Transfer, Realty Income, and United Parcel Service. The Motley Fool has positions in and recommends Amazon, Realty Income, and United Parcel Service. The Motley Fool has a disclosure policy.