3 Dirt-Cheap Stocks to Buy in a Market That's Priced for Perfection

How expensive is the stock market right now? The S&P 500 Shiller CAPE ratio is near its second-highest level ever. Its highest mark came in early 2000 before the dot-com bubble burst. The next-highest level was set in late 2021. The S&P 500 soon plunged more than 20%.

Bargain stocks aren't easy to find, but they do exist. Here are three dirt cheap stocks to buy in a market that's priced for perfection.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

1. BioNTech

BioNTech (NASDAQ: BNTX) vaulted into the spotlight in 2020 when Pfizer teamed up with the then-small German company to develop a COVID-19 vaccine. This partnership led to BioNTech raking in billions of dollars in a short period.

Today, BioNTech is much larger with a market cap of around $27 billion. However, the company's cash stockpile of over $16.7 billion and low debt load of roughly $244 million make its enterprise value (EV) less than $10 billion. I think BioNTech is a steal at this valuation.

Granted, BioNTech's COVID-19 vaccine sales have dwindled from the pandemic peak. Still, though, Wall Street expects the company to generate revenue of around $2.5 billion in 2025. That level puts BioNTech's EV-to-sales multiple at only 4x.

Even better, BioNTech's pipeline is very promising. The company plans to win regulatory approvals for 10 cancer indications by 2030. Maybe it won't achieve a 100% success rate, but it doesn't have to do so to be an attractive stock to buy at the current price.

2. D.R. Horton

D.R. Horton (NYSE: DHI) has ranked as the largest homebuilder in the U.S. by volume for 23 years. In the company's 2024 fiscal year, it closed on 93,600 homes. That was enough to give D.R. Horton a market share of almost 14%.

This housing stock looks attractively valued based on nearly any metric. However, its price-to-earnings-to-growth (PEG) ratio of 0.55 based on five-year growth projections arguably underscores what a bargain D.R. Horton truly is. Any PEG multiple below 1.0 is viewed as a discounted valuation.

The optimistic growth outlook for D.R. Horton is based on the fundamentals of the U.S. housing market. Some estimates indicate that the country needs another 4 million homes to meet the demand. That understandably seems to bode well for D.R. Horton's growth prospects over the next few years.

High mortgage rates have presented a major obstacle for homebuyers in recent years. However, D.R. Horton has managed this problem relatively well, in part by offering incentives to customers including mortgage rate buydowns.

3. Energy Transfer

Energy Transfer's (NYSE: ET) name provides a great clue as to what the company does. This limited partnership (LP) is a leading U.S. pipeline operator. Its over 130,000 miles of pipelines transport natural gas, natural gas liquids, crude oil, and refined petrochemical products across the country.

The energy sector generally trades at lower valuation multiples than most other sectors. However, Energy Transfer is especially cheap. Its forward price-to-earnings ratio is only 10.9 compared to 14.4 for the S&P 500 energy sector.

With Donald Trump back in the White House, domestic oil and gas production could increase. That's great news for Energy Transfer. And even if fossil fuel prices decline, the LP's revenue shouldn't be affected thanks to its "toll-road-like" business model.

We can't talk about Energy Transfer without mentioning its juicy distribution. The LP's forward yield currently stands at 6.36%. It won't take much unit price appreciation for this midstream energy leader to deliver a solid total return.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $357,084!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,554!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $462,766!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Learn more »

*Stock Advisor returns as of January 21, 2025

Keith Speights has positions in Energy Transfer and Pfizer. The Motley Fool has positions in and recommends D.R. Horton and Pfizer. The Motley Fool recommends BioNTech Se. The Motley Fool has a disclosure policy.