Cheapest Stocks with the Most Upside

With the stock market staying strong (despite sub-par earnings), investors need to find stocks that are still undervalued if they want to make money without spending a fortune on shares.

Goldman Sachs analyst David Kostin expects a 7% return over the next year. Recently, Kostin released two stock lists for investors: 40 stocks with most downside and 40 stocks with the most upside.

The stocks with the most upside are those that are still underpriced and have price targets above their current price. Marathon Petroleum has the most upside, with the potential to surge 60% before it hits fair value.

The health care sector is barely represented at all on the list of 40 stocks, with just Bristol-Myers Squibb making the cut. The biopharmaceutical company was recently trading at $43.24, which gave it a 22.6% upside to its target price.

This list includes those from Kostin’s top 40 that have the lowest recent price. Kostin’s overall list includes, unsurprisingly, a lot of energy, oil and gas companies, one of which is already trading at $145.49. However, these can all be bought for less than $40 and even as cheap as just $15.39.

10. Noble Corp.

Noblecorp.com

Recent price: $38.20

Upside to target: 28.3%

Ticker: NE

Industry: Basic materials

Q2 revenue was up 13.47% from a year ago and earnings per share were up 6.78%. However, the stock has been volatile — in April it hit $34.67 before spiking to $42.26 in May and then falling to $36.42 in June.

9. General Motors

GMFleet.com

Recent price: $35.87

Upside to target: 25.5%

Ticker: GM

Industry: Consumer Goods

The automaker is up a whopping 76% year over year. General Motors is also one of the companies with the most fallback cash — $27.4 billion.

8. Valero Energy Corp.

Freetravelguys.com

Recent price: $35.77

Upside to target: 23%

Ticker: VLO

Industry: Basic materials

The company has a dividend yield of 2.4%. At the end of January, the stock jumped up into the $40 range, but it slipped back down again in the middle of March and has yet to get back there.

7. Autodesk Inc.

Recent price: $35.39

Upside to target: 41.3%

Ticker: ADSK

Industry: Technology

Autodesk has the second-highest upside on Kostin’s list of 40 stocks, and the highest upside among the cheapest of those stocks.

6. Yahoo!

Recent price: $28.09

Upside to target: 24.6%

Ticker: YHOO

Sector: Technology

In mid-July Yahoo! hit a five-year high. The stock is up 38% year to date.

5. Broadcom Corp.

Broadcom.com

Recent price: $27.57

Upside to target: 30.6%

Ticker: BRCM

Industry: Technology

On Monday, Broadcom was one of the most active Nasdaq-traded stocks, according to AP. It’s dividend yield is 1.7%

4. Newfield Exploration

Newfld.com

Recent price: 24.60

Upside to target: 26%

Ticker: NFX

Industry: Basic materials

Recently, the stock declined after Q2 earnings per share were down nearly 40% from a year ago.

3. Goodyear Tire & Rubber

Investor.goodyear.com

Recent price: $18.5

Upside to target: 24.3%

Ticker: GT

Industry: Consumer goods

Year to date, Goodyear’s stock price is up 36%.

2. Applied Materials

Photo courtesy Applied Materials.

Recent price: $16.32

Upside to target: 22.6%

Ticker: AMAT

Industry: Technology

Shares are up 32% year to date and the stock’s dividend yield is 2.6%.

1. Nabors Industries

Nabors.com

Recent price: $15.39

Upside to target: 26.7%

Ticker: NBR

Industry: Basic materials

The land-driller’s stock is down over the last few months as it missed Q2 earnings estimates because of “seasonal depression in the operation of Alaska and Canada,” according to Zacks Equity Research.