By Philip van Doorn
These stocks have low price/earnings ratios, and most have been overlooked by investors this year
These companies passed a screen of the S&P 500 for low price/earnings valuations and high projected growth rates for earnings per share through 2027.
Early on Tuesday, Tom Fitzgerald, a stock analyst at TD Cowen (a unit of TD Securities), cited United Airlines Holdings Inc. and Delta Air Lines Inc. as particular bargains within the S&P 500. And that provided a basis for a broader screen of the index.
Fitzgerald wrote in a note to clients that there were 47 stocks in the S&P 500 SPX trading at single-digit price-to-earnings ratios, with 14 projected to increase earnings for calendar 2026 more quickly than the full index. With United (UAL) and Delta (DAL) both included in that group, he wrote: “We believe this creates an attractive set-up on top of a rapidly improving industry outlook.”
The analyst pointed out that both United and Delta were trading at a low single-digit P/E late in 2023. Now take a look at how both stocks performed for two years through Monday along with the S&P 500. All returns in this article include reinvested dividends.
United Airlines has been a stellar performer over the past two years, and Delta has trailed the S&P 500’s total return only slightly.
It has been a good two years for shareholders of the two airlines, although their share prices have been far more volatile than the S&P 500.
Valuations and earnings-growth projections
Investors typically look at forward P/E ratios based on current prices and consensus earnings-per-share estimates for the next 12 months. But since we are getting close to the fourth quarter, Fitzgerald looked at prices divided by consensus EPS estimates for calendar 2026. The S&P trades for a weighted 21.9 times projected 2026 EPS, based on estimates among analysts polled by FactSet.
The S&P 500 and its P/E ratio are weighted by market capitalization. This makes for concentrated portfolios for investors in funds that track the index. Here are the top 10 holdings (actually 11 stocks, with two common-share classes for Alphabet Inc. (GOOGL) (GOOG)) of the $671 billion SPDR S&P 500 ETF Trust SPY, which tracks the index by holding all of its stocks. Together they make up 40.6% of the portfolio.
Company Ticker Price/ consensus calendar 2026 EPS estimate Two-year estimated EPS CAGR through 2027 Weighting in SPY portfolio
Nvidia Corp. NVDA 40.5 28.6% 7.7%
Microsoft Corp. MSFT 35.3 16.9% 6.8%
Apple Inc. AAPL 31.5 8.8% 6.3%
Amazon.com Inc. AMZN 34.7 17.6% 3.9%
Broadcom Inc. AVGO 50.9 28.3% 3.0%
Meta Platforms Inc. META 27.1 10.2% 3.0%
Alphabet Inc. Class A GOOGL 25.3 10.6% 2.6%
Alphabet Inc. Class C GOOG 25.3 10.5% 2.1%
Tesla Inc. TSLA 236.0 42.8% 2.0%
Berkshire Hathaway Inc. Class B BRK.B 23.9 4.5% 1.6%
JPMorgan Chase & Co. JPM 15.6 5.6% 1.5%
Sources: FactSet, State Street
All of these stocks except for JPMorgan Chase (JPM) trade higher to projected calendar 2026 EPS than the full index does. Half trade at more than 30 times next year’s projected earnings per share.
The table includes compound annual growth rates from calendar 2025 through calendar 2027, based on consensus EPS estimates among analysts polled by FactSet. Half of SPY’s top 10 holdings have projected two-year EPS CAGR exceeding the 13.2% projection for the full S&P 500.
A broad stock screen
Fitzgerald’s analysis provided the basis for a screen of the entire S&P 500. Keeping in mind that the index trades close to a weighted 22 times its consensus 2026 EPS estimate, we narrowed the index to 46 companies trading at P/E of 11.0 or less on the same basis. The data set was slightly different from the one used by Fitzgerald, which explained why our initial list included 46 stocks against his 47.
Among the 46 stocks in the S&P 500 trading at or below 11.0 times consensus calendar 2026 EPS estimates, these 10 are projected to increase earnings per share at compound annual growth rates exceeding the full index’s projected EPS CAGR of 13.2%:
Company Ticker Price/ consensus calendar 2026 EPS estimate Two-year estimated EPS CAGR through 2027 2025 return through Sept. 15
Everest Group Ltd. EG 7.2 19.9% -5%
Coterra Energy Inc. CTRA 9.7 18.8% -3%
Ford Motor Co. F 9.9 18.8% 25%
United Airlines Holdings Inc. UAL 10.1 18.3% 8%
Delta Air Lines Inc. DAL 10.1 18.0% -3%
Devon Energy Corp. DVN 8.4 16.7% 5%
Eastman Chemical Co. EMN 11.0 16.7% -26%
Charter Communications Inc. Class A CHTR 7.1 15.9% -24%
Global Payments Inc. GPN 6.9 14.3% -24%
MetLife Inc. MET 9.3 14.0% 0%
Source: FactSet
Both United and Delta made the list. Ford (F) was the only company passing the screen that had outperformed the S&P 500’s 2025 total return of 13.5% through Monday.
As always, you should keep in mind the limitations of a stock screen. If you are considering any of the stocks listed here for investment, you should do your own research and form your own opinion about the company’s prospects for remaining competitive over the next decade.
One way to begin your research is by clicking on the tickers.
Read: Tomi Kilgore’s detailed guide to the information available on the MarketWatch quote page
Don’t miss: Oracle is part of an elite club that tops the S&P 500 for huge jumps in sales estimates
-Philip van Doorn
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09-20-25 1018ET
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