Best Deep Value Stocks to Buy in 2024

For those willing to take on more risk than usual, investing in deep value stocks could be a great way to increase your returns. Deep value stocks are cheap stocks with low valuation multiples. Cheap, in this case, means that the intrinsic value is much higher than the current price.

While there's some overlap between value stocks and deep value stocks, deep value investors don't focus as much on the quality of a company, but the price. They're also open to companies with glaring issues. In fact, those often make for the best deep value stocks, because the market has largely written them off.

Five top deep value stocks

Here are the top deep value stocks to check out:

Citigroup

With $2.4 trillion in assets under management, Citigroup is one of the largest U.S. banks. Since 2022, interest rate hikes and a shaky economy have lowered valuations of bank stocks, and Citi has been one of the hardest hit.

Citi's stock price fell by nearly 30% in 2022. While a decrease is understandable, in this case, the market overcorrected. With the lowest price-to-earnings ratio among the big banks, and the highest dividend yield at 4%, Citi is a fantastic bargain. In 2021, it started a multiyear transformation plan that includes

• Modernizing the bank
• Selling off nonperforming assets
• Investing more in its best-performing businesses.

Recession fears and inflation are already priced in, and if the economy has a soft landing, those could have a smaller impact than originally thought. Analysts are predicting solid earnings per share for Citi starting next year, and towards the end of 2024, it should see its expenses start to trend down.

General Motors

Automotive giant General Motors generated $156.7 billion in revenue in 2022. That was at the high end of its guidance range, and a 23.4% increase from 2021.

General Motors isn't considered the most exciting stock, especially compared to purely electric vehicle (EV) companies, like Tesla (TSLA -1.11%). But it's making headway of its own in this department, with plans to invest $35 billion in EVs and reach $90 billion in EV sales by 2030.

Another example of General Motors' forward-thinking approach is its 80% ownership stake in Cruise, an autonomous driving company. While autonomous vehicles are still a small industry at the moment, they have tremendous growth potential.

General Motors' had a low price to earnings of 5.49 in 2022. It also generated quite a bit of cash - - automotive adjusted free cash flow was $10.5 billion. While management projections for 2023 are $5.0 billion to $7.0 billion, that's still impressive compared to its market cap.

T. Rowe Price Group

T. Rowe Price Group is an investment management company with over $1.3 trillion in assets under management. As expected for this type of business, the bear market in 2022 had a significant impact. Revenue dropped by 15% to $6.5 billion, causing some investors to leave it behind.

Bear markets don't last forever, though. As the stock market recovers, T. Rowe Price is in a good position to reach new heights.

It has been around since 1937, so it's a well-known and well-regarded brand. T. Rowe Price has also demonstrated success in stock picking, with its mutual funds outperforming their benchmarks 76% of the time over the last decade.

Last but certainly not least, T. Rowe Price pays out a generous dividend. It has increased its annual dividend for 36 years in row, making it one of the more valuable dividend stocks you can find.

Medical Properties Trust

Medical Properties Trust is a real estate investment trust (REIT) that buys and rents out healthcare facilities. As a REIT, it pays out a hefty dividend to shareholders, and its growth is dependent on its ability to continue expanding by snapping up new properties.

This is considered one of the riskier healthcare REITs, as it has a high debt-to-equity ratio of almost 120%. There's concern about how much Medical Properties Trust will be able to grow, unless it takes on new debt at high interest rates. In addition, one of its tenants filed for bankruptcy, and others are reportedly dealing with financial issues.

Despite the bad press surrounding Medical Properties Trust, it's still profitable. While it may be tough going in the short term, this REIT offers long-term stability. Communities will continue to need hospitals and other healthcare facilities. Even if a property operator can't pay its bills, Medical Properties Trust could transition properties to new operators when necessary.

Celanese

Celanese manufactures materials and chemicals used in just about every industry you could name, including transportation, consumer goods, construction, and food and beverage. In 2022, it gained a prominent backer, when Warren Buffett spent over $1 billion to acquire 9% of Celanese's outstanding shares.

Buffett's investment strategy leans more toward value investing than deep value investing. His strategy, as he once put it, is to buy "a wonderful company at a fair price." But there are cases where the two philosophies overlap, and this is one of them.

Celanese is an industry leader trading at a cheap valuation, with price to earnings of 5.90 in 2022. That's lower than most of its competitors, and it doesn't have a large number of competitors due to high barriers of entry in chemical manufacturing.

This chemical company has done a good job of looking towards the future, which makes it a sound long-term pick. Management has invested in lower-cost production plans, and Celanese claims its Clear Lake plant is even the world's lowest-cost acetyl chain product plant.

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The bottom line

The key to building wealth is long-term investing, and deep value investing fits that approach well. After all, with this type of stock, you're looking past the short-term noise and evaluating a company based on its price compared to its intrinsic value.

It's important to be prepared for some volatility when following a deep value strategy. If you can do that, deep value stocks could be a boon to your investment portfolio.