With the holiday season right around the corner, investors are likely looking for bargains to close out the year on a high note. Now in the heart of earnings season, several companies are giving industry watchers insight into their financial performance and guidance for the year ahead. The surge of news has led to a lot of stock movements, making some companies, in particular, look ridiculously cheap.

We asked some of our contributors to identify some diamonds in the rough. They got their pickaxes and shovels and dug up FedEx (NYSE:FDX), Lockheed Martin (NYSE:LMT), and The Goodyear Tire & Rubber Company (NASDAQ:GT). Here's what makes these value stocks all great buys now.

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A recent sell-off provides a great opportunity to pick up an industry stalwart on the discount rack

Scott Levine (FedEx): Now that November is here, many of us are looking to pinch the pursestrings before the holiday buying season begins. With the S&P 500 consistently flirting with all-time highs, however, the options for scooping up quality stocks from the bargain bin may seem limited. But where there's a will, there's a way, and it seems that value-oriented investors have a great opportunity to add to their portfolios now with FedEx. While the S&P 500 has risen 11% over the past six months, shares of FedEx have headed in the other direction, plunging more than 18%.

Before allowing this logistics leader to occupy a place in their portfolios, investors surely want to know the cause for the stock's recent decline. Evidently, investors were disappointed with the company's fiscal first-quarter 2022 earnings report, sending the stock on a downward spiral that's extended for the past few weeks. Besides missing earnings estimates, FedEx scared investors with the acknowledgment that labor costs -- due in part to supply chain challenges -- are hurting the company's financials and will continue to do so in the near future; in fact, on the conference call, FedEx acknowledged that it was reducing its 2022 earnings-per-share (EPS) forecast.

Those focused on the company's long-term prospects, however, should be reassured with management's belief that growth opportunities remain. The company, for example, projects 10% annual growth rate of U.S. domestic market volume through 2026. And while its air cargo business is expected to be lower through the first half of 2022, the company expects a full recovery will arrive in 2024. For patient investors, the ability to grab an industry leader's stock at such a striking sale price is an opportunity that deserves a serious look.

As a leader in its industry, Lockheed Martin stock is simply too cheap

Daniel Foelber (Lockheed Martin): Shares of Lockheed Martin are hovering right around their year-to-date low. The defense industry is under pressure, and Lockheed Martin has been one of its worst performers as of late. Facing low growth, or even revenue declines in the years ahead, Lockheed Martin is in for a slog over the next few years.

FDX Chart

FDX data by YCharts

However, value investors and income investors can take advantage of all the negative news by buying Lockheed Martin on the cheap. The company has a track record for generating strong earnings and operating cash flow, a trend that should continue in the coming years. Even if Lockheed's growth grinds to a standstill, the company's valuation metrics are too cheap to ignore. Lockheed Martin's price-to-sales (P/S) ratio, price-to-earnings (P/E) ratio, and price-to-free cash flow (P/FCF) ratio are all currently well below their 10-year median level. 

Metric

Current

10-Year Median

P/S ratio

1.37

1.61

P/E ratio

15.05

16.96

P/FCF ratio

17.77

18.36

Data source: YCharts. 

For investors with the patience to wait and those interested in the stock's 3.4% dividend yield, now is the time to buy and hold Lockheed for at least 30 years.

The tire industry is a lot less cyclical than you might think

Lee Samaha (Goodyear): The leading U.S. tire company will release its third-quarter earnings on Friday, Nov. 5. In common with much of the industrial sector, it's likely to be replete with commentary on rising raw material costs and supply chain difficulties.

Moreover, automotive production schedules have been scaled back in response to ongoing supply chain challenges, not least a shortage of semiconductors -- which suggests Goodyear might have some near-term disappointments in store for investors.

That said, investors shouldn't lose sight of the bigger picture here. The investment case for Goodyear stock is based on the idea that the company's consolidation play in buying Cooper Tires will work. In addition, the tire market is overwhelmingly a replacement market (around 80% of Goodyear's tire sales go to the replacement market).

In common with other automotive suppliers, it's not as dependent on automotive production as you might think. But, in any case, auto production will surely boost as the supply chain issues get worked through in 2022.

According to management's figures, the addition of Cooper Tires will boost margin due to Cooper having a higher margin than Goodyear. In addition, the margin should increase due to cost savings generated by combining costs and building scale. Using 2019 figures for both companies, the new Goodyear would have generated $525 million in FCF in 2019. That's a lot of cash flow for a company with a $5.66 billion market cap.

Throw in the prospects of low-single-digit revenue growth and margin expansion over the long term, and Goodyear is an excellent value investment option.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.