The S&P 500 dipped into bear market territory earlier this week, down more than 20% from its early January peak. The broader market drop has brought down the valuations of some individual good stocks in numerous sectors and industries.

I've had my eye on two stocks that have been on sale for quite a while now and were trading lower even before the market began to tank in November. For whatever reasons, investors have undervalued them despite their strong performances. Should investors take a chance on these two sale-priced stocks? Let's take a closer look.

1. The case for Goldman Sachs

Goldman Sachs (GS 0.22%) is currently trading at about $290 per share, down about 24% year to date, and based on its fundamentals and outlook, that's a bargain valuation. 

The investment banking giant has a price-to-earnings (P/E) ratio of 5.6 and a forward P/E ratio of 7.7.

Further, consider its 5-year price/earnings-to-growth (PEG) ratio -- a metric that weighs the stock price relative to its expected earnings growth. At 0.2, that's another indicator of a cheap stock, as any PEG ratio under 1 is considered undervalued.

It's also trading at a price-to-book (P/B) ratio of 0.9 -- another sign that it's discounted, as a P/B of 1 indicates a stock trading at its actual value.

So why is Goldman Sachs a good buy at this low valuation? It is a market leader in two of its businesses, investment banking and global markets -- which is its institutional trading arm. While mergers and acquisitions activity has slowed considerably compared to last year, Goldman Sachs is still the leader in deals so far in 2022. And while equity trading has slowed, too, Goldman Sachs had a record quarter for fixed income trading. Also, it experienced strong growth in its consumer banking/wealth management businesses, which saw revenue increase 21% year over year. This offset losses in the asset management business, which suffered due to an overall decline in assets due to the falling stock market.

Even after its declines in this bear market, Goldman Sachs' market leadership and diversity of revenue sources have it trading at a price nearly twice as much as it was at the bottom of its early pandemic plunge in March 2020. Yet it's still cheap by these metrics, which makes this a good time to pick up shares of this blue-chip financial institution. 

2. The case for Citigroup

You certainly don't have to wait for a market crash to get Citigroup (C 1.41%) at a low valuation. The nation's third-largest bank by assets has been undervalued for several years now, due in part to the pandemic, but also due to its own issues related to risk management.

But Citigroup has been a relative outperformer compared to its megabank peers in 2022. It's only down about 20% year to date, and it remains extremely undervalued. It has a P/E ratio of 5.6 and a forward P/E of 7, with a PEG ratio of 0.4. Also, it has a P/B ratio of just 0.5. All of those metrics indicate a stock trading well below its value.

Renowned value stock investor Warren Buffett, chairman and CEO of Berkshire Hathaway, recognized that, as he added Citigroup to the conglomerate's portfolio in the first quarter. 

What Buffett likely saw was that Citi was trading at a deep discount due in large part to its own past mistakes, but that the bank has made some key changes. Those started with bringing in a new CEO, Jane Fraser, who has refocused its strategy on its strengths and exited businesses that have underperformed. It has also invested close to $1 billion to improve its internal controls.

While Citigroup's transformation won't happen overnight, it's a good buy at this valuation. And the current rising interest rate environment should benefit it by boosting its interest income, as long as inflation can be brought into check and the U.S. economy doesn't fall into a recession.

When the economy and markets do eventually turn around, these two undervalued stocks will be in a good position to grow.