With an S&P 500 bear market underway, there are plenty of "discounted" stocks to be found. President Donald Trump's tariff strategy could cause inflation to surge, and many experts see the chances of a U.S. recession in 2025 as much higher than they were a few months ago. The general uncertainty of the situation has caused the sharpest market downturn since the 2008 financial crisis.
However, there are some excellent businesses that were already trading at attractive valuations before 2025's downturn. Here are three in particular that look ridiculously cheap and could be excellent opportunities to buy now.
A tariff victim and cyclical business with a bright future
General Motors (GM +0.65%) is down by more than 23% from its 52-week high, and with Trump's moves to impose new auto tariffs, it's not hard to understand why. GM makes many of its vehicles in the United States, but it also has production facilities in Canada and Mexico.
NYSE: GM
Key Data Points
However, the recent sell-off appears to be an overreaction. GM's fourth-quarter earnings were strong, and the company issued 2025 guidance that was better than many expected. Revenue grew by 11% year over year in Q4, and sales have been strong even as the automaker has been offering significantly fewer incentives than its peers. Plus, GM's EV strategy is progressing nicely -- the company now has the highest U.S. EV sales of any automaker besides Tesla.
It's also worth noting that GM announced a new $6 billion stock buyback authorization at the time of its Q4 report. It can now use those funds to buy back its shares at a better discount. And speaking of discounts, consider the incredible fact that tariffs and a recession could literally cut General Motors' 2025 EPS in half (compared to the company's guidance), and the stock would still be trading for less than 8 times forward earnings.
A turnaround story that is off to a promising start
PayPal (PYPL +1.16%) hired an all-new management team in late 2023 to help return it to growth and maximize profitability. CEO Alex Chriss started by focusing on the latter goal, and as a result, the stock rallied by more than 45% in the second half of 2024. However, in this year's market downturn, PayPal has given back nearly all of those gains.
However, the stock could be an absolute bargain for long-term investors if management continues to execute on its strategy. Not only does PayPal trade for about 13 times forward earnings, but management has been aggressively rolling out growth initiatives that aren't reflected in the numbers yet and believes that it can achieve consistent double-digit percentage earnings growth rates in the not-too-distant future. In the meantime, PayPal is spending virtually all of its $6 billion in annual free cash flow on buybacks to take advantage of its low valuation.
Iconic assets and strong demand
Ryman Hospitality Properties (RHP +1.78%) was one of the best-performing real estate investment trusts, or REITs, of the past few years thanks to a surge in group travel demand in the post-pandemic era. Ryman owns several large-scale hotels that focus on conferences, conventions, and other large events. The company also owns entertainment assets, including performance venues and the country-music-themed Ole Red dining and entertainment venue chain.
In Ryman's latest earnings report, management reported disappointing holiday-season demand. But from a long-term perspective, demand for group events isn't going away, and Ryman is investing heavily to improve its portfolio. With shares about 27% below their recent high, and with an excellent 5.4% dividend yield, now would be an excellent time for long-term investors to take a closer look at Ryman.
Buy for the long term
I have absolutely no idea what these stocks will do in the coming weeks or years. If the trade war intensifies, economic data erodes, or inflation spikes (or all three), it's entirely possible (and likely) that these stocks will fall even further.
Having said that, if you're focused on achieving strong investment returns over periods of years or even decades, these three great businesses could produce excellent performance in your portfolio if you buy now and hold for the long haul.
