It may seem like a tough time to buy stocks, as tariffs, trade wars, military conflicts, and other macro headwinds rattle the markets. But during these uncertain times, we should always recall Warren Buffett's timeless advice of being "greedy only when others are fearful."
Instead of chasing the market's highest-growth stocks, investors should focus on the less exciting value plays that are trading at absurdly low valuations. Three of those underappreciated stocks -- Kroger (KR -0.14%), Kraft Heinz (KHC -0.08%), and Lyft (LYFT -0.53%) -- might just be great plays for long-term investors who can tune out all the near-term noise. So, even if you have only $500 to invest, these stocks might be great places to park your cash.
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Kroger
Kroger is the biggest supermarket operator in America, with approximately 2,905 stores. In addition to its namesake stores, it owns other banners, including Fred Meyer, Ralphs, Dillons, Fry's Food Stores, King Soopers, and Baker's. It nearly merged with Albertsons (NYSE: ACI) last year, but the $24.6 billion deal was eventually scuttled by antitrust regulators.
Kroger's growth is driven by its digital and loyalty programs, private label products, and the expansion of its smaller advertising and health services divisions. The company's scale helped it weather the pandemic, inflation, and other macro headwinds over the past few years. It's been diversifying its supply chains to offset the pressure from the higher tariffs.
Kroger notably launched a new $7.5 billion buyback program (including a $5 billion accelerated buyback) last December after its closely watched bid for Albertsons collapsed. That move, which should boost its near-term earnings per share (EPS), suggests its stock is still undervalued.
For 2025, Kroger expects its identical sales (excluding fuel) to rise 2% to 3% as its adjusted EPS increases 3% to 7%. Its stock still looks like a bargain at 14 times forward earnings, and it pays a decent forward dividend yield of nearly 2%. That makes it a safe evergreen play for long-term investors to accumulate in either bull or bear markets.
Kraft Heinz
Kraft Heinz, which was created from the merger of Kraft and Heinz in 2015, is one of the world's biggest packaged food companies. In addition to its two namesake brands, it owns other well-known brands like Oscar Mayer, Ore-Ida, Philadelphia, Classico, Velveeta, Grey Poupon, Maxwell House, and Kool-Aid. Back in 2019, it disappointed a lot of investors as it took a $15 billion writedown on its top brands, slashed its dividend, and dealt with a Securities and Exchange Commission (SEC) probe into its accounting practices.
But under Miguel Patricio, who took over as its CEO that year, it recovered by divesting its weaker brands, acquiring higher-growth brands, refreshing its classic brands, and streamlining its spending. Patricio's successor, Carlos Abrams-Rivera, stuck with those strategies while hiking prices to counter inflation and developing healthier products.
Kraft expects its organic sales and adjusted EPS to decline this year as it grapples with inflation, competition from healthier and private label brands, and the weakness of some of its older brands (like Kraft Mac & Cheese). However, analysts still expect it to grow again in 2026 as inflation cools off and it refreshes its portfolio. Its stock trades at just 10 times forward earnings, and it pays a hefty forward yield of 6.1%. That low valuation and high yield should limit its downside potential as it turns its massive business around.
Lyft
Lyft is the second-largest ride-hailing company in the U.S. and Canada. It suffered a severe slowdown during the pandemic, but its business gradually stabilized under David Risher, who succeeded its co-founder, Logan Green, as its CEO in 2023.
Under Risher, Lyft focused on improving its customer experiences, offering more competitive prices, and increasing its driver availability. It also expanded its ecosystem with new features, including its Lyft Pass service for businesses, relaunched Lyft Pink membership program, Price Lock subscriptions for set prices, and Lyft Media platform for in-app and in-car ads.
In the first quarter of 2025, its active riders grew 11% year over year to 24.2 million, and its total rides rose 16% to 218.4 million. For the full year, analysts expect the company's revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to rise 12% and 34%, respectively, as its stabilization continues.
With an enterprise value of $5.0 billion, Lyft's stock is valued at just 0.8 times this year's sales. Its larger rival Uber trades at 3.4 times this year's sales. Therefore, Lyft looks undervalued relative to its growth potential -- and I believe it could head a lot higher over the next few years.
