In today's market environment, all three of the major indexes have either set or come close to reaching record highs. While that points to bullish conditions for shareholders, it also increases the odds that the market has become pricey, presumably leaving investors with few options to find cheap stocks.
Fortunately for bargain hunters, one can still find stocks trading at reasonable valuations. Such conditions are a great way to put $1,000 (or more) to work. Knowing that, they might want to take these two stocks into consideration.
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Target
Target's (TGT 1.98%) nearly 2,000 stores in the U.S. mean that more than 75% of the U.S. population is within 10 miles of one of its locations. Since few other retailers exceed that reach, that offers its shareholders a notable competitive advantage.
Unfortunately, recent conditions might prompt investors to question whether that is the case. Ongoing supply chain issues, a sluggish economy, and political stances have led to negative sales growth in recent quarters. Moreover, Target announced chief operating officer Brian Fiddelke would become CEO in February, and investors, who likely hoped an outsider would take over, did not react well to the news.
Consequently, Target's stock price has dropped steadily since late 2021, and it trades at an approximate 65% discount to its all-time high from 2021.
Nonetheless, despite the uncertainty, its brand and reach within the U.S. position it well for a recovery. Given the company's aforementioned footprint and online sales infrastructure, it rivals every retailer except for arguably Walmart in omnichannel sales.
Furthermore, investors have other noteworthy reasons to take a chance on the stock. One is its dividend. The 54 consecutive years of payout hikes make Target a Dividend King. Additionally, at $4.56 per share annually, it offers a dividend yield of 4.8%, far above the 1.2% average of the S&P 500.
Furthermore, its valuation should account for the challenges faced by the stock. Its trailing P/E ratio is around 10, far below its archrival Walmart at 43 times earnings and warehouse retailer Costco, which recently sold at a 56 P/E.
Admittedly, investors may have to exercise some patience with Target, but with its high dividend, low valuation, and potential for recovery, the stock could drive high returns for bargain hunters and income investors.
Nu Holdings
Although it was formerly owned by Warren Buffett's Berkshire Hathaway, NuBank parent Nu Holdings (NU 1.98%) is not well known among U.S. investors.
It is the largest digital bank outside of Asia, and it operates in Brazil, Mexico, and Colombia. Also, Brazil accounts for the majority of its customers, and that country faces considerable economic and political turmoil.
That may partially explain why its past stock performance has not matched the company's growth, and the above factors could have prompted Berkshire to sell the stock.
Moreover, to understand Nu's value proposition, one has to understand Latin American fintech, which is substantially different from that in the U.S. Latin America remains a largely cash-based society. Even though Nu and other companies have spearheaded fintech in the region, a significant portion of the Latin American population lacks a bank account or credit card.
Nu has worked to change that, issuing the first credit card to nearly 21 million Brazilians, the country that accounts for most of Nu's customers.
In total, about 123 million people hold at least one Nu account, up from 105 million in the year-ago quarter. That includes an astounding 60% of Brazil's adult population. Also, it is growing rapidly in Mexico and Colombia, its newer markets. Around 13% of adult Mexicans and 9% of Colombian adults are NuBank customers.
Additionally, its net income in the first half of 2025 grew 38% yearly. With a P/E ratio of 30, its valuation does not appear to fully reflect that growth.
Indeed, Latin America's challenges, along with the challenges in understanding the region's personal finance environment, may discourage U.S. investors from buying that stock. However, the rapid customer growth and the potential to bring more people into the financial system should make Nu Holdings stock a market-beater over time.
