Investors looking for "cheap" stocks may find today's market less accommodating. The S&P 500 average P/E ratio is above 31, and while that is not a record high, it has risen significantly from the 20 average at the low point of the 2022 bear market.
Fortunately, the elevated valuations do not mean that all stocks are expensive. Even with a budget of around $1,000, investors stand a good chance of driving market-beating returns in these two stocks.
Image source: Getty Images.
1. Uber Technologies
Rideshare leader Uber Technologies (UBER +1.48%) presents a unique opportunity for investors. The company leads the globe in the ridesharing industry that it has helped spearhead. Also, while DoorDash leads food delivery in the U.S., Uber's delivery segment alone drives more global revenue than DoorDash.
However, the opportunity (and the risk) appears to hinge on autonomous driving. Since Uber already has a rideshare platform, it is probably more cost-effective for autonomous driving companies to turn to Uber's platform rather than build one from scratch. This could send revenue soaring as more rides occur without a human driver.
Admittedly, that strategy comes with risks, namely that we do not know the degree to which autonomous driving will ultimately replace human drivers. Although the technology's backers hope autonomous driving will make the roads safer, time will tell to what degree it succeeds.
NYSE: UBER
Key Data Points
Nonetheless, that situation places Uber in a sweet spot as it is likely to succeed with or without self-driving cars. In the first nine months of 2025, its nearly $37.7 billion in revenues surged 18% higher compared to year-ago levels, and this happened with humans doing almost all of the driving.
Moreover, its $9.8 billion in net income in the first three quarters of 2025 rose from the $3 billion during the same period in 2024. Indeed, Uber got a one-time boost from a $4.3 billion income tax benefit. That skewed its P/E ratio down to 10.
Still, at a forward P/E ratio of 20, Uber stock is still far cheaper than the S&P 500 average. Also, at about $85.40 per share as of the time of this writing, investors can afford six shares for around $512, a nice starting investment in a company driving the future of driving.
2. AT&T
Admittedly, a recommendation of AT&T (T +0.99%) may sound strange given its recent history. While it is only one of three companies providing essential wireless and fiber communication services, it spends heavily to compete with Verizon Communications and T-Mobile US.
Furthermore, it overpaid for DirecTV and Warner Bros., eventually spinning off both entities at a massive loss. This forced AT&T to abandon a 35-year streak of dividend increases.
Today, the company has returned to a singular focus of offering communication services. To that end, it spent $5.75 billion to acquire Lumen's mass market fiber business. It also bought Echostar's wireless spectrum for $23 billion, giving AT&T the right to use some prime RF frequencies that will probably improve its service quality.
Investors may not feel comfortable with the fact that those purchases have taken its total debt to $139.5 billion, a high level considering AT&T's book value of $127 billion.
NYSE: T
Key Data Points
Nonetheless, the aforementioned dividend has remained steady since that time, paying $1.11 per share annually for a dividend yield of 4.7%. Also, even though the dividend costs about $6.2 billion in the first nine months of the year, AT&T's $12.4 billion in free cash flow should cover the cost of the payout.
Even with that benefit, investors should still remember that AT&T is a mature business. Hence, the fact that its $92 billion in revenue in the first nine months of 2025 grew by only 2% should not surprise investors. Also, cost-cutting efforts and one-time benefits boosted its net income attributable to shareholders for that period to $18.1 billion versus just $6.7 billion one year ago.
That profit surge temporarily reduced its P/E ratio to 7.7. Still, even though the forward P/E ratio is 11, it looks like an inexpensive stock. Consequently, at around $23 per share, investors can buy 21 shares of AT&T stock for about $483, an amount that will offer generous dividend returns and probably some stock price growth over the long term.
