In this article, we will take a detailed look at 10 Undervalued Stocks to Invest in According to Goldman Sachs.
Sell-side analysts identify undervalued stocks by conducting thorough fundamental analysis and examining financial metrics like revenue, earnings, debt levels, and growth potential. They use valuation techniques such as complex DCF models or P/E ratios to compare a company’s performance against industry peers to spot discrepancies between stock price and intrinsic value. Goldman Sachs, known for its reputation and expertise, leverages advanced proprietary data models and quantitative methods to refine its recommendations, helping institutional investors identify high-potential stocks early before their mispricing gains broader market attention. Another important competitive advantage of GS is their large scale and vast team of analysts, which allow them to cover a wide range of companies in a timely manner.
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Unlike other major banks, Goldman Sachs is also known for its highly skilled macro research team, which is known for occasionally making bold, out-of-consensus predictions regarding the broad market. One relatively recent example is an October 2024 paper in which the Goldman Sachs team expressed a rather pessimistic and significantly out-of-consensus view that the US stock market will likely deliver mediocre returns in the next 10 years, driven by high valuations and elevated market concentration. More precisely, Goldman Sachs estimated that the main US stock market index will only deliver a nominal annualized return of 3% during the subsequent 10 years, significantly below the 13% during the previous decade. Here’s a snippet of the report that sheds light on the causes of such potentially low future returns:
“Market concentration is particularly important today because the US equity market is currently near its highest level of concentration in 100 years. The intuition for why concentration matters for long-term returns relates to growth in addition to valuation. Our historical analyses show that it is extremely difficult for any firm to maintain high levels of sales growth and profit margins over sustained periods of time. The same issue plagues a highly concentrated index. As sales growth and profitability for the largest stocks in an index decelerate, earnings growth and therefore returns for the overall index will also decelerate. The current extremely high level of market concentration is one of the main drags on our return forecast. If our model were to exclude this variable, our baseline return forecast would be roughly 4 pp higher (7% rather than 3%)”
While the aforementioned findings are bad news for passive investors who are long the entire US equity market through ETFs and other broad market instruments, Goldman Sachs claims that peak market concentrations have historically been followed by prolonged periods of declining concentration. This trend has materialized through the equal-weight index—dominated by small caps—outperforming the value-weight index, which is largely driven by large caps. In other words, the key takeaway for investors is that pockets of outperformance will always exist, and hidden opportunities should be observed with smaller caps and underfollowed names. The Goldman Sachs team of analysts covers a wide array of stocks and regularly issues reports with ‘Buy’ ratings that could potentially uncover undervalued stocks to invest in. Their deep research and industry expertise provide valuable insights that allow investors to take advantage of market inefficiencies.
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Our Methodology
To compile our list of 10 undervalued stocks we analyzed recent stock reports issued by Goldman Sachs analysts with a “Buy” rating. For each stock, we included the forward P/E ratio and ranked the companies from most expensive to least expensive. We also include the number of hedge funds that own each stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Mondelez International, Inc. (NASDAQ:MDLZ)
Forward P/E ratio: 19.78
Number of Hedge Fund Holders: 55
Mondelez International, Inc. (NASDAQ:MDLZ) is a global snack and confectionery company that manufactures and markets biscuits, chocolate, gum, candy, and powdered beverages. Its portfolio includes well-known brands such as Oreo, Chips Ahoy!, Cadbury, Milka, Toblerone, Trident, and Halls. The company operates in over 150 countries, with key markets in North America, Europe, Latin America, and Asia-Pacific. MDLZ uses a combination of owned manufacturing facilities and third-party suppliers to produce its products, distributing them through retail chains, e-commerce, and direct-store delivery systems. It leverages strong brand equity, innovation, and marketing to drive sales, while its supply chain strategy includes cost efficiencies and sustainability initiatives.
Mondelez International, Inc. (NASDAQ:MDLZ) delivered strong performance in 2024 with organic net revenue growth of 4.3% and adjusted gross profit dollar growth of 5.1%, despite record cocoa inflation costs. The company maintains leadership positions across key categories: #1 globally in biscuits with a 17.4% market share, #2 in chocolate with a 12% share, and #3 in cakes and pastries with a 3.8% share. The company’s geographic footprint represents a significant competitive advantage, with 39% of 2024 revenues coming from high-growth emerging markets growing at a 12% CAGR over five years. To address the current cocoa cost challenges, MDLZ has implemented a robust strategy including revenue growth management, enhanced marketing and sales activities, promoting agility in local business units, delivering cost savings, and improving supply chain resilience.
Mondelez International, Inc. (NASDAQ:MDLZ) is also expanding significantly in the cakes and pastries category, which is valued at $97 billion and growing at a high single-digit CAGR. MDLZ maintains its long-term growth algorithm targeting 3-5% organic net revenue growth, high single-digit adjusted EPS growth, and more than $3 billion in free cash flow. The company has demonstrated its commitment to shareholders by returning approximately $13 billion over the past 5 years while reducing the share count by 15%, with a new $9 billion share repurchase plan recently approved. With a forward P/E ratio of 19.78, MDLZ is one of Goldman Sachs’s undervalued stocks.
9. Corteva, Inc. (NYSE:CTVA)
Forward P/E ratio: 17.94
Number of Hedge Fund Holders: 45
Corteva, Inc. (NYSE:CTVA) is an agricultural company specializing in seed and crop protection solutions. It develops and sells genetically modified and hybrid seeds under brands like Pioneer and Brevant, along with herbicides, insecticides, and fungicides for farmers worldwide. The company operates in key agricultural markets across North America, Latin America, Europe, and Asia-Pacific, serving row crop and specialty crop growers. CTVA integrates biotechnology, digital agriculture, and research-driven innovations to enhance crop yields and sustainability. It maintains a global supply chain with in-house production and strategic partnerships, focusing on productivity, regulatory compliance, and environmental stewardship.
Corteva, Inc. (NYSE:CTVA)’s outlook for 2025 is showing positive momentum with record crop demand expected to continue and tight inventories, particularly in corn which is at its tightest level in a decade. The company has guided for EBITDA of $3.7 billion at midpoint, representing a 10% increase over 2024, with EBITDA margins projected to grow between 100-150 basis points. CTVA has also made significant progress in reducing royalty expenses, bringing down the net royalty expense from $800 million in 2019 to approximately $200 million currently, with a goal to achieve royalty neutrality by 2028. In the biologicals segment, CTVA has strengthened its position through strategic acquisitions and is expanding its presence in the US market through both direct and licensing channels.
Corteva, Inc. (NYSE:CTVA) maintains a strong balance sheet with robust cash flow generation, having returned $1 billion in buybacks last year and committed to another $1 billion in buybacks for the coming year. Looking ahead, management sees significant opportunities in gene editing technology, which they believe will be transformational for agriculture, potentially enabling yield advantages, healthier food, and more sustainable production. The company is also positioning itself to capitalize on the emerging biofuels opportunity, which could potentially be larger than the ethanol market from 25 years ago. With a forward P/E ratio of 17.94, CTVA is one of Goldman Sachs’s undervalued stocks.
8. Hubbell Incorporated (NYSE:HUBB)
Forward P/E ratio: 17.91
Number of Hedge Fund Holders: 38
Hubbell Incorporated (NYSE:HUBB) is a manufacturer of electrical and utility solutions for industrial, commercial, and residential applications. The company operates through two primary segments: Electrical Solutions, which provides wiring devices, lighting fixtures, enclosures, and controls for buildings and industrial systems, and Utility Solutions, which supplies electrical infrastructure products such as transformers, insulators, and grid automation systems to electric utilities. HUBB serves a wide range of markets, including construction, energy, transportation, and telecommunications, supporting critical infrastructure development and modernization. Its products enhance electrical safety, reliability, and efficiency across North America and select international markets.
The utility demand of Hubbell Incorporated (NYSE:HUBB) has shown positive momentum with book-to-bill going above 1 for the first time in approximately 7 quarters, indicating a significant trend reversal. While end demand remained strong with continued material installation, utilities had been satisfying their needs through inventory rather than new orders over the past 1.5 years. The destocking trend is expected to fade throughout 2025, with shipments aligning more closely with installation rates. In the electrical segment, demand has remained steady, particularly in light industrial applications, though commercial segments show modest performance. The company’s data center business operates in two distinct areas: balance-of-system products and modular solutions through PCX, with both segments projected to grow in the mid-teens for 2025.
Regarding pricing strategy, Hubbell Incorporated (NYSE:HUBB) has maintained strong pricing power, with distributors being supportive of price increases. The company’s financial model is generating increased cash flow, enabling expanded capital expenditure and creating opportunities for strategic acquisitions. Management anticipates having over $2 billion in disposable cash for investment over the next 3-4 years, aiming to add approximately 2.5-3 points to top-line growth through programmatic acquisitions. With a forward P/E ratio of 17.91, HUBB is one of Goldman Sachs’s undervalued stocks.
7. e.l.f. Beauty, Inc. (NYSE:ELF)
Forward P/E ratio: 17.84
Number of Hedge Fund Holders: 35
e.l.f. Beauty, Inc. (NYSE:ELF) is a cosmetics company that offers affordable, high-quality beauty products across various categories, including makeup, skincare, and tools. Known for its value-driven approach, ELF targets a broad consumer base with products that focus on innovation, clean ingredients, and sustainability. The company sells its products through multiple channels, including e-commerce, retail stores, and third-party distributors. ELF emphasizes inclusivity and a strong digital presence, using social media and influencer partnerships to engage with its customer base. Its business model is built around affordable pricing, efficient production, and a focus on expanding its product offerings to meet evolving beauty trends.
e.l.f. Beauty, Inc. (NYSE:ELF) has demonstrated remarkable growth with a 30% net sales CAGR over the last 6 years, projecting $1.3 billion in net sales for the current year. The company has achieved consistent growth, being one of only 6 out of 546 consumer public companies that have grown for 24 consecutive quarters, averaging at least 20% sales growth. In color cosmetics, ELF holds the first position by unit share and is the second dollar-share brand with clear leadership potential given its growth profile. The company has successfully diversified its business, with skincare now representing almost 20% of its business, and international operations also accounting for nearly 20%, up from 10% just a few years ago.
e.l.f. Beauty, Inc. (NYSE:ELF)’s international business has been growing at a 55% CAGR over the last 5 years, though penetration remains at only 18% compared to global peers at 70%, indicating significant growth potential. The company maintains strong financial health with net debt to adjusted EBITDA at less than 1x leverage, while continuing to reinvest in infrastructure, working capital, distribution capacity, and technology. Looking forward, management projects strong net sales growth between 27% to 28% and adjusted EBITDA growth between 23% to 25% for 2025, with opportunities to double their business through expansion in cosmetics, skincare, and international markets. With a forward P/E ratio of 17.84, ELF is one of Goldman Sachs’s undervalued stocks.
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Forward P/E ratio: 16.81
Number of Hedge Fund Holders: 96
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor company that designs and develops high-performance computing, graphics, and embedded processor solutions for consumer, enterprise, and data center applications. The company operates through segments including Computing and Graphics, which provides CPUs and GPUs for personal computers and gaming, and Enterprise, Embedded, and Semi-Custom, which supplies processors for servers, data centers, automotive, and custom solutions for gaming consoles. AMD competes with other semiconductor manufacturers in markets such as AI, cloud computing, gaming, and high-performance computing, leveraging advanced chip architectures and leading-edge manufacturing partnerships to drive innovation. The California-based company ranked four on our recent list of 10 Best Semiconductor Stocks to Buy for the AI Boom.
Advanced Micro Devices, Inc. (NASDAQ:AMD) achieved a transformative year in 2024, successfully ramping up MI300 production and exceeding $5 billion in revenue from a standing start. The company’s MI300 and ROCm software are now powering sophisticated AI models at major companies like Microsoft and Meta. AMD has demonstrated strong product roadmap execution with plans for MI350 this year and MI400 next year while making significant progress in software capabilities.
Advanced Micro Devices, Inc. (NASDAQ:AMD) sees a substantial market opportunity of approximately $500 billion and believes it can achieve tens of billions in annual revenue in this market. In the server business, AMD gained 5-6 points of server market share in the previous year and maintains confidence about further share gains in 2025. The client business has shown impressive performance with 58% year-on-year growth in the last quarter, driven by a strong product portfolio across desktop and notebook segments. The company maintains a disciplined approach to investment and innovation, focusing on leveraging its CPU platform, GPU platform, and software platform while expanding revenue faster than operating expense growth. With a forward P/E ratio of 16.81, AMD is one of Goldman Sachs’s undervalued stocks.
5. Pinterest, Inc. (NYSE:PINS)
Forward P/E ratio: 14.18
Number of Hedge Fund Holders: 73
Pinterest, Inc. (NYSE:PINS) is a visual discovery and social media platform that enables users to discover, save, and share ideas through images and videos. It operates a digital platform where users can explore topics such as home decor, fashion, recipes, and DIY projects by “pinning” content to virtual boards. PINS generates revenue primarily through advertising, offering businesses the ability to promote their products via targeted ads based on user interests and search behavior. The platform serves a diverse global user base, with a strong focus on e-commerce integration, enabling users to shop directly from pins. PINS continues to expand its features with tools for creators, businesses, and advertisers to enhance engagement and monetization.
Pinterest, Inc. (NYSE:PINS) has achieved record highs in Monthly Active Users (MAUs) and demonstrated strong engagement metrics, with weekly active to monthly active ratios reaching all-time highs. The platform has successfully transformed into a shopping destination, more than doubling its revenue growth rate in 2024 and showing deepening user engagement even with record new user growth. The company has integrated AI deeply into every aspect of the platform, leveraging unique curation behavior and shopping signals to enhance personalization. PINS reported significant improvements in ad performance, with 90% growth in clicks to advertisers in Q4, building on 100% growth from the previous year. Gen Z has emerged as the platform’s largest and fastest-growing demographic, comprising 40% of users, with 66% of weekly Gen Z users considering the Pinterest platform as their first destination for shopping.
Pinterest, Inc. (NYSE:PINS) has also demonstrated strong financial performance, generating over $1 billion in adjusted EBITDA with a 90%-plus free cash flow conversion rate, while simultaneously expanding margins and investing in AI capabilities. The company’s AI investments have yielded significant results, including a 10 percentage point lift in recommendation relevancy, doubled relevancy in search ads over two years, and a 30-fold increase in context window leading to improved user engagement. The platform maintains a strong international growth potential, with approximately 80% of users outside U-CAN but only representing 20% of revenue, indicating significant monetization opportunities. With a forward P/E ratio of 14.18, PINS is one of Goldman Sachs’s undervalued stocks.
4. The Mosaic Company (NYSE:MOS)
Forward P/E ratio: 12.52
Number of Hedge Fund Holders: 41
The Mosaic Company (NYSE:MOS) is a leading producer and marketer of concentrated phosphate and potash crop nutrients, essential for global agriculture. It operates mining, production, and distribution facilities in North America and South America, supplying fertilizers to farmers, cooperatives, and industrial customers worldwide. MOS’s key products include phosphate-based fertilizers like diammonium phosphate (DAP) and monoammonium phosphate (MAP), as well as potash fertilizers used to enhance soil fertility. The company leverages vertically integrated operations, global logistics, and strategic partnerships to optimize production and distribution. It also invests in sustainability initiatives, including water conservation, energy efficiency, and responsible mining practices.
The Mosaic Company (NYSE:MOS) reported Q4 2024 net income of $169 million and adjusted EBITDA of $594 million, with strong phosphate prices and stripping margins, solid potash performance, and excellent underlying business performance in Brazil. The company expects constructive agricultural and fertilizer market fundamentals in 2025, supported by strong global corn demand and rising crop prices. In operational progress, the Esterhazy complex continues to generate strong cash flow, while Belle Plaine delivered record production in 2024. The company is expanding capacity through projects including a 500,000-tonne compaction capacity increase and a Hydrofloat project adding 400,000 tonnes annually. In the phosphate segment, supply remains tight and demand strong, with prices and stripping margins significantly above historic levels.
The Mosaic Company (NYSE:MOS) has secured long-term ammonia supply through three contracts, ensuring reliable supply at competitive rates. The Brazil business demonstrates strong underlying performance despite market headwinds, with distribution margins at the high end of the annual normalized range. Strategic progress includes the pending sale of the Patos de Minas site and the Ma’aden transaction, which provided a transparent value of about $1.5 billion and a $522 million gain. The company’s cost reduction initiatives are showing good progress, with expectations to reach the $150 million target. Looking ahead, management expects phosphate production volumes to improve throughout the year, reaching 7.2 million to 7.6 million tonnes for the year. With a forward P/E ratio of 12.52, MOS is one of Goldman Sachs’s undervalued stocks.
3. Block, Inc. (NYSE:XYZ)
Forward P/E ratio: 11.15
Number of Hedge Fund Holders: 81
Block, Inc. (NYSE:XYZ) is a financial technology company that provides digital payment, banking, and commerce solutions for businesses and consumers. The company operates through key segments, including Square, which offers point-of-sale and financial services for merchants, and Cash App, a peer-to-peer payment platform with banking and investing features. XYZ also owns Tidal, a music streaming service, and TBD, an open developer platform focused on decentralized financial solutions. The company serves small businesses, enterprises, and individual consumers, leveraging technology to enhance digital transactions, financial accessibility, and cryptocurrency integration. XYZ ranked fourth on our recent list of 10 Best Growth Stocks Under $100 to Buy Now.
Block, Inc. (NYSE:XYZ) experienced substantial growth in 2024, generating $8.89 billion in gross profit – an 18% increase from the previous year. Both Square and Cash App contributed to this expansion, with Square’s revenue rising by 15% and Cash App’s by 21%. Customer engagement remained strong, as gross profit retention for both platforms exceeded 100%. The company’s Gross Payment Volume (GPV) maintained upward momentum, increasing 10% year over year in the fourth quarter, with US growth accelerating by 200 basis points to 6.9%. Meanwhile, Cash App’s active paycheck deposit users reached 2.5 million in December, reflecting a 25% annual increase. Operational efficiencies significantly boosted profitability, with Adjusted EBITDA surging 69% to $3.03 billion and Adjusted Operating Income climbing over 4.5x year over year to $1.61 billion.
Looking ahead to 2025, Block, Inc. (NYSE:XYZ) projects at least 15% gross profit growth, targeting a minimum of $10.22 billion. The company plans to enhance Cash App’s functionality by expanding Cash App Borrow, integrating Afterpay with the Cash App Card, and ramping up marketing efforts. XYZ is expected to see continued GPV and gross profit improvements, driven by customer retention and acquisition initiatives. The company remains committed to disciplined expansion while controlling costs, keeping its workforce under 12,000 employees. Profitability remains a priority, with the company aiming for $2.1 billion in Adjusted Operating Income, equating to an approximately 21% margin. With a forward P/E ratio of 11.15, XYZ is one of Goldman Sachs’s undervalued stocks.
2. Builders FirstSource, Inc. (NYSE:BLDR)
Forward P/E ratio: 11.14
Number of Hedge Fund Holders: 59
Builders FirstSource, Inc. (NYSE:BLDR) is a leading supplier of building materials, prefabricated components, and construction services for residential and commercial markets in the United States. The company offers a broad portfolio of products, including lumber, engineered wood, windows, doors, roofing, siding, insulation, and structural components such as roof and floor trusses. It also provides digital solutions, design software, and off-site manufacturing services to enhance efficiency in homebuilding and remodeling projects.
Builders FirstSource, Inc. (NYSE:BLDR) demonstrated resilience in Q4 and full year 2024, maintaining strong performance despite market challenges, achieving a mid-teens adjusted EBITDA margin and nearly 33% gross margin. The company invested over $75 million in value-added facilities, including opening 2 new truss manufacturing facilities, upgrading 19 truss facilities, and enhancing 13 millwork locations. Digital platform adoption showed progress with $134 million in incremental sales in 2024, with expectations of approximately $200 million in incremental sales for 2025. The company completed 13 acquisitions in 2024 with aggregate prior-year sales of roughly $420 million, demonstrating continued strategic expansion.
For 2025, Builders FirstSource, Inc. (NYSE:BLDR) projects net sales between $16.5 billion to $17.5 billion, with adjusted EBITDA expected between $1.9 billion to $2.3 billion, and adjusted EBITDA margin forecasted in the range of 11.5% to 13%. The company faces some headwinds, including continued weakness in multifamily construction and affordability challenges in single-family housing, but maintains a strong position with over 90% on-time and in-full delivery rates. The company’s fortress balance sheet and robust free cash flow generation, delivering $1.5 billion in free cash flow for 2024, positions it well for future growth opportunities. With a forward P/E ratio of 11.14, BLDR is one of Goldman Sachs’ undervalued stocks.
1. Oshkosh Corporation (NYSE:OSK)
Forward P/E ratio: 7.60
Number of Hedge Fund Holders: 38
Oshkosh Corporation (NYSE:OSK) is a manufacturer of specialty vehicles and equipment serving defense, fire and emergency, commercial, and construction markets. The company operates through segments including Defense, which supplies tactical vehicles to the US military; Fire & Emergency, which produces fire trucks and rescue vehicles; Commercial, which manufactures concrete mixers and refuse collection trucks; and Access Equipment, which provides aerial work platforms and telehandlers under the JLG brand.
Oshkosh Corporation (NYSE:OSK) is a global company with nearly $11 billion in revenue and approximately 18,000 employees, with 80% of its operations concentrated in North America. The company serves multiple end markets with a focus on delivering productivity and safety solutions through technological advancements in autonomous functionality, analytics, Software as a Service model, and electrification. In the Access segment, despite facing a 15% revenue decline in 2025 due to private nonresidential construction slowdown and changes in the Cat telehandler contract, the company maintains its market leadership position and is expanding into new markets like agriculture.
The Vocational segment shows strong performance with stable markets, robust orders, and backlogs, particularly in municipal fire trucks where backlog extends to 2027-2028 with solid double-digit pricing. The Defense segment is transitioning from JLTV production to NGDV (postal vehicle) production, with postal revenue expected to exceed JLTV losses as production ramps up to full capacity of 16,000-20,000 units annually by the fourth quarter. The company demonstrated its technological capabilities at the CES show, showcasing futuristic autonomous vehicles and solutions for fire trucks, refuse collection, last-mile delivery, and airport operations, which confirms the strong market position and opportunities ahead.
Overall Oshkosh Corporation (NYSE:OSK) ranks 1st on our list of the 10 undervalued stocks to invest in according to Goldman Sachs. While we acknowledge the potential of OSK as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OSK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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