SAIC, Inc. (SAI), Wells Fargo & Co (WFC): Three Cheap Stocks You Can Buy Now

Still, as one of the biggest banks in the world Wells Fargo & Co (NYSE:WFC) still looks cheap. The firm trades at a trailing-12 month P/E of 12 compared to the sector average of 14 and produces a return on equity of 13.6% compared to the sector average of 11.7%. Moreover, Buffett is a fan so the company definitely has the long-term investing seal of approval.

A play on the oil market

Lastly, National-Oilwell Varco, Inc. (NYSE:NOV) is a great company, and according to earnings yield, it’s trading at a great price. National-Oilwell Varco, Inc. (NYSE:NOV) controls about 60% of the global market for oil-services equipment and still, the company trades at a discount to sector peers. Indeed, compared to smaller peers Cameron International and Baker Hughes, the company is undervalued on a trailing-12 month P/E basis of around 40%! Moreover, National-Oilwell Varco, Inc. (NYSE:NOV) trades with an earnings yield of 7.5%, signifying that it is undervalued when compared to the wider market as well.

With 60% of the oil-services equipment market under its belt, National-Oilwell Varco, Inc. (NYSE:NOV) is well placed for future growth. In particular, with oil becoming increasingly hard to find, explorers are having to use much more specialized equipment, which benefits National-Oilwell Varco, Inc. (NYSE:NOV) as the company can use its size and experience to undercut its peers.

National-Oilwell Varco, Inc. (NYSE:NOV) has a PEG ratio of 0.9, indicating that the stock has growth at a reasonable price while debt remains low at only 20% of equity.

Foolish summary

Overall, earnings yield is a good method of comparing the market valuation to that of the risk-free Treasury. Earnings yield is also a good method of evaluating stocks on an individual method and the three stocks above are testament to that.

Indeed, both National Oilwell and Wells are both market leaders in their fields, but they still appear to be undervalued even though they are both more efficient and generating a better return on capital.

The key to successful long-term investing is to buy and hold good companies at great prices, and right now, both National Oilwell and Well Fargo look very attractive.

The article Three Cheap Stocks You Can Buy Now originally appeared on Fool.com and is written by Rupert Hargreaves.

Fool contributor Rupert Hargreaves owns shares of National Oilwell Varco. The Motley Fool recommends National Oilwell Varco and Wells Fargo. The Motley Fool owns shares of National Oilwell Varco and Wells Fargo. Rupert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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