Seagate Technology PLC (STX), Valero Energy Corporation (VLO): The Five Cheapest Stocks in the S&P 500

3. Valero Energy Corporation (NYSE:VLO), P/E of 7.4

Valero Energy Corporation (NYSE:VLO) is a major oil refiner and distributor based out of San Antonio, Texas. Beyond typical crude oil refining, Valero Energy Corporation (NYSE:VLO) also has a hand in biofuels and ethanol.

The company’s stock has almost doubled in the past year, yet it still trades for a cheap valuation. While Valero Energy Corporation (NYSE:VLO) can be at the whim of volatile commodity prices, management seems to think there are good times ahead. The company recently bought 1,600 new rail cars to transport close to 30,000 barrels bitumen per day, and it’s constructing a new refining facility in California.

If management is right, there could be a lot of upside to this oil stock.

2. Seagate Technology PLC (NASDAQ:STX), P/E of 6.5

To understand Seagate Technology PLC (NASDAQ:STX) and what it does, simply go back and read about Western Digital. These two companies combined control 90% of the world’s HDD market.

One of the reasons Seagate Technology PLC (NASDAQ:STX) trades for cheaper than Western is that its balance sheet isn’t as healthy. Whereas Western has $4 billion in cash and $2 billion in long-term debt, Seagate Technology PLC (NASDAQ:STX) has $1.9 billion in cash and $2.5 billion in debt. Though Seagate Technology PLC (NASDAQ:STX) offers up a tempting 3.7% dividend yield, investors should consider the balance sheet and what SSDs will do to Seagate Technology PLC (NASDAQ:STX)’s core business in the future.

1. CF Industries Holdings, Inc. (NYSE:CF), P/E of 6.4

CF Industries Holdings, Inc. (NYSE:CF) is an Illinois-based company that makes fertilizers for the agricultural industry. Over the past few years, business has been booming, with earnings rising 275% in the past three years. This is largely because demand for the company’s fertilizers has been in high demand, and input costs have been held down by record-low natural gas prices.

The big worry here is twofold. First, if natural gas prices rise — which they’ve already begun doing — input costs will rise. Second, if there’s any dip in demand for CF Industries Holdings, Inc. (NYSE:CF)’s fertilizers, revenue will dip. Many of those concerns are already priced into the stock, but they’re still worth considering before you buy in.

The article The 5 Cheapest Stocks in the S&P 500 originally appeared on Fool.com is written by Brian Stoffel.

Fool contributor Brian Stoffel owns shares of Google. The Motley Fool recommends Google and owns shares of CF Industries Holdings, Google, and Western Digital..

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