Top 5 undervalued stocks to watch in 2025

What are undervalued stocks?

Undervalued stocks are the shares of companies with stock prices that are perceived as being lower than they should be – or what their ‘fair’ value is.

The principle behind trading undervalued stocks is that the market will, inevitably, correct itself, and the stock price will eventually reach its fair market value. This means that if you buy a stock while it’s undervalued, you would, in theory, make a profit on it when it increases.

It’s important not to conflate ‘cheap’ with ‘undervalued’ when you’re looking for stocks trading below their fair value. The trick is to find companies that have quality stocks that will rise over time, versus junk stocks at low prices.

Why would a stock be undervalued?

There are multiple reasons why a stock might be undervalued, such as:

• Market changes: Markets can crash or correct themselves, which can tank a company’s stock price
• Negative news: Negative press, and economic and political news could cause a stock price to plummet
• Cyclical changes: Some stocks and sectors are cyclical, meaning they perform well during certain times or economic periods, and tend to dip during others. It’s at these downturns that you can find undervalued stocks
• Overestimated results: If a stock doesn’t perform as well as analysts expect it to, stock traders might sell their holdings, causing the stock to drop below fair value
• Company recognisability: Some companies are simply not familiar enough to get media or analyst coverage, which can lead to them being unknown to stock traders

How to find undervalued stocks

Two good ways to find undervalued stocks are to look at companies’ price-to-earnings ratios (P/E ratios) and their market capitalisations.

A P/E ratio is calculated by dividing the stock price by the earnings per share (EPS). This tells you what investors are willing to pay for a share.

A lower P/E ratio can (but not always) indicate an undervalued company, whereas a higher P/E ratio could signal future growth – but again, not every time.

Market capitalisation is also important because it can tell you how profitable the company is. You can calculate the market cap by multiplying the current stock price by the total number of stocks outstanding (ie shares held by stockholders). 

Where to find undervalued stocks

There are a few places to look for undervalued shares. These include:

• Undervalued sectors: Most sectors go through periods of bull and bear markets. If you find an industry that’s currently down, let’s say that’s mining, you could find a real gem in the sector, capable of significant future growth
• News: Pay attention to the news related to a company and sector. Market crashes, bad press, and political and social changes could all lead to a business becoming undervalued. But beware here – there’s a big difference between cheap and undervalued stocks. Don’t just go for the first company to fall on hard times
• Emerging sectors: New and innovative sectors, such as the biotechnology industry, can contain undervalued stocks that are just waiting for the sector to flourish
• Technical analysis: Using indicators, such as Fibonacci levels and a moving average, can indicate levels of support and resistance, helping you identify potentially undervalued stocks. You can also try a stock screener tool to help you filter companies that might be undervalued

Advantages of undervalued stocks

There are numerous pros to trading undervalued stocks, including:

• Lower stock prices: Stock prices of undervalued companies often trade at a steal, giving investors the ability to buy a large portion of stocks
• Potential for higher returns: Because stock traders can purchase a large number of shares for a relatively low price, should the stock price rise to meet its fair market value, traders can significantly increase their profits
• Built-in safety margin: If the stocks are trading at low prices, you’ve got a built-in safety margin because, should your analysis be wrong, the lower entry price offers some protection

Risks of undervalued stocks

At first glance, it might look as though there aren’t that many risks when trading undervalued stocks, except for the obvious ones – volatility, socio-economics, picking a worthless stock and similar factors. But sometimes, there are reasons why a stock is undervalued that aren’t always obvious.

For example, a stock might be undervalued because of internal structural business changes or financial management issues.

This is why it’s important to thoroughly research any company you plan to trade before taking a position on it – as well as have a good risk management strategy in place.

Top 5 undervalued stocks to watch in 2025

We’ve chosen these five stocks based on their market caps, P/E ratios and the diversification they offer across regions and sectors.

All figures are accurate as of 28 November 2025.

Overview of the stocks in this article

You can CFD trade and stock trade all the companies on this list through our platform.

1. HSBC Holdings (LSE: HSBA)

Industry: Finance

Market cap: £182.81 billion¹

P/E ratio: 14.80²

HSBC is one of the world’s largest banking and financial services groups, with a strong presence across Europe, Asia, the Middle East and the Americas.

The bank offers retail banking, commercial banking, wealth management and investment services. Its diversified footprint helps reduce reliance on any single market, while its capital position supports ongoing dividend payments.

HSBC has more recently benefited from rising interest rates in key markets, which boost net interest margins and overall profitability.

For stock traders, HSBC offers a combination of income through dividends and potential upside from interest-rate improvements and Asia-focused growth. Its diversified operations also make it less vulnerable to shocks in a single region. However, earnings are sensitive to interest rate swings and global economic conditions.

For CFD traders, it’s highly liquid and reacts to macroeconomic announcements, central bank decisions and earnings releases, offering potential short-term trading opportunities.

Highlights:

• The company is highly diversified across Europe, Asia and the Middle East, reducing reliance on any single region. However, it’s still prone to the effects of geopolitical and regulatory risks
• It has a strong capital position and a history of consistent dividend payouts
• Its stock price has grown by 23.27% over the past six months³

2. TotalEnergies (Euronext: TTE)

Industry: Energy minerals

Market cap: €121.77 billion⁴

P/E ratio: 9.92⁵

TotalEnergies is a global energy company operating in oil, gas, LNG, renewables and electricity. Its integrated model provides stable cash flow from production, refining and marketing, while its renewable investments position it for the energy transition.

The company offers a strong dividend and consistent shareholder returns, making it appealing for income-oriented stock traders.

For stock traders, the combination of steady cash flow, dividend yield and long-term exposure to renewable energy makes TotalEnergies a potentially stable, value-oriented pick. But keep in mind its revenue is heavily influenced by commodity prices, which are inherently volatile. Regulatory pressures and geopolitical risks, especially in oil-producing regions, can impact earnings.

For CFD traders, the stock reacts to global oil and gas price movements, OPEC announcements and earnings updates, providing short-term trading opportunities.

However, commodity-driven swings can be unpredictable, with sudden gaps during global energy shocks.

Highlights:

• It has a solid, predictable cash flow from its large integrated energy operations
• The company is diversifying into renewables and LNG, giving it long-term transition positioning. Having said that, it still faces ESG and regulatory pressure as global decarbonisation accelerates
• Earnings are tied to oil and gas price volatility, which could be negative (if you’re stock trading) or positive (if you’re CFD trading)
• Its stock price has increased by 9.02% over the past six months⁶

3. Volkswagen AG (XETR: VOW)

Industry: Consumer durables

Market cap: €49.08 billion⁷

P/E ratio: 7.40⁸

Volkswagen is a global automotive leader. It’s investing heavily in EVs, batteries and software-driven mobility services. Its strong manufacturing scale and brand recognition give it an edge in both combustion and EV markets.

For stock traders, recent low valuations make it attractive for those seeking value. Long-term exposure to EV adoption and strong brands could also provide an upside as the market transitions. Having said that, its profitability is under pressure due to the costly EV transition, intense competition and cyclical auto demand; economic downturns can sharply affect sales.

For CFD traders, Volkswagen tends to move on earnings, production updates and industry news, creating trading opportunities. But leveraged positions can be extra risky during economic downturns.

Highlights:

• It has a low valuation relative to some of its global peers, along with strong brands (VW, Audi, Porsche) and high global market share
• Its growing investment in EVs, batteries and software gives it a long-term strategic upside
• Over the past six months, the stock price has climbed by a modest 1.85%, with a year to date (YTD) growth of 7.78%⁹

4. Mitsubishi UFJ Financial Group, Inc (TSE: 8306)

Industry: Finance

Market cap: JP¥27.85 trillion¹⁰

P/E ratio: 14.50¹¹

Mitsubishi UFJ offers retail, corporate and investment banking services. It benefits from rising interest rates in Japan and international operations that diversify revenue.

The bank is improving efficiency and capital returns, while maintaining a conservative balance sheet.

For stock traders, its strong balance sheet, exposure to rising Japanese interest rates, and diversified operations support stable long-term returns. However, growth is limited by slow Japanese economic expansion, and a return to low rates would compress margins. Regulatory requirements across multiple regions also add operational costs.

For CFD traders, the stock price reacts to central bank decisions, economic data and financial results, which can create short-term trading opportunities. But macro and regulatory risks can trigger sudden moves, making leveraged positions potentially hazardous.

Highlights:

• The company is benefiting from Japan’s gradual shift away from decades of ultra-low interest rates, and international operations in the US and Asia help to diversify domestic pressure
• On the downside, Japan’s economic growth remains slow, which can cap the company’s revenue potential
• It’s seen a healthy stock price growth of 22.03% over the past six months¹²

5. AT&T Inc (NYSE: T)

Industry: Communications

Market cap: US$183.05 billion¹³

P/E ratio: 8.40¹⁴

AT&T is a major US telecom and media company, providing wireless, broadband and pay-tv services.

Its extensive subscriber base generates predictable cash flow, while the stock offers one of the highest dividend yields in the sector.

The company is navigating a period of transformation, having recently divested some non-core media assets to focus more on its wireless and broadband businesses. This strategic shift aims to simplify operations, reduce debt and concentrate on high-margin, recurring revenue streams.

For stock traders, the combination of a low valuation, high dividend yield and stable recurring revenue makes AT&T appealing for income-focused investors. Although, with new revenue drivers, its growth could be limited.

For CFD traders, there are trade setup opportunities around earnings, debt announcements and telecom sector news. But these can also create rapid price changes, particularly around the company’s debt concerns.

Highlights:

• AT&T has a large, stable subscriber base and strong recurring revenue, along with an attractive dividend yield, appealing to income-focused stock traders
• It does have a high debt load that increases its sensitivity to rate changes
• Over the past six months, its stock price has fallen by 5.73%, but it’s up by 13.10% YTD¹⁵

How to trade undervalued stocks with IG UAE

CFDs

1. Open a CFD trading account with IG UAE
2. Search for undervalued stocks on the IG platform
3. Decide whether to go long (buy) or short (sell)
4. Choose your position size
5. Set stop-loss and limit orders
6. Place your trade and monitor it

Stock trading

1. Open a stock trading account with IG UAE
2. Search for undervalued stocks
3. Choose the stock you want to buy – try our stock screener
4. Determine how many shares you want to purchase
5. Place your order
6. Monitor your investment and collect any dividends

FAQs about undervalued stocks

Footnotes

1. TradingView, November 2025
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