3 Low-P/E Stocks That Look Cheap as the S&P 500 Trades Near Record Highs

Low-priced stocks which appear to be discounted despite signs of underlying business strength are Sohu.com Inc., Onity Group, and TriMas Corp. All three of these companies have trading prices at unusually low earnings multiples. The S&P 500 has reached record highs in recent times, which may be attractive to many investors, but value-oriented investors may find fewer bargain opportunities as valuations become elevated.

These stocks are not trading at low multiples because of deteriorating business models. Instead, they are priced below what they may be worth due to various factors such as one-time accounting effects, operational pressures, or industry-specific challenges. For example, Sohu.com Inc. trades at just 1.6 times earnings due to strong profitability in its online gaming business, improved bottom-line performance, and a solid balance sheet that supports share repurchases.

Onity Group, a mortgage loan servicer, trades at a valuation of 2.3 times earnings despite higher interest rates that could increase the value of mortgage servicing rights. Its revenue has increased significantly year-over-year, and the company's potential upside is estimated at almost 52%. Lastly, TriMas Corp., an industrial company, trades at 1.6 times earnings.

The company has shown profitability improvements, including a 29% boost in operating profit and a 180-basis-point increase in operating margin. Despite some manufacturing demand and margin concerns, TriMas has raised its full-year adjusted earnings guidance and anticipates sales growth along with substantial operating margin improvement.