3 Undervalued Names Too Cheap to Ignore

Key Points

• Several established companies present potential value plays in early 2026 thanks to comparably low P/E ratios and strong fundamentals, despite broader market challenges.
• Merck's recent rally has not compromised its P/E ratio, which remains below the industry average, as the company navigates new ways to grow revenue amid its flagship Keytruda nearing patent expiration.
• Campbell's and US Foods offer contrasting cases: the former experiencing a sharp pullback and a high dividend yield, while the latter rallying amid adjusted EBITDA gains and the potential for further improvement.

Highly publicized growth trajectories of some of the biggest companies out there may make it seem like 2026 is not a prime time for a value strategy. Still, some fairly sizable firms are trading at attractive valuations and offer potential for share price appreciation alongside fundamental growth.

The companies below all represent potential value plays, including value metrics that are historically low and/or competitive relative to peers across industries or the broader market. They offer added benefits, including compelling dividends or promising new product developments. While value plays may be harder to come by when many promising companies have already seen renewed investor attention, and others that appear to be value plays have deteriorating operations or other red flags, well-established and stable names can also be a value prospect.

Even After Rally, Merck May Be Undervalued, With Careful Planning for Keytruda in the Works

Although shares have climbed by more than 28% in the last year, bringing its market capitalization to nearly $300 billion, biopharma giant Merck & Co. Inc. NYSE: MRK still maintains a price-to-earnings (P/E) ratio of 16.45, well below the medical industry average of close to 27. Analysts expect continued growth going forward: the company is projected to see earnings climb by nearly 10% in the coming year and has a 5% additional upside in the near term.

Helping to drive Merck's momentum is its pembrolizumab cancer drug, known as Keytruda, which was approved for subcutaneous injection by the European Commission in late 2025 and reached about $8.4 billion in sales in Q4 2025. This marks an increase of almost 7% year-over-year (YOY). Keytruda also shows promise for ovarian cancer treatments, potentially drawing interest from a new group of patients as well. This should all help Merck to continue to build revenue as it prepares to lose patent exclusivity on Keytruda in 2028.

Merck's drug portfolio is broadening, including notable phase 3 trial results recently announced for clesrovimab-cfor, known as Enflonsia, a treatment for RSV in young children. At the same time, the company is making strategic moves as it prepares for Keytruda's patent expiration, dividing its human health branch into two separate units, allowing it to more easily bulk up its non-cancer-drug sales.

A Difficult External Situation Pressures Campbell's, But Strong Dividend and Value Remain Factors

Campbell’s NASDAQ: CPB shares have fallen about 37% over the last year as the food-and-beverage staple has faced pressure from tariffs and inflation. In Q1 fiscal 2026, which ended Nov. 2, 2025, the company saw modest YOY declines in organic net sales and consumption, with adjusted earnings per share (EPS) falling by 13% over the same period. To make matters worse, the company has not yet seen notable margin improvement after initiating cost-saving measures.

The near term will likely remain a challenge for the iconic food brand, as fiscal-year guidance is weak overall.

However, its improving supply chain and strong brand loyalty, particularly for its premium offerings, should help to protect the company. Shifting tariff landscapes may also reduce the overall pressure the company faces.

On top of that, Campbell's remains a strong dividend play, with an impressive yield of 5.9%, though its payout ratio is fairly high at over 80%. Moreover, Campbell's P/E ratio of 13.5 is the lowest it has been in about four years. These factors may convince some investors that the stock is worth the risk, despite caution among Wall Street analysts.

A Recent US Foods Rally May Continue Bottom-Line Growth Remains in Place

Foodservice distribution leader US Foods NYSE: USFD experienced a share price trajectory almost directly opposed to Campbell's—in the last year, shares have climbed by about 33%. Still, its P/E ratio remains relatively low compared to the broader market at 31.6.

On fundamentals, US Foods is making important strides: the company reported improving profitability in the latest quarter and full-year adjusted EBITDA gains of 11% YOY. Stronger inventory management and climbing cost-of-goods savings are also helping the firm to gain traction. With a strong $4-billion capital deployment strategy in place, US Foods is well-positioned to maintain revenue growth momentum and continue its upward trend in adjusted EBITDA.

Analysts see USFD shares as a Moderate Buy based on 11 Buys and 2 Holds, with about 15% in upside potential.