8 Undervalued Stocks for a Rocky Market

Charles Schwab stock is up 30% so far this year. (Justin Sullivan/Getty Images)

The U.S. economy is looking increasingly iffy. Fortunately, there are plenty of stocks posting solid second-quarter earnings, and some are still relatively cheap.

A string of weak economic data, especially Friday’s jobs report, has seemingly sapped investors’ confidence in the stock market. President Donald Trump only made matters worse by firing a top Bureau of Labor Statistics official in response to the jobs report. In the aftermath, the S&P 500 has closed down four of the past five days, and slid 0.3% Tuesday afternoon—on track for a fifth down day.

The good news is that second-quarter earnings season is shaping up to be a healthy one, with S&P 500 profits on pace to increase by a better-than-expected 11%, according to LSEG data.

One way to protect your portfolio against a slowing economy is to focus on companies that have consistently beaten Wall Street profit forecasts, argued Wolfe Research in a recent note.

To generate a list of potential stock picks, Wolfe ran a screen for companies that beat average analysts’ forecasts for both profit and revenue over the past two quarters, and whose shares had recently enjoyed price gains in response. Wolfe also filtered for companies that had increased earnings outlooks in 2025. “We expect these companies to continue to perform well in the face of mixed signals on the U.S. economy,” explained Chris Senyek, Wolfe’s chief investment strategist.

Wolfe’s full list includes nearly 30 stocks, so Barron’s narrowed it further, focusing on the eight that are trading below the S&P 500’s average forward price-to-earnings ratio of 21.8. Given the S&P has recently been at one of the highest P/Es on record, these stocks aren’t necessarily deep-value bargains.

Still, the comparatively low purchase prices suggest these stocks won’t have as far to fall as more richly-valued peers if the market continues heading south.