The US market looks expensive, so investors may be wondering which stocks to buy now against this backdrop.
Regardless of where the markets are headed, investors may want to own companies that offer some sense of certainty in terms of cash flows and company fundamentals. That’s where Morningstar’s Best Companies to Own list comes in. The companies that make up this list have significant competitive advantages. We believe the best companies have predictable cash flows and are run by management teams that have a history of making smart capital-allocation decisions.
But the best companies aren’t always the best stocks to buy. How much an investor pays to own a company—best or otherwise—is important, too. So, here we’re focusing on the 10 best companies to invest in with the most undervalued stock prices today.
10 Best Stocks to Buy Now—May 2025
The 10 most undervalued stocks from our Best Companies to Own list as of April 28, 2025, were:
- Polaris PII
- Nike NKE
- Pfizer PFE
- Campbell CPB
- Yum China Holdings YUMC
- Taiwan Semiconductor Manufacturing TSM
- Brown-Forman BF.B
- GSK GSK
- Alphabet GOOGL
- Thermo Fisher Scientific TMO
Here’s a little bit about why we like each of these companies at these prices, along with some key Morningstar metrics. All data is as of market close on April 28.
Polaris
- Price/Fair Value: 0.45
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Recreational Vehicles
Polaris is the most undervalued stock on our list of best companies to buy again this month, trading 55% below our fair value estimate of $75 per share. Polaris is one of the longest-operating brands in powersports. The company started to build its reputation and brand by producing snowmobiles and has since expanded into all-terrain vehicles, motorcycles, boats, and electric vehicles, building a recreational and utility vehicle powerhouse. We think Polaris stands to capitalize on its research and development, solid quality, operational excellence, and acquisition strategy, says Morningstar senior analyst Jaime Katz. Peers are innovating more quickly than in the past, however, which could jeopardize the firm’s ability to take price and share consistently. Still, with supply chain constraints largely in the rearview mirror, we expect incremental improvement in market share for Polaris moving forward.
Nike
- Price/Fair Value: 0.51
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Footwear and Accessories
The largest athletic footwear brand in all major categories and all major markets, Nike dominates categories like running and basketball with popular shoe styles. We view Nike as the leader of the athletic apparel market and believe it will overcome current challenges, such as uneven demand for sportswear in key markets and high tariff exposure, argues Morningstar senior analyst David Swartz. Nike has a renewed focus on its key partners, its products, and its connections to international athletics under new CEO Elliott Hill. Hill is investing in new marketing and products while rebuilding Nike’s relationships with retailers and the global sports community. Nike stock trades at a 49% discount to our fair value estimate of $112 per share.
Pfizer
- Price/Fair Value: 0.57
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Drug Manufacturers—General
A household name among drug manufacturers, Pfizer stock is currently trading at a 43% discount to its fair value estimate of $42 per share. The company’s large size gives it significant competitive advantages in developing new drugs, and its diverse portfolio of drugs helps insulate the company from any one particular patent loss, says Morningstar director Karen Andersen. After many years of struggling to bring out important new drugs, Pfizer is now launching several potential blockbusters in cancer and immunology. With limited patent losses and fewer older drugs, Pfizer is poised for steady growth (excluding the more volatile coronavirus-related product sales) before a round of major patent losses hits in 2028.
Campbell
- Price/Fair Value: 0.59
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Packaged Foods
Campbell earns a wide moat rating thanks to its cost advantages and brands, which include its namesake brand, Pace, Prego, and Swanson, among others. We think Campbell’s strategy is sound, observes Morningstar director Erin Lash. By leveraging technology, data insights, and artificial intelligence, the company brings products that consumers value to the shelf in a timely fashion. “We believe Campbell remains committed to extracting inefficiencies from its supply chain and distribution network, optimizing direct-to-store routes, and investing in automation,” she adds. Campbell recently laid out plans to unlock $250 million in savings through fiscal 2028, on top of the $950 million it realized the past few years. Campbell stock is trading 41% below our $61 fair value estimate.
Yum China Holdings
- Price/Fair Value: 0.61
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Restaurants
Yum China returns to our list of best companies to buy this month, trading 39% below our fair value estimate of $76 per share. The restaurant sector in China continues to face challenges because of the real estate downturn and a lack of significant economic stimulus, but Morningstar senior analyst Ivan Su believes Yum China has opportunities for restaurant expansion in China’s fast-food industry. Over the longer term, we believe there are several opportunities for Yum China to gain a share in the fragmented $700 billion Chinese restaurant market. Our conviction in rising fast-food penetration is underpinned by three long-term secular trends: the increasing number of office workers, rising disposable incomes, and shrinking family sizes.
Taiwan Semiconductor Manufacturing
- Price/Fair Value: 0.63
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Semiconductors
Taiwan Semiconductor is the world’s largest dedicated contract chip manufacturer, with over 60% market share in 2024. Like all foundries, it assumes the costs and capital expenditures of running factories amid a highly cyclical market for its customers. Morningstar analyst Phelix Lee notes two long-term growth factors for the company: First, the consolidation of semiconductor firms is expected to create demand for integrated systems made with the most advanced nodes. Second, the organic growth of artificial intelligence, Internet of Things, and high-performance computing applications may last for decades. Taiwan Semiconductor stock trades 37% below our fair value estimate of $262 per share.
Brown-Forman
- Price/Fair Value: 0.66
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Beverages—Wineries and Distilleries
Premium spirits maker Brown-Forman has over 150 years of distilling experience, specializing in Tennessee whiskey and Kentucky bourbon. Morningstar analyst Dan Su observes that Brown-Forman has earned accolades and loyalty from drinkers for distinct flavors and consistent quality, building strong brand equity for its core Jack Daniel’s trademark in the US and globally. Further, the company’s high-end positioning in the whiskey category aligns well with the industry’s premiumization trend. Still, the company must deal with some tax and regulatory headwinds affecting the industry, as well as the proliferation of craft distillers that could chip away at Brown-Forman’s customer base. Shares of Brown-Forman stock are trading 34% below our fair value estimate of $52.
GSK
- Price/Fair Value: 0.67
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Drug Manufacturers—General
Pharmaceutical company GSK is next on our list of best companies to buy now. The firm’s innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, says Morningstar senior analyst Jay Lee, as GSK’s diverse drug portfolio insulates the company from problems with any one product. The strong product pipeline at GSK stems from a shift in strategy; the firm had previously targeted slight enhancements but now focuses on true innovation. GSK is also strategically branching out from developed markets into emerging markets. We expect GSK to be a major competitor in respiratory, HIV, and vaccines over the next decade. GSK stock trades 33% below our fair value estimate of $58 per share.
Alphabet
- Price/Fair Value: 0.68
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Internet Content and Information
Alphabet, the holding company of internet giant Google, is trading 32% below our fair value estimate of $237 per share. With solutions ranging from advertising to cloud computing and self-driving cars, Alphabet has built itself into a true technology behemoth, generating tens of billions of dollars in free cash flow annually. While antitrust concerns around Alphabet’s core search business have made headlines, Morningstar analyst Malik Ahmed Khan argues that the firm will be able to navigate these headwinds and maintain its leadership position in search and text-based advertising in the long term.
Thermo Fisher Scientific
- Price/Fair Value: 0.68
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Diagnostics and Research
Thermo Fisher Scientific rejoins our list of best companies to buy and rounds out the group. The firm is weathering the pullback in global biopharmaceutical spending better than most of its peers. Being the premier life science supplier and having an unmatched portfolio of products, resources, and manufacturing capabilities have allowed Thermo Fisher to retain and grow its wallet share among its customers across all channels, observes Morningstar regional director Alex Morozov. The firm remains in a great position to leverage its share gains in the biopharma channel and capitalize on strong long-term demand. Thermo Fisher stock is trading at a 32% discount to its fair value estimate of $630.
Find More of the Best Stocks to Invest In
You can review all of the companies on our Best Companies to Own list and dig into our methodology, which includes definitions for the key Morningstar metrics included in this article. Those with specific interests can drill down with our Best International Companies to Own, Best Sustainable Companies to Own, and Best Innovative Companies to Own lists, too. And as we outline here, we suggest that you focus your research on the undervalued stocks of the companies on these lists.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
