These S&P 500 stocks are trading at a discount as the second half gets under way

Published Wed, Jul 5 20232:04 PM EDT

There are still some cheap stocks in this market despite the strong first-half performance. The S & P 500 surged more than 15% to start the year, marking its biggest first-half gain since 2019 — when it jumped more than 17%. The bulk of that rally came from tech, with investors betting big on artificial intelligence. One negative to come out of that surge is an elevated market valuation. As of Wednesday, the S & P 500 is trading at a forward price-to-earnings ratio of 19.3 — near the highest since April 2022. To be sure, some buying opportunities may be available for investors as the second half gets underway. CNBC Pro screened the S & P 500 for stocks with the lowest forward PE ratio relative to their sector average. Here are the 11 names that made the cut (one for each sector): AT & T made the list, with a relative forward valuation of just 0.38 — the lowest in the communication services sector. The stock has struggled this year, losing more than 12%. Over the past 12 months, shares are down more than 23%. That said, the stock is well-liked by analysts. FactSet data shows analysts on average have an overweight rating on AT & T, while the average price target implies upside of more than 27%. United Airlines also made the list with the lowest relative valuation among industrials. The airline has been on fire this year, soaring about 48%, thanks to strong travel demand. Analysts expect the stock to go even higher, with the average price target implying upside of nearly 20% over the next 12 months. UAL YTD mountain UAL in 2023 Another name that made our list is General Motors . The automaker trades at a relative forward multiple of 0.21 — the lowest among consumer discretionary names. Shares have rallied more than 15% over the past month after GM announced it will use Tesla's network of electric vehicle chargers . Morgan Stanley analyst Adam Jonas, who has an overweight rating on the stock, also said last month that "a continued appreciation of the cash flow generating attributes of the company (such as internal combustion trucks, SUVs, and crossovers) are a store of shareholder value." — CNBC's Michael Bloom contributed reporting.