Finding Good Value Stocks When Markets Feel Expensive

The investment landscape has felt daunting lately. Valuations have climbed to levels not seen since the dot-com era, and many investors are asking themselves where opportunities actually exist. Yet despite this challenging environment, good value stocks remain discoverable for those willing to dig deeper. The companies I’m highlighting today offer genuine value—combining solid fundamentals with the potential for meaningful upside, while providing that critical margin of safety investors need.

Why Value Matters Right Now

In an environment where traditional valuation metrics show stretched levels across many sectors, the hunt for undervalued opportunities becomes crucial. What separates a true value investment from a value trap is whether a company has a clear path forward and strong underlying economics. The three companies below each have these qualities, which is why I believe they represent good value stocks worthy of portfolio consideration.

Citigroup: Restructuring Gains Traction

Citigroup has long traded at a discount to its banking peers, but there’s a substantive reason the market undervalued this financial giant—the company struggled with operational bloat and regulatory challenges stemming from internal risk management deficiencies. The road to rehabilitation, however, has been meaningful.

Under CEO Jane Fraser’s leadership since 2021, Citigroup has undertaken a serious restructuring. The bank exited consumer operations across 14 countries, streamlined its workforce, and shed underperforming assets that were dragging down returns. In Mexico, the company spun out its Banamex consumer division, marking a strategic shift toward profitability rather than scale.

The results speak for themselves: the bank’s return on equity metrics have improved noticeably as operations have become leaner. When compared to competitors like JPMorgan Chase and Bank of America on valuation grounds, Citigroup continues to trade at a meaningful discount—suggesting the market hasn’t fully priced in the progress already achieved. For investors seeking value in the financial sector, Citigroup’s transformation story offers an attractive entry point backed by real operational improvements.

PayPal: Growth Waiting to Be Recognized

PayPal’s valuation has become compressed, trading at levels typically reserved for mature financial institutions with limited growth prospects. Yet this payment company is actively implementing meaningful growth initiatives that I believe the market is overlooking.

CEO Alex Chriss brought experience managing small and medium-sized businesses from his tenure at Intuit, applying that expertise to expand PayPal’s business model. Recent years have seen the company roll out its Complete Payments platform targeting SMBs, expand its buy-now-pay-later capabilities, and establish new partnerships with e-commerce leaders to enhance checkout experiences. Most intriguingly, PayPal has built an advertising platform leveraging its proprietary payments data and partnered with OpenAI to develop AI-powered shopping tools that embed payments directly into the customer experience.

The near-term challenge is undeniable—PayPal’s stock has been lackluster, and growth hasn’t been flashy. But the company continues to advance at a steady pace, and these growth initiatives carry upside that I believe remains underappreciated in the current valuation. For value-oriented investors with a longer time horizon, PayPal represents a good value stock transitioning toward new opportunities.

Progressive: Quality Trading at a Discount

Progressive stands apart as an exceptional long-term investment. Over three decades, the company delivered investors extraordinary returns through its combination of market share leadership and underwriting excellence. The company’s data-driven approach, pioneered through early adoption of telematics and advanced analytics, has consistently delivered industry-leading profitability.

Today’s insurance market environment presents headwinds—carriers face pressure from inflation and changing claims costs. Progressive itself recently announced a substantial policyholder refund in Florida due to excess profits, acknowledging the cyclical nature of the insurance business. The stock has pulled back accordingly.

Yet this pullback creates opportunity. Progressive’s underwriting prowess remains intact, and the company’s pricing power—the ability to adjust rates as economic conditions warrant—provides confidence in future profitability. Trading at valuations that compress several years of pricing strength, Progressive offers value investors exactly what they seek: a high-quality company selling at a discount during a down cycle.

Building a Portfolio Around Value

Finding good value stocks requires looking beyond surface-level metrics and understanding the actual business dynamics at play. Each of these three companies—a restructuring bank, a payments innovator, and an insurance excellence story—brings different strengths yet shares one critical commonality: sound fundamentals trading at prices that haven’t caught up to reality.

In markets where valuations matter, these opportunities represent the kind of balanced risk-reward profile that value investing is built upon. They’re not guaranteed wins, but they’re precisely the sorts of companies where patient, informed investors can build long-term wealth.