The 10 Best Companies to Invest in Now (2024)

Investors have endured a lot of stock market volatility during the past few years. Given ongoing uncertainty about interest rates and the economy, investors may be wondering which stocks to buy now against this backdrop.

Regardless of where interest rates and the economy 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 with the most undervalued stock prices today.

10 Best Stocks to Buy Now—December 2023

The 10 most undervalued stocks from our Best Companies to Own list as of Nov. 28, 2023, were:

1. Yum China YUMC
2. Roche Holding RHHBY
3. Pfizer PFE
4. Estee Lauder EL
5. Zimmer Biomet ZBH
6. Imperial Brands IMBBY
7. GSK GSK
8. Campbell Soup CPB
9. Corteva CTVA
10. British American Tobacco BTI

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 Nov. 28, 2023.

Yum China

• Price/Fair Value: 0.55
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Restaurants

Yum China’s stock is 45% undervalued relative to our fair value estimate of $80 and tops our list of best stocks to buy this month. We recently reduced our fair value estimate for Yum China from $84 to reflect higher labor expenses in the near term. Morningstar senior analyst Ivan Su argues that there’s reason to be confident about restaurant companies such as Yum China (whose brands include KFC, Pizza Hut, and Taco Bell, among others) that have the scale to be aggressive on pricing; that provide customers greater access via robust digital ordering, delivery, and drive-through options; and that boast healthy balance sheets. We think the market is overlooking Yum China’s restaurant expansion opportunities in China’s growing fast-food industry.

Roche Holding

• Price/Fair Value: 0.60
• Morningstar Uncertainty Rating: Low
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Drug Manufacturers—General

Roche is the first of three drug manufacturers to make the list of the best companies to invest in now. The company’s drug portfolio and industry-leading diagnostics provide significant competitive advantages and underpin our wide Morningstar Economic Moat Rating, says Morningstar strategist Karen Andersen. “This Swiss healthcare giant is in a unique position to guide healthcare into a safer, more personalized, and more cost-effective endeavor,” she notes. With its biologics focus and innovative pipeline, we expect Roche to continue to achieve growth as its competitors face headwinds. Roche stock trades 40% below our fair value estimate of $56.

Pfizer

• Price/Fair Value: 0.62
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Drug Manufacturers—General

Another household name among drug manufacturers is Pfizer, which is currently trading at a 38% discount to its fair value estimate of $48. 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 sector director Damien Conover. While the company gave reduced guidance for COVID-19 product sales, it also announced cost-cutting plans that show the drug manufacturer’s ability to adapt to demand while supporting strong margins. With the stock’s pullback from the peak of the pandemic, we believe the market is underappreciating the tail potential of Pfizer’s COVID-19 sales and next-generation drugs.

Estee Lauder

• Price/Fair Value: 0.63
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Household and Personal Products

Estee Lauder stock is trading 37% below our fair value estimate of $200 per share, which we recently reduced from $249 to reflect a weaker-than-expected near-term outlook. We expect the firm’s fiscal 2024 sales to be flat owing to lower demand for high-margin skincare products amid macro headwinds. With brands that include its namesake, Clinique, and Aveda, Estee Lauder is a leading provider of premium beauty products that has a strong presence across both brick-and-mortar and digital channels. Given its brand equity and cost advantages, we assign the company a wide moat rating, explains Morningstar analyst Dan Su. We expect the company to benefit from a consumer shift in both developed and emerging markets toward higher-end beauty brands.

Zimmer Biomet

• Price/Fair Value: 0.65
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Medical Devices

Zimmer Biomet stock is trading 35% below our fair value estimate. Zimmer manufactures orthopedic reconstructive implants. We award the company a wide moat rating thanks in part to the high switching costs that orthopedic surgeons would face if they transitioned to another company’s instrumentation, says Morningstar senior analyst Debbie Wang. We were surprised by the CEO change announcement earlier this year, but considering how well the current business strategy is working, we don’t expect new management will bring wholesale changes, she adds. We think Zimmer Biomet stock is worth $175 per share.

Imperial Brands

• Price/Fair Value: 0.66
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Tobacco

Tobacco company Imperial Brands rejoined our list of best companies to buy now. Morningstar director Philip Gorham refers to this Big Tobacco name as a “fast follower” rather than a leader in most markets. As a result, the company is likely to be more exposed to cigarettes in the future relative to its peers, who are investing for growth and moving away from the secular decline in cigarettes. Gorham nevertheless says Imperial Brands should remain a highly profitable and cash-generative business. Imperial Brands stock trades 34% below our fair value estimate of $36 per share, which we recently raised from $34 to account for a stronger U.S. dollar.

GSK

• Price/Fair Value: 0.66
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Drug Manufacturers—General

One of the largest pharmaceutical and vaccine companies, GSK’s innovative new product lineup and expansive list of patent-protected drugs earn a wide moat rating, says Morningstar’s Conover. GSK reported solid earnings in the most recent quarter. Conover thinks the market underappreciates the global growth potential for the company’s shingles and RSV vaccines. GSK stock trades 34% below our fair value estimate of $54 today.

Campbell Soup

• Price/Fair Value: 0.66
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Packaged Foods

Campbell Soup stock trades at a 34% discount to its fair value of $61. A leading packaged-food manufacturer, Campbell Soup earns a wide economic 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, as it leverages technology, data insights, and artificial intelligence to bring consumer-valued products to the shelf in a timely fashion, argues Morningstar director Erin Lash. We’re forecasting low-single-digit annual sales growth and high-single-digit adjusted average earnings per share growth over the next decade, she adds.

Corteva

• Price/fair value: 0.68
• Fair value uncertainty: Medium
• Capital Allocation Rating: Standard
• Industry: Agricultural Inputs

Corteva joins the list of the best stocks to buy now for the first time in December. The company, which was formed in 2019 when it was spun off from DowDuPont, is a leader in the development of new seed and crop chemicals products. Management recently issued revised 2023 guidance with a lower outlook owing to continued inventory destocking leading to lower sales volumes than the company had previously forecast. However, we view destocking as a near-term issue, says Morningstar strategist Seth Goldstein. We see no changes to Corteva’s competitive positioning or our long-term outlook that premium crop chemicals producers should see above-market growth in the coming years as farmers will continue to pay up for premium products that result in better pest management and higher crop yields. Corteva stock trades 32% below our fair value estimate of $67.

British American Tobacco

• Price/Fair Value: 0.69
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Tobacco

The second Big Tobacco name on our list of the best companies to buy now, British American Tobacco stock is trading 31% below our fair value estimate of $47. While cigarettes will likely remain the driving force of profits in the industry for the next decade, British American Tobacco has been the most aggressive of the Big Tobacco makers with its push into new-generation products, with exposure to several emerging categories, including vaping, heated tobacco, and oral, says Morningstar’s Gorham.

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.