Despite a Fresh All-time High for the S&P 500, These Strong Performers Remain Cheap

Several stocks remain attractive despite the broader market reaching record highs.

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The S&P 500 and Nasdaq Composite both hit all-time highs on Wednesday, driven by a lower-than-expected April consumer inflation report that boosted investor sentiment. This month, the broader market and the 30-stock Dow Jones Industrial Average have each risen over 5%, while the Nasdaq has climbed about 6.5%.

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Using the CNBC Pro Stock Screener Tool, we identified stocks still considered "cheap" compared to the broader market and meeting the following criteria:

• Up 20% or more year-to-date
• Lower valuation than the S&P 500, with a forward price-to-earnings (P/E) ratio under 21
• A price target indicating at least a 10% upside potential

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Airlines Delta Air Lines and United Airlines, both of which have gained over 30% this year, fit these criteria. Among these, United Airlines has the highest potential upside, with analysts' consensus price target suggesting roughly 24% growth.

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HSBC analyst Achal Kumar recently started coverage on Delta, United, and American Airlines but preferred Delta. Kumar set a price target of $72.80 for Delta, implying a potential 37% upside. Kumar highlighted Delta's strong competitive positioning, noting its nearly 70-75% market share at its top six hubs, which account for more than 50% of its capacity. Delta also has the highest penetration in the premium traffic segment among the three major U.S. full-service carriers. Kumar believes airlines will benefit from a continued recovery in corporate travel and strong demand for international vacations.

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Western Digital, a digital storage stock, also made the list. Its shares have surged 43% year-to-date, the most among the group, and analysts' consensus forecast indicates the stock could gain another 15.2% over the next 12 months. The company posted a robust fiscal third-quarter report, prompting Benchmark analyst Mark Miller to upgrade the shares to buy last month. Miller expects stronger semiconductor pricing to drive another rally for the stock.

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Automotive manufacturer General Motors (GM) has the lowest forward P/E ratio in the group, at about 4.98. GM shares have risen more than 26% this year, significantly outperforming the S&P 500. Wall Street firms, including Citigroup and Bank of America, believe GM is well-positioned to capture a larger share of the electric vehicle market.

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In summary, despite record-high levels in the broader market, several stocks still offer attractive investment opportunities. Airlines like Delta and United are poised to benefit from a resurgence in corporate and international travel. Western Digital shows promise with its strong performance and favorable semiconductor pricing outlook. Lastly, General Motors presents a compelling case with its low valuation and potential for growth in the electric vehicle sector.

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