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5 Undervalued U.S. Stocks for August 2026: CVS, BBY, UPS, GDDY, NKE

2026-08-27

1. Overview

  • Data as of: 2026-08-27
  • Stocks reviewed: 10
  • Market backdrop: SPY gained roughly 2.7% over the last three months while aggregate Q2 2026 U.S. earnings growth remained strong. The screen therefore required more than a falling share price: relative weakness had to coincide with improving operations, cash flow or guidance.
  • Scoring: Fundamental improvement 30%, valuation 25%, balance sheet 15%, catalysts 15%, price dislocation 10%, risk 5%. Scores were calculated once and the Top 5 was then locked.

This is investment research for idea generation, not investment advice.

2. Candidate Comparison

RankTickerCompanySector3M ReturnLatest Revenue GrowthOPM ChangeFCF/Cash FlowGuidanceValuationKey Risk / CatalystScore
1CVSCVS HealthHealthcare+1.7%, about -1.0%p vs SPYQ2 2026 +7.3% YoYabout +2.0%p GAAP1H26 CFO $10.6B vs $6.5BFY26 EPS and CFO raisedDiscounted vs broad marketMedical cost / cash-flow recovery87
2BBYBest BuyConsumer Discretionarymodest relative performanceQ2 FY27 +3.6% YoY+1.6%p1H CFO $1.30B vs $0.78BComp and EPS raisedMid/low-teens earnings multipleConsumer demand / AI devices, ads84
3UPSUnited Parcel ServiceIndustrialsmarket-lagging rangeQ2 revenue $22.8B, YoY growth positiveAdjusted OPM 9.2%, improved1H26 CFO $3.1BRevenue, operating profit and EPS raisedForward P/E ~13.6xVolume/labor / restructuring82
4GDDYGoDaddyTechnology Services+7.4%, but far below 2025 peakGrowth remained positiveMargin trend improvingStrong recurring FCFStable/improving outlookDiscount to prior EV/FCF rangeSMB demand / buybacks, mix80
5NKENikeConsumer Discretionary-15.8%Q4 FY26 -1%; wholesale +4%gross margin +8.9%p, tariff benefit largePositive cash generationTurnaround still earlyP/E ~19xDirect/China / product reset78
6ELEstée LauderConsumer Staples+16.6%Q4 FY26 +6%FY26 margin expandedFY27 CFO guide $1.3-$1.4BFY27 margin guide raisedForward P/E ~32xChina / restructuring76
7PYPLPayPalFintechlagged S&P over 1 yearTTM growth positiveStable/improvingHealthy FCFEfficiency program intactP/E ~11.8x; EV/EBITDA ~7.6xCompetition / buybacks75
8EBAYeBayConsumer Internet~14% below May highQ2 revenue $2.2BNot confirmedNot confirmedNot confirmedMature-platform discountGMV / capital returns73
9AMATApplied MaterialsSemiconductor Equipment+5.9%; 1M about -8%Q3 FY26 +25%+3.1%pQ3 FCF $2.33B, +14%Strong 2026/2027 demand viewP/E ~42x, not cheapCycle/valuation / AI capex70
10FDXFedExIndustrials~4% below 52-week highQ4 FY26 +12.6%-1.9%p GAAPNot confirmedGrowth outlook positiveModerateMargin / Freight separation68

3. Final Top 5

CVS — CVS Health — 8.7/10

Thesis: Revenue, operating profit and operating cash flow all improved while management raised FY26 EPS and CFO guidance. The market is still focused on medical-cost volatility, but cash generation and deleveraging capacity are recovering faster than the headline narrative suggests.

What the market may be missing: The diversified insurance, pharmacy and services model is producing substantially more cash even before a full normalization of medical-cost trends.

Catalysts: Further guidance raises, medical-cost stabilization, debt reduction.

Risks: Medical-cost reacceleration, regulation, high absolute debt.

Kill conditions: FY26 CFO guidance is cut again or Health Care Benefits profitability deteriorates materially.

Metrics to watch: medical benefit ratio, adjusted operating income, cash flow from operations.

BBY — Best Buy — 8.4/10

Thesis: Q2 FY27 revenue rose 3.6%, comparable sales rose 4.1%, GAAP operating margin improved 1.6 percentage points and first-half CFO rose to $1.30B. Management raised full-year comparable-sales and EPS guidance.

What the market may be missing: Ads, Marketplace and AI-enabled device categories are becoming more important contributors alongside the PC refresh cycle.

Catalysts: AI PCs and wearables, gaming cycle, advertising growth, cost efficiency.

Risks: Consumer slowdown, tariffs and memory costs, fading PC refresh.

Kill conditions: Comparable sales turn negative again and operating margin structurally falls below 4%.

Metrics to watch: comparable sales, operating margin, CFO.

UPS — United Parcel Service — 8.2/10

Thesis: Q2 adjusted operating profit was $2.1B and adjusted margin reached 9.2%; management raised FY26 revenue, adjusted operating-profit and EPS targets.

What the market may be missing: Network restructuring and customer-mix improvement are offsetting part of the cyclical volume pressure.

Catalysts: Annualized restructuring savings, healthcare logistics growth, network productivity.

Risks: Economic slowdown, large-customer volume shifts, labor inflation.

Kill conditions: Renewed adjusted-margin erosion and withdrawal of FY26 EPS guidance.

Metrics to watch: average daily volume, adjusted operating margin, CFO.

GDDY — GoDaddy — 8.0/10

Thesis: Shares remain well below their prior peak while margins, cash flow and buybacks continue to improve. A richer mix of software, commerce and payments supports higher per-share value than the legacy domain-registration narrative implies.

What the market may be missing: Mix shift and share-count reduction can compound per-share FCF even with only moderate top-line growth.

Catalysts: Margin expansion, FCF growth, buybacks, Airo upsell.

Risks: SMB cyclicality, AI website-builder competition, higher acquisition costs.

Kill conditions: Bookings/ARR deceleration occurs together with declining FCF margins.

Metrics to watch: bookings, normalized EBITDA margin, FCF/share.

NKE — Nike — 7.8/10

Thesis: The stock is down about 16% over three months, creating the largest price dislocation in the final group. Q4 FY26 revenue was still down 1%, but wholesale revenue grew 4% and the product/inventory reset is advancing.

What the market may be missing: Weak Direct revenue is dominating the narrative while wholesale normalization, product resets and inventory cleanup are occurring in parallel.

Catalysts: New-product cycle, North American wholesale acceleration, China stabilization.

Risks: Persistent Direct weakness, China demand, one-time tariff-recovery help to margins.

Kill conditions: Currency-neutral revenue declines worsen for two consecutive quarters and wholesale growth rolls over again.

Metrics to watch: currency-neutral revenue, wholesale growth, gross margin excluding tariff effects.

4. Conclusion

  • Highest Conviction: CVS
  • Best Risk/Reward: NKE
  • Most Conservative: BBY
  • Highest Rebound Potential: NKE
  • Needs Additional Verification: GDDY, particularly the latest detailed FCF and valuation bridge.

Key Sources

Not investment advice. Scores and lists are relative snapshots.

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