High-Yield Bargains: Two Undervalued Stocks Trading Below Fair Value Today

Why These Overlooked Picks Deserve Your Attention

The bull market has been climbing steadily, yet the market remains littered with cheap stocks to buy that most investors overlook. If you’re sitting on $1,000 looking for solid entries in 2026, we’ve identified two compelling opportunities trading at significant discounts—both offering attractive yields and growth potential.

Energy Transfer: Riding the AI Energy Wave at Attractive Valuations

Energy Transfer [(NYSE: ET)] stands out as one of the most undervalued plays in the midstream sector. At an enterprise value-to-EBITDA multiple of just 7.5 (based on 2026 analyst estimates), this pipeline operator trades well below the sector’s historical average of 13.7 from 2011-2016. Add an 8.1% yield to the mix, and the numbers become even more compelling.

What makes this cheap stock particularly interesting right now is its exposure to surging AI-driven energy demand. The company operates strategic assets in the Permian Basin—America’s most prolific oil field and a source of remarkably cheap natural gas. Energy Transfer is executing multiple capacity expansion projects to feed this natural gas into high-demand markets.

The Hugh Brinson Pipeline will transport natural gas to Texas markets, while the Desert Southwest Pipeline serves Arizona and New Mexico. Demand has proven so robust that the company recently announced additional capacity increases on the Desert Southwest line. The company has already locked in supply agreements with major utilities, data center operators including Oracle and others, guaranteeing steady revenue streams.

From a financial standpoint, Energy Transfer maintains solid balance sheet health and plans to grow its distribution by 3-5% annually. This combination of cheap valuation, strong positioning in AI infrastructure buildout, and steady dividend growth creates an appealing risk-reward profile for income-focused investors.

Verizon: A Turnaround Story With Multiple Catalysts

Another cheap stock flying under the radar is Verizon Communications [(NYSE: VZ)], trading at a forward price-to-earnings ratio of just 8.5 with a 6.8% yield—a notable discount to AT&T’s forward P/E above 11.

Verizon’s appeal extends beyond its valuation. The company faces a transformational moment with its Frontier Communications acquisition scheduled to close in Q1 2026. This deal unlocks substantial bundling opportunities—a critical strategy shift under new CEO Daniel Schulman. The company’s market penetration in Frontier’s service areas lags its company average, presenting a significant cross-selling opportunity to add wireless services to broadband customers at competitive bundle prices.

Beyond bundling, management is aggressively restructuring operations. The company has announced over 13,000 workforce reductions (20% of non-union staff) and is converting approximately 200 company-owned stores to franchise models. These initiatives should drive meaningful cost improvements.

Additionally, Verizon is positioning itself in the AI infrastructure boom. The company recently signed an agreement to construct a high-capacity, low-latency fiber network connecting data centers, positioning it to capitalize on accelerating cloud compute demand.

The Investment Case: Valuation Meets Momentum

Both stocks exemplify the buy low, high-yield approach to generating total returns. Energy Transfer offers direct exposure to AI infrastructure buildout with a fortress balance sheet and expanding cash distributions. Verizon provides a defensive core holding enhanced by near-term operational improvements and strategic bundling catalysts.

At current price levels, each represents a compelling opportunity for investors seeking cheap stocks to buy with established cash flow, meaningful yields, and tangible growth drivers.