Finding Investment Opportunities: What Stocks to Buy in Today's Market

The Paradox of Current Market Conditions

The financial markets are experiencing what seems like a contradiction. The S&P 500 has posted impressive gains of 16.25% year-to-date, with investors enthusiastically embracing technology companies and their artificial intelligence ventures. Yet beneath this bullish surface lies a pricing concern that deserves attention.

Using the Shiller price-to-earnings ratio (also known as the CAPE ratio), we can observe that current market valuations have reached levels not seen since the dot-com bubble of 2000. This metric, which adjusts for economic cycles, reveals that many investors are paying premium prices for stocks. The question then becomes: where should prudent investors direct their capital in such an environment?

The Case for Value Investing in an Expensive Market

Conventional wisdom might suggest sitting on the sidelines when valuations are stretched. However, value-oriented investors know that opportunities still exist for those willing to conduct thorough research. Three sectors and companies stand out as particularly interesting candidates for those seeking what stocks to buy without overpaying.

The key attraction of value stocks lies in their margin of safety. When you purchase a stock trading below its intrinsic worth, you gain downside protection while maintaining upside potential. In today’s market, this protective characteristic becomes increasingly valuable.

Examining Three Contrarian Picks

Banking Sector Opportunity: Citigroup’s Turnaround Story

Among the nation’s largest financial institutions, one has traded at a significant discount compared to its competitors. Citigroup (NYSE: C) has faced headwinds including operational challenges across its sprawling global network and regulatory complications. The company faced substantial fines—$400 million in 2020 and $136 million subsequently—for internal control deficiencies related to risk management and data governance.

These challenges manifested in disappointing financial metrics. The return on common tangible equity (ROTCE) languished in mid-single digits, well behind industry peers. Contributing factors included elevated operating expenses, slower growth trajectories in consumer and international divisions, and legacy assets that weighed on profitability.

However, leadership changes have catalyzed meaningful shifts. Under CEO Jane Fraser’s stewardship since 2021, the institution has undertaken significant restructuring. The bank has wound down consumer operations across 14 countries, optimized its workforce, and consolidated redundant processes. A particularly notable development occurred in Mexico, where Citigroup separated its Banamex consumer division from institutional operations, preparing it for a public offering.

These initiatives are yielding results. The ROTCE metric has improved from 7.4% to 8.9% as the organization divests low-return assets and sharpens its focus. Trading at 1.06 times tangible book value—substantially below JPMorgan Chase’s 2.99 and Bank of America’s 1.88—the stock presents an attractive valuation for investors asking what stocks to buy for value positioning.

Payments Sector: PayPal’s Underappreciated Potential

The payments industry has witnessed dramatic evolution, and PayPal (NASDAQ: PYPL) exemplifies this transition. Once a high-flying growth stock with seemingly unlimited upside, the company has spent years trading within a $50-$100 range, disappointing those who anticipated continued acceleration.

At 11.3 times forward earnings, PayPal’s valuation has compressed to levels typically associated with financial institutions rather than technology companies. This repricing reflects investor skepticism about growth prospects under previous leadership.

The appointment of CEO Alex Chriss in 2023 introduced fresh strategic direction. Drawing on his experience scaling small and medium-sized business operations at Intuit, Chriss has implemented several notable initiatives. PayPal Complete Payments now serves the SMB segment more comprehensively. Strategic partnerships with major e-commerce platforms have enhanced transaction options. The company has expanded its buy-now-pay-later offerings and, most recently, launched an advertising platform leveraging its proprietary payments data.

Perhaps most intriguing is PayPal’s collaboration with OpenAI to develop AI-powered shopping capabilities that promise to revolutionize commerce through greater personalization and automation. The company continues generating steady growth despite recent underperformance, and these business development initiatives may drive returns not yet reflected in the current stock price. For investors researching what stocks to buy with transformative potential, PayPal deserves consideration.

Insurance Sector: Progressive’s Cyclical Opportunity

Progressive (NYSE: PGR) holds the distinction of being one of the insurance industry’s greatest long-term performers. Over the past three decades, investors have enjoyed compound annual returns of 16.9%, representing a cumulative 10,780% gain—a testament to operational excellence and strategic consistency.

The company’s competitive advantages rest on multiple pillars. It commands the second-largest market share among U.S. auto insurers and demonstrates exceptional underwriting discipline. Progressive’s combined ratio—a key profitability measure—has consistently beaten industry benchmarks, reflecting superior risk selection and pricing discipline. The organization pioneered telematics adoption and maintains a sophisticated data-driven approach to underwriting.

Cyclical headwinds currently affect the insurance sector. Recent inflation cycles created challenging conditions for underwriting profitability, prompting insurers to moderate customer rate increases for the coming year. Adding to near-term pressure, Progressive announced a $1 billion refund to Florida policyholders because underwriting profits exceeded statutory retention thresholds during 2023-2025.

Market reaction to these challenges has been severe, with Progressive’s stock declining 17% over the past year. However, seasoned investors recognize this as a cyclical trough rather than a deterioration in business quality. The company retains robust pricing power should inflationary pressures resurface. At 11.5 times earnings—below valuation levels from the preceding two years—the stock offers a compelling opportunity to accumulate shares of a franchise with demonstrated staying power. This represents an interesting entry point for those evaluating what stocks to buy during periods of temporary sector weakness.

The Path Forward

Market valuations remain elevated by historical standards, yet investors who think strategically about where to deploy capital can still identify securities offering meaningful protection and growth potential. The three companies examined here—Citigroup, PayPal, and Progressive—each offer distinct reasons for consideration in a diversified portfolio, whether you’re seeking stability, innovation, or cyclical recovery potential.