Is Herbalife Ltd. (HLF) the Ridiculously Cheap Stock to Invest in?
April 19, 2025
We recently published a list of 11 Ridiculously Cheap Stocks to Invest in. In this article, we are going to take a look at where Herbalife Ltd. (NYSE:HLF) stands against other ridiculously cheap stocks to invest in.
Just as we hunt for bargains in the commodity market—comparing relative prices, identifying discounted products, and getting the product most valued for our money—investing in the financial market isn’t any different. In both investments, price matters.
In a world of overpriced stocks, spotting the hidden gem is what differentiates a smart investor from an impulsive investor. One who realizes that value isn’t just about what you buy rather it’s more about what you pay, is the one who is likely to identify an overlooked but full of value stock.
Let’s first understand what a cheap stock actually implies. There are two most common interpretations of such a stock. First, a stock may be regarded as a cheap stock if it has a low share price. Second, an undervalued stock is more commonly known as a cheap stock. Our analysis resonates with the second interpretation, that a cheap stock is a stock that is trading below its intrinsic value based on factors like earnings, revenue, or assets. Thus, in the market, investors say it’s “cheap” relative to its true potential, making it a compelling investment.
One such measure to spot a cheap stock is through the forward price-to-earnings ratio. This is a measure used by investors to actually see how much they are paying for each dollar of a company’s earnings. A low P/E can signal an undervalued stock when compared to its competitors, historical average, and broader market average.
A report by Hoover Capital Management (HCM) analyzes the historical performance of value versus growth stocks through the French High Minus Low (HML) factor. The results from 97 years of data, from July 1926 to December 2023, strongly support value investing. The cumulative return of value stocks surpassed growth stocks by an impressive 3,000%. In other words, value investing has delivered a 30 times higher return on growth than growth investing. It can be further reinforced through the research by Economist Victoria Galsband, according to which cheap stocks outperformed growth stocks from 1975 to 2010 in every single G7 country, including Canada, the U.S., Japan, and the leading European countries.
Another report that analyzed the impact of additions or removals of companies from the S&P index on their valuations indicated that, as removals are associated with the undervaluation of the stock and vice versa, many companies removed from the index outperformed the market. A study by Research Affiliates highlighted that stocks taken out of the S&P between 1990 and 2022 outperformed those that were added by more than 5% annually. This provides a compelling case for our view that undervalued stocks, translated to cheap stocks, have a greater probability of yielding higher returns.
We have compiled a list of 11 ridiculously cheap stocks through the Finviz screener. In doing so, stocks have been selected that have a lower than 5 price-to-earnings (P/E) ratio. These stocks cover a range of industries, from consumer products to natural resources exploration. These companies are then listed according to their P/E ratios, from highest to lowest.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A person enjoying a morning jog while sipping from a bottle of a functional beverage.
Forward P/E as of April 17: 2.97
Herbalife Ltd. (NYSE:HLF) is a global nutrition company providing health and wellness products. This California-based company operates through various geographical segments, including North America, Latin America, EMEA, Asia Pacific, and China. The core offerings of the company include meal replacements, a snack portfolio, and dietary supplements. With operations in more than 90 countries, the company considers improving nutritional habits all over the world with exquisitely flavored, science-based nutrition products to assist people in maintaining a balanced lifestyle.
Just a few days ago, investment banking firm D. A. Davidson & Co. expressed optimism for Herbalife Ltd. (NYSE:HLF) by increasing its price target to $14 from $7.50, upgrading to Buy from Neutral. This guidance is driven by the company’s gradual growth in its new and existing distributors in the last few quarters. Additionally, the firm believes that the appointment of Stephan Gratziani as the chief executive officer will prove fruitful for Herbalife Ltd. (NYSE:HLF) as several measures have been taken in the areas of recognition, digital tools, distributor training, and information-sharing systems.
The company’s MLM business model is what sets it apart from an investor’s perspective. Herbalife Ltd. (NYSE:HLF) adopts an approach that integrates direct selling and multi-level marketing with independent distributors forming a network. The investments in technology to help the members improve their online channels reinforce that the strategies chosen are well-structured. And with the weight loss segment contributing the most to the company’s revenues, we can only expect it to grow further in this calorie-counting world.
Considering this, the analysts have set a one-year price target for Herbalife Ltd. (NYSE:HLF) as high as $13 and as low as $7. While the true value lies in management changes and strategic initiatives like the loyalty card program in China, the company can deliver returns if it’s successful in capitalizing on the business model.
Overall, HLF ranks 2nd on our list of ridiculously cheap stocks to invest in. While we acknowledge the potential of cheap stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than HLF but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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