The tariff game of U.S. President Donald Trump has resulted in a tailspin in the stock market globally. The S&P 500 Index closed below 5,000 points for the first time in almost a year and shed $5.83 trillion in market value, marking the worst four-day loss since the benchmark’s inception in the 1950s. The broad market index is on track to enter into a bear market, having lost almost 19% from its record close on Feb. 19.
The ultra-popular and now the largest ETF in the world, Vanguard S&P 500 ETF VOO, which tracks the S&P 500 Index, has also dropped 19% from its Feb. 19 peak (read: SPY, IVV, VOO Battle for Top ETF Crown Amid S&P 500 Swings).
With the S&P 500 hitting a low, valuations have fallen. We have highlighted five stocks in VOO that are undervalued, as reflected in their lower P/E ratio than industry peers. The constituent stocks have a strong Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of B or better, suggesting their outperformance in the months to come. The stocks are Universal Health Services UHS, Qualcomm QCOM, Carnival CCL, Molson Coors Beverage Company TAP and Fox Corporation FOXA.
Is This the Right Time to Buy?
A set of steep new tariffs on U.S. trading partners, including 104% levies on China, took effect today, further escalating the global trade conflict and denting market sentiment. This is expected to deepen the losses and might compel the Fed to step in to buoy the stock markets.
Trump claimed the tariffs will bring in "almost $2 billion a day" and that these will revive American manufacturing by encouraging companies to relocate their operations in the United States.
Per the latest data, traders ramped up the bets on the number of Fed cuts this year to five and pulled forward their estimate of when those cuts could begin, starting at the next meeting on May 6-7. The odds of a May cut are now above 50%. Lower interest rates generally lead to reduced borrowing costs that help businesses expand their operations more easily and increase profitability. This, in turn, minimizes the impact of tariffs on the economy and reignites confidence in the stock market.
The S&P 500’s recent pullback has helped ease some of the excess from its valuation. According to FactSet, the index is now trading at a forward price-to-earnings ratio of 19.4 —below its 5-year average of 19.9 and closer to the 10-year average of 18.3. That’s a notable drop from 22.2 in February. While the S&P 500 still is not cheap, it has returned to the 18-20 P/E range, historically associated with flat one-year returns rather than losses.
Let’s take a closer look at the fundamentals of VOO.
VOO in Focus
Vanguard S&P 500 ETF holds 506 stocks in its basket, each accounting for no more than 7.2% of the assets. It is heavy on the information technology sector, while financials, healthcare and consumer discretionary rounding off the next three spots with a double-digit allocation each.
Vanguard S&P 500 ETF charges investors 3 bps in annual fees and has an AUM of $541.4 billion. It sports a Zacks ETF Rank #1 with a Medium risk outlook (see: all the Large Cap Blend ETFs here).
Below, we have highlighted the abovementioned five cheap stocks in the ETF.
Universal Health owns and operates (through its subsidiaries) acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers and radiation oncology centers. It saw a positive earnings estimate revision of $1.02 for this year over the past 30 days and has an estimated earnings growth rate of 14.03%. Universal Health has a P/E ratio of 9.15 compared with the industry average of 9.86. It has a Zacks Rank #1 and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Qualcomm is a fabless semiconductor company. It saw an earnings estimate revision of a couple of cents for this year over the past seven days. QCOM has a P/E ratio of 10.58 compared with the industry average of 18.40. It carries a Zacks Rank #2 and has a VGM Score of A.
Carnival operates as a cruise and vacation company. It is the world’s leading leisure travel firm and carries nearly half of the global cruise guests. The company saw a positive earnings estimate revision of a penny over the past seven days for the fiscal year (ending November 2025), with an estimated growth rate of 31%. Carnival has a P/E ratio of 8.97 compared with the industry average of 15.20. It has a Zacks Rank #2 and a VGM Score of A.
Molson Coors is a global manufacturer and seller of beer and other beverage products with an impressive diverse portfolio of owned and partner brands. It saw a solid earnings estimate revision of a couple of cents for this year over the past 30 days and has an estimated earnings growth rate of 6.88%. TAP has a P/E ratio of 9.19 compared with the industry average of 14.60. It has a Zacks Rank #2 and a VGM Score of B.
Fox Corporation is a news, sports and entertainment content provider. It became a standalone, publicly traded company on March 21, 2019, following the merger of Disney and Twenty-First Century Fox, Inc. The stock has seen a positive earnings estimate revision of a couple of cents over the past seven days for the fiscal year (ending June 2025), with an estimated growth rate of 28.9%. Fox Corporation has a P/E ratio of 10.73 compared with the industry average of 10.99. It has a Zacks Rank #2 and a VGM Score of B.
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