Finding Value in an Expensive Market: Two Bargain Stocks Worth Your Attention

When the broader market hits new all-time highs, savvy investors know exactly where to look: the dirt cheap valuations that inevitably exist even in elevated markets. While the S&P 500 continues its upward march driven by artificial intelligence hype, a contrarian strategy has proven resilient—identifying undervalued equities that offer both downside protection and genuine return potential.

With $1,000 to deploy, two stocks present compelling entry points: Carnival Corporation and Target. Both trade at bargain valuations despite vastly different operational trajectories, making them worthy candidates for value-oriented portfolios.

Carnival: Recovery Play With Fortress Economics

The cruise operator has staged a remarkable revival since pandemic lows, yet the market remains pessimistic. The stock gained 167% over three years but has stalled this year, rising just 2%. This disconnect reveals an opportunity.

Demand signals paint an entirely different picture than sentiment suggests. Carnival’s booking pipeline is exceptional—half of 2026 cruises are already committed, while 2027 bookings sit at historical highs. Third-quarter deposits reached a record $7.1 billion, and critically, they’re expanding beyond ticket sales into onboard spending categories, indicating deeper customer commitment.

The balance sheet is transforming rapidly. Management has reduced debt from a $35 billion peak to $26.5 billion—a $8.5 billion improvement in just two years. During 2025 alone, the company prepaid $1 billion in debt while refinancing $11 billion at improved rates. Moody’s recently upgraded Carnival’s credit rating, reflecting this progress.

Financial performance validates operational momentum. Third-quarter net income hit $1.9 billion—a quarterly record. The company’s model has weathered inflation effectively while maintaining strict cost discipline. At a P/E ratio below 14, Carnival trades at a dirt cheap valuation in a market where mediocre businesses command premium multiples.

Target: The Hidden Dividend Gem

Target presents a different value thesis. The retailer stumbled after riding an omnichannel wave, facing headwinds from consumer retrenchment and margin compression. Inflation particularly stung a company whose physical footprint concentrates on discretionary categories where shoppers are cutting back.

Yet beneath the operational struggles lies a fortress: Target is a Dividend King, having increased distributions for 54 consecutive years—even during this downturn. This capital commitment matters.

Signs of stabilization are emerging. While comparable sales declined 2% in the fiscal third quarter, digital comps accelerated 4%, driven by same-day fulfillment options. A new CEO assumes leadership in January, tasked with revitalizing owned brands and refreshing store experiences that historically differentiated Target.

The valuation screams opportunity. At a P/E ratio of 10, Target trades at one of the cheapest valuations available. The market has lost confidence, pricing in maximum pessimism—precisely when value investors should be attentive. The dividend yield provides income while waiting for the turnaround narrative to unfold.

Why Bargain Valuations Matter Now

In crowded markets driven by narrative investing, dirt cheap stocks serve dual purposes: they provide genuine margin of safety and they’re often where genuine alpha emerges. Whether through Carnival’s debt reduction and booking strength or Target’s multi-decade dividend commitment, these securities offer paths to outperformance that don’t depend on momentum or sentiment shifts.

Both companies trade at valuations that would have been considered steals even five years ago, yet they’re available today. That’s the opportunity.