3 Historically Cheap, Safe Stocks You Can Confidently Buy in an Expensive Stock Market

The third year of Wall Street's bull market rally didn't let investors down. When 2025 came to a close, the iconic Dow Jones Industrial Average, broad-based S&P 500, and growth-focused Nasdaq Composite had gained 13%, 16%, and 20%, respectively, with all three indexes notching several record-closing highs.

But as Wall Street's major indexes have leaped into uncharted territory, so have stock valuations. According to the S&P 500's Shiller Price-to-Earnings (P/E) Ratio, which is also known as the cyclically adjusted P/E Ratio, or CAPE Ratio, this is the second priciest stock market in history, dating back to the beginning of 1871. Whereas the Shiller P/E has averaged 17.33 over the last 155 years, it ended the Jan. 23 trading session at a multiple of 40.65.

Historically, surpassing a Shiller P/E of 30 has spelled trouble for the stock market. Based on back-tested data, there have been six times since 1871 when the S&P 500's CAPE Ratio exceeded 30, including the present, and the previous five occurrences were eventually followed by declines in one or more of Wall Street's major stock indexes ranging from 20% to 89%.

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But just because the stock market is historically pricey, it doesn't mean bargains can't be found. It just means additional vetting is required by investors to unearth phenomenal deals.

What follows are three historically cheap, safe stocks -- "safe" in the sense that their downside risk appears limited -- that you can confidently buy in an expensive market.

NextEra Energy

The first safe stock that makes for a genius buy in a market that's rife with questions about its valuation is America's largest publicly traded electric utility by market cap, NextEra Energy (NYSE: NEE).

One of the easiest ways for investors to escape the "noise" on Wall Street is to put their money to work in businesses that aren't cyclical or that provide a basic need good or service. Whether you're a homeowner or renter, there's a good chance you'll need electricity to run your appliances and/or your HVAC system. Electricity demand is relatively constant from one year to the next, leading to predictable and transparent operating cash flow year after year.

To build on this point, utilities enjoy an exceptionally high barrier to entry. It takes time and a pretty penny to get the necessary infrastructure in place. With most electric utilities acting as monopolies or duopolies in the areas they serve, their cash flow projections tend to be accurate looking years into the future.

Cash flow transparency is particularly important for NextEra, given its aggressive investments in renewable energy. No electric utility in the world generates as much capacity from wind and solar power. Although these investments were costly, they've meaningfully reduced the company's electricity generation costs and lifted its annual earnings growth rate to the high single digits. Comparatively, most electric utilities grow their earnings per share (EPS) by a low single-digit percentage.

NextEra is also an ideal way to gain ancillary exposure to the artificial intelligence (AI) revolution. The proliferation of AI data centers should increase electricity demand.

As of the closing bell on Jan. 23, shares of NextEra Energy could be scooped up by opportunistic investors for 21 times forward-year EPS, representing a 9% discount to its average forward P/E over the trailing half-decade. Including dividends, NextEra has generated a positive total return for its shareholders in 21 of the last 24 years.

Image source: Sirius XM.

Sirius XM Holdings

A second shockingly inexpensive stock that can be bought with confidence amid a historically pricey market is satellite-radio operator Sirius XM Holdings (NASDAQ: SIRI). Although Sirius XM's subscriber count has tapered a bit from its all-time high, this company has all the hallmarks of a high-floor, solid-ceiling opportunity.

Easily one of the most unique aspects of Sirius XM's operating model is that it's one of America's few public legal monopolies (outside of the utility space). While Sirius XM contends with plenty of competition for listeners from terrestrial and online radio operators, it's the only company that possesses satellite radio licenses. This competitive edge translates into reasonably strong subscription pricing power.

But there's a competitive edge for Sirius XM that's, arguably, even more important than its monopoly status. Namely, its revenue mix.

Most radio operators generate a substantial portion of their revenue from advertising. While ad-based operating models thrive on prolonged periods of economic growth, they can struggle mightily during recessions.

Meanwhile, Sirius XM brought in roughly 20% of its net sales from ads through the first nine months of 2025, with approximately 76% of its net revenue tied to subscriptions. Subscribers aren't as likely to cancel their service during periods of economic turbulence as businesses are to pare back their marketing budgets. For Sirius XM, it means less prominent ebbs and flows and more cash flow predictability than its peers.

Similar to NextEra Energy, there's also a hearty capital-return program. In addition to regularly repurchasing its shares, Sirius XM is doling out a 5.3% yield, which is nearly five times higher than the average yield of the S&P 500 at the moment. With a forward P/E of 6.6, Sirius XM is valued at a 45% discount to its average forward P/E over the trailing five-year period.

PayPal Holdings

The third historically cheap, safe stock that you can purchase with confidence amid a pricey stock market is fintech leader PayPal Holdings (NASDAQ: PYPL). Despite competition picking up in the digital payments arena, which has somewhat stymied active account growth, many of PayPal's key performance indicators point to ample long-term opportunity.

To begin with, PayPal's digital payment networks, including Venmo, have seen total payment volume consistently expand by a high single-digit or low double-digit percentage on a constant-currency basis. This steady growth demonstrates the ongoing potential for digital payments and fintech services.

What's been more impressive is the engagement PayPal has observed from its active accounts. While it hasn't been a straight-line increase, the average number of payment transactions per active account over the trailing 12-month period has risen 41% to 57.6, from the end of 2020 to the third quarter of 2025. Keeping its active accounts engaged should ensure a steady climb in the company's gross profit.

PayPal has also been relying on its out-of-the-box innovations to fuel growth and boost platform engagement/loyalty. In particular, it's been leaning into buy now, pay later solutions that'll give consumers more options when making sizable purchases.

To keep with the theme of the companies on this list, investors can take solace in PayPal's capital-return program. The company has been spending north of $5 billion annually to repurchase its stock, and the board recently introduced a dividend, which is currently yielding about 1%.

To round things out, PayPal Holdings is trading at a forward P/E of less than 10, marking a 42% discount to its average forward P/E multiple since the end of 2020.

Sean Williams has positions in NextEra Energy, PayPal, and Sirius XM. The Motley Fool has positions in and recommends NextEra Energy and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2026 $65 calls on PayPal. The Motley Fool has a disclosure policy.