Sprint Nextel Corporation (S), Advanced Micro Devices, Inc. (AMD) & The S&P 500’s Best Values

2. Frontier Communications Corp (NASDAQ:FTR), $4.42

Unlike the previous two stocks, Frontier Communications Corp (NASDAQ:FTR) has been on a fairly steady downward path for years. The stock has paid out an impressive dividend thanks to its rural telecom business, which produces substantial amounts of cash flow. But ever since it took on a massive acquisition of assets from Verizon Communications Inc. (NYSE:VZ), Frontier has struggled under a much larger debt load, and that has hampered Frontier’s ability to sustain its dividend.

For Frontier Communications Corp (NASDAQ:FTR) to manufacture a turnaround, it will need to go beyond its traditional landline voice offerings to get customers to use broadband and other higher-margin services. Without successfully making that transition, Frontier’s shares could continue to dwindle away.

1. Advanced Micro Devices, Inc. (NYSE:AMD), $4.07

AMD has long played second-fiddle in the PC processor space, and periodic bouts of optimism have inevitably given way to harsh reality. More recently, the company’s efforts to diversify into the mobile arena have met with the same resistance as in the PC market, albeit from a different set of players that were quicker in recognizing the potential growth from mobile chips.

Within the past few weeks, Advanced Micro Devices, Inc. (NYSE:AMD) has soared on hopes that its placement in some new gaming consoles will help the business reverse its slide. Yet gaming alone won’t be nearly enough for the company to find a viable long-term strategy, and until Advanced Micro Devices, Inc. (NYSE:AMD) can make a meaningful impression in the fast-growing mobile space, its stock is unlikely to climb much above its current levels.

Look beyond share price
Don’t let low share prices deceive you into thinking that a stock is automatically a good value. If fundamentals like earnings and cash flow don’t support their valuation, they can be just as overpriced as a stock that trades 10 times higher. All four of these companies have faced some big struggles in the past, and while they still have potential to post future gains, they nevertheless need to work hard to overcome the obstacles in their path.

The article The 4 Cheapest Stocks in the S&P 500 originally appeared on Fool.com is written by Dan Caplinger.

Fool contributor Dan Caplinger owns warrants on Bank of America.You can follow him on Twitter: @DanCaplinger. The Motley Fool owns shares of Bank of America.

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