In a recent publication, we introduced our readers to a selection of 11 remarkably affordable stocks worth considering for investment. Today, we will delve into the specific standing of Diversified Energy Company PLC (NYSE:DEC) in relation to these other attractively priced stocks.

Much like shoppers searching for the best deals in the commodity marketwhere comparing relative prices and identifying discounted products is keythe financial market demands a similar approach. In both scenarios, the price point of an asset is of paramount importance.

In today's climate, characterized by inflated stock prices, the ability to discover a hidden gem separates the sagacious investor from one driven by impulse. An astute investor understands that the true value of an investment is not solely about the asset but largely hinges on the price paid for it. Such insight allows them to pinpoint stocks that may be underappreciated yet possess significant potential.

To grasp what constitutes a cheap stock, it is essential to clarify its meaning. There are typically two prevailing interpretations of this term. Firstly, a stock may be considered cheap simply due to its low share price. Secondly, and more commonly, a cheap stock is recognized as one that is undervalued relative to its intrinsic worth, which is evaluated based on various factors including the company's earnings, revenue, or asset holdings. Our analysis aligns with this latter interpretation, suggesting that a cheap stock is one that trades below its true potential, rendering it an appealing investment opportunity.

One effective method for identifying cheap stocks is through the forward price-to-earnings (P/E) ratio, a critical metric that helps investors assess how much they are paying for each dollar of a companys earnings. A low P/E ratio can indicate an undervalued stock, especially when it is compared with competitors, historical averages, or the broader market performance.

A comprehensive report by Hoover Capital Management (HCM) sheds light on the historical performance of value stocks versus growth stocks, employing the French High Minus Low (HML) factor to analyze data spanning an impressive 97 years, from July 1926 to December 2023. The findings overwhelmingly support the principles of value investing. Notably, the cumulative returns of value stocks have outstripped their growth counterparts by a staggering 3,000%. This translates to a remarkable 30-fold greater return for value investing compared to growth investing.

Further bolstering this narrative is research conducted by economist Victoria Galsband, which revealed that undervalued stocks consistently outperformed growth stocks across all G7 nationsincluding Canada, the United States, Japan, and leading European nationsover a time frame stretching from 1975 to 2010.

Additionally, a study analyzing the effects of companies being added to or removed from the S&P index on their market valuations reveals some striking insights. It was found that removals from the index are often linked to stock undervaluation, while additions may correlate with inflated valuations. Research by Research Affiliates further substantiates this, showing that stocks excluded from the S&P index between 1990 and 2022 outperformed newly added stocks by over 5% annually. This data reinforces our perspective that undervalued stocks, synonymous with cheap stocks, are poised to deliver superior returns.