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In this article, we take a look at the 15 most undervalued value stocks, according to hedge funds.To see more such companies, please visit directly Buy the 5 most undervalued value stocks, according to hedge funds.
Investors will start piling into value stocks in 2022 as financial markets rock amid rising inflation, tightening Fed policy and uncertain geopolitical conditions. Goldman Sachs experts expect a broader market rotation toward value stocks to continue this year, according to a Bloomberg report released in early January.Gold led by Peter Oppenheimer Value stocks will gain more momentum in 2023 as technology stocks continue to feel margin pressure, the Man Sachs team said in a note.
Post-pandemic euphoria in tech stocks has given way to speculative buying. Investors were willing to pay premiums to loss-making tech companies whose profits hung in the distant future. But as markets began to adjust, investors became more wary of tech stocks, unable to develop a stomach for the enormous risks. He quotes multiple experts who believe value stocks are preferred over technology stocks. Bank of America’s Savita Subramanian, for example, said investors should “avoid crowded parts of the stock market, including big tech,” according to the report.
Morgan Stanley strategist Michael Wilson also reportedly warned that technology companies’ profit margins are likely to take a hit this year.
Investors now prefer value stocks with strong fundamentals and profitable businesses. Many popular value stocks also pay dividends. As you can see in this article, finance, energy and healthcare dominate the sector. Meanwhile, value investors continue to shy away from tech stocks that are unprofitable and lack near-term growth prospects. However, some analysts say that technology companies of this size offer an attractive entry point for investors, so leading technology stocks such as Meta Platforms are attracting the attention of value investors. More details will be provided later in the article. First, let’s take a look at the methodology of this article.
our methodology
In this article, we scrutinize the top Vanguard Value ETF (VTV) stocks and select stocks with a PE ratio of less than 18 as of January 26th. As a result, a long list of stocks was created. We then selected the 15 of these stocks with the most hedge fund backings as of the end of the third quarter. To do so, we used Insider Monkey’s premium database of 920 hedge funds. That said, the stocks mentioned in this article are some of the most popular undervalued stocks among elite hedge funds.
The list is ranked by the number of hedge funds that have stakes in these companies.
Buy the most undervalued value stocks, according to hedge funds
15. 3M (NYSE:hmm)
Hedge fund holders: 49
3M Company (NYSE:MMM) is one of the most undervalued value stocks, according to hedge funds. A total of 49 hedge funds tracked by Insider Monkey reported that he had stakes in 3M Company (NYSE:MMM) at the end of the September quarter.
14. Morgan Stanley (NYSE:MS)
Hedge fund holders: 52
Morgan Stanley (NYSE:MS) ranks 14th on the list of the most undervalued value stocks, according to hedge funds. Morgan Stanley (NYSE:MS) has consistently increased its dividend for more than a decade. Morgan Stanley (NYSE:MS) has a dividend yield of over 3% as of Jan. 26 and a PE ratio of 15.68. Earlier in January, Morgan Stanley (NYSE:MS) announced a quarterly dividend of $0.775 per share, as before. The expected dividend yield at the time was 3.38%.
At the end of the third quarter, 52 hedge funds tracked by Insider Monkey reported holding shares in Morgan Stanley (NYSE:MS), compared with 58 funds last quarter. The total amount of these bets he made was $3.3 billion.
Here’s what the Madison Dividend Income Fund has to say about Morgan Stanley (NYSE:MS) in its Q3 2022 investor letter.
“The highlight of the quarter was Morgan Stanley (NYSE:MS) is an example of relative yields in the financial sector. MS is a leading investment bank and wealth management company managing approximately $5 trillion in client assets. After the 2008 recession/financial crisis, we integrated Citigroup’s Smith Barney business into our own wealth management business, resulting in a more stable business model. The recent acquisitions of asset managers Eaton Vance and E*Trade provide additional stability and a strong return on capital. We believe that MS has a sustained competitive advantage due to its size and scale, global reach, strong reputation and financial distribution capabilities. Importantly for financial institutions, at the end of 2021, all key leverage ratios, including Common Equity Tier 1 Ratio, Tier 1 Capital Ratio, Tier 1 Leverage Ratio and Supplemental Leverage Ratio, are well above required minimums financial soundness is good.
Our argument for MS is that its wealth management business will continue to be a larger part of the company overall, improving overall profitability and return on equity (ROE). Wealth and asset management are less cyclical than investment banking, often yielding higher profit margins and more stable financial results. For example, the addition of Smith Barney has significantly increased our scale, increased our Wealth Management operating margin from less than 10% to mid-20% over the past few years, and also improved our return on equity. Going forward, we believe the company will benefit if asset prices rise and interest rates rise over the long term…” (Click here for full text)
13. EOG Resources, Inc. (NYSE:EOG)
Hedge fund holders: 52
Energy company EOG Resources, Inc. (NYSE:EOG) is one of the best buys among undervalued bargains, according to hedge funds. EOG Resources, Inc. (NYSE:EOG) has a PE ratio of 10.68 as of January 26. EOG Resources, Inc. (NYSE:EOG) is a dividend paying company with a dividend yield of 2.43% as of January 26th.
A total of 52 hedge funds tracked by Insider Monkey had stakes in EOG Resources, Inc. (NYSE:EOG) as of the end of the September quarter.
12. Verizon Communications (NYSE:VZ)
Hedge fund holders: 62
Verizon Communications Inc. (NYSE:VZ) is one of the most stable companies. Verizon Communications Inc. (NYSE:VZ) has consistently increased its dividend for the past 16 years. The telecommunications giant posted a retail postpaid net addition of 1.43 million in the fourth quarter. It was Verizon Communications’ (NYSE:VZ)’s best quarter in seven years. Postpaid phone net additions were 217,000 during the period. In 2023, Verizon Communications (NYSE:VZ) expects EPS to be in the range of $4.55 to $4.85. Earnings before interest, taxes, depreciation and amortization are expected to be $47 billion to $48.5 billion.
As of the end of the September 2022 quarter, Verizon Communications Inc.’s (NYSE:VZ) largest shareholder was Ken Griffin’s Citadel Investment Group, which owned $204 million in shares.
11. ConocoPhillips (NYSE:policeman)
Hedge fund holders: 64
With a dividend yield of over 4%, ConocoPhillips (NYSE:COP) is one of the hottest stocks these days as investors look to rack up solid dividends for certainty and steady income. ConocoPhillips (NYSE:COP) is up about 40% over the past 12 months. Still, as of January 27, the PE ratio is 8.9.
As of the end of the third quarter, 77 hedge funds tracked by Insider Monkey reportedly had stakes in ConocoPhillips (NYSE:COP). The total value of these shares was approximately $5 billion. ConocoPhillips’ (NYSE: COP)’s largest shareholder was Ken Fisher’s Fisher Asset Management, which holds $709 million in shares.
10. Chevron Corporation (NYSE:CVX)
Hedge fund holders: 66
Shares of oil giant Chevron (NYSE:CVX) soared on Jan. 26 after the company revealed plans to buy back about $75 billion worth of its shares. Chevron (NYSE:CVX) also increased its quarterly dividend by a whopping 6%. The news comes as investors flock to dividend-paying value stocks like Chevron (NYSE:CVX) to deposit cash amid recession fears. Hedge funds also like Chevron stock. As of the end of the third quarter of 2022, 66 hedge funds reportedly own shares of his Chevron (NYSE: CVX). At the end of the second quarter, that index was 59. This indicates positive hedge fund sentiment for equities.
(NYSE:CVX)’s share repurchase announcement, Bank of America’s Doug Leggate said Chevron’s (NYSE:CVX) buyback plan “allows for a balance sheet on the way to zero net debt, while this management I am talking about the balancing act that has navigated the Capital discipline and sustainable dividend growth. ”
9. Intel Corporation (NASDAQ:INTC)
Hedge fund holders: 69
A total of 69 hedge funds tracked by Insider Monkey reported holding shares in Intel (NASDAQ:INTC) as of the end of the third quarter, compared with 65 funds the previous quarter.
Shares of Intel (NASDAQ:INTC) plunged more than 6% on Jan. 26. The company’s fourth-quarter results were disappointing and its first-quarter guidance also signaled further weakness in its Intel (NASDAQ:INTC) business. Intel (NASDAQ:INTC) expects a loss of $0.15 per share in the first quarter, excluding one-off items. Revenue is expected to be between $10.5 billion and he’s $11.5 billion.
8. Goldman Sachs Group (NYSE:GS)
Hedge fund holders: 69
Goldman Sachs Group (NYSE:GS) is an attractive value stock. Goldman Sachs Group (NYSE: GS) has a dividend yield of about 2.8% for him as of Jan. 26. Of the 920 hedge funds in Insider Monkey’s database, 69 have stakes in Goldman Sachs Group (NYSE). :GS).
Earlier this month, Wells Fargo Securities analyst Mike Mayo said Goldman Sachs Group Inc. (NYSE:GS) was “probably going to stall soon.” Analysts were citing reports that the Federal Reserve has launched an investigation into the investment bank’s consumer business.
7. Exxon Mobil Corporation (NYSE:XOM)
Hedge fund holders: 75
Exxon Mobil (NYSE:XOM) is one of the cheapest value stocks, according to hedge funds. Of the 920 hedge funds tracked by Insider Monkey as of the end of Q3 2022, 75 had stakes in (NYSE:XOM), compared to 72 funds the previous quarter. The total value of these stakes was $5.5 billion. Exxon Mobil’s (NYSE: XOM) largest shareholder was Rajiv Jain’s GQG Partners, which holds a $3 billion stake.
ExxonMobil (NYSE:XOM) said in early January that it would ramp up gasoline and diesel production at its Beaumont, Texas refinery, Reuters reported.
6. Pfizer (NYSE:PFE)
Hedge fund holders: 77
Pfizer Inc. (NYSE:PFE) is one of the most popular value stocks among elite hedge funds tracked by Insider Monkey. As of the end of the September quarter, 77 funds reported holdings in Pfizer (NYSE:PFE), compared with 70 funds in the previous quarter. The total value of these stakes was approximately $2.4 billion. Pfizer (NYSE: PFE)’s largest shareholder during this period was Cliff Asness’s AQR Capital Management, which held his $468 million stake in Pfizer (NYSE: PFE).
Recently, the FDA said it has not seen an increased stroke risk associated with Pfizer-BioNTech’s COVID vaccination for the elderly.
Click to read more Buy the 5 most undervalued value stocks, according to hedge funds.
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Disclosure: None. The 15 most undervalued value stocks, according to hedge funds was first published on Insider Monkey.
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