In this article, we will discuss the 10 Best Bargain Stocks to Buy in May.
While increasing tariffs and a hard sell-off have resulted in uncertainty, Neuberger Berman, an investment manager, expects that negotiations can bring some relief to initial tariff proposals. Furthermore, the firm anticipates a sharply slower growth than a US recession. Also, it believes that stimulus in Europe and China can rejuvenate global industrial activity, and the firm recommends styles, sectors, and regions that are most geared to it.
Investment Style- Where Do Opportunities Lie?
Given that a significant amount of tariff shock has now been priced in, Neuberger Berman is constructive on global equities for the remainder of the year. The firm expects that an ongoing recovery in the global industrial economy might be dampened but not derailed. The underlying momentum in the goods economy is expected to support equities that are most levered to it. Furthermore, the firm prefers value over growth (which is relatively expensive) and small caps over large caps. While an overdose of growth-inhibiting policy can impact the relatively healthy economy and push it into recession, the investment management firm believes that the US hasn’t yet reached that point. As per the firm, performance during the decline demonstrates relative strength in some of the more cyclical economic sectors in the US and around the world. The goods-oriented sectors, regions, and styles continue to outperform amidst the recent sell-off.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
What Lies Ahead?
S&P Global expects inflation to remain closer to 3.0% in 2025 as tariffs raise the prices along the domestic supply chain as well as for the end consumers. For 2026, the firm expects growth to pick up after a slow start. This is because of the abatement of uncertainty associated with the structure of tariffs and the further easing of the policy rate by the Federal Reserve. Also, the growth is expected to be aided partly because of a more favorable growth backdrop in the eurozone, which can help expand US exports.
Neuberger Berman opines that a combination of improving fundamentals and stabilizing risks increased the optimism in the energy sector. As per the firm, increased global industrial activity is expected to continue to buoy oil demand and keep prices aloft. Furthermore, energy seems to be the most undervalued sector in the S&P 500 relative to the current and expected earnings growth. The investment management firm believes that much of the negative news, including regulatory concerns and geopolitical risks, seem to be factored in. This suggests that energy stocks can increase as the sentiment improves.
Amidst such trends, let us now have a look at the 10 Best Bargain Stocks to Buy in May.
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Our Methodology
To list the 10 Best Bargain Stocks to Buy in May, we used a screener to shortlist the companies that trade at a forward P/E of less than ~20.0x. Next, we chose the ones that analysts see upside to, as of April 11. We also mentioned hedge fund sentiments around each stock, as of Q4 2024. Finally, the stocks were arranged in the ascending order of their hedge fund sentiments.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Bargain Stocks to Buy in May
10. Union Pacific Corporation (NYSE:UNP)
Forward P/E as of April 11: ~18.2x
Average Upside Potential: ~19.1%
Number of Hedge Fund Holders: 93
Union Pacific Corporation (NYSE:UNP) is a rail transportation company. Citi upped the company’s stock to “Buy” from “Neutral.” As per the firm, the transports were already setting up for a difficult Q1. Adding tariffs to the mix makes the future uncertain through the remainder of 2025 and beyond. Despite the uncertainty, the significant selloff made the transport stocks more attractive on both an absolute and relative basis, says the firm. Notably, a downturn in freight demand is expected to catalyze the carrier exits and rationalize excess capacity, says Citi. The growth in international intermodal volumes offers a strong opportunity for Union Pacific Corporation (NYSE:UNP) to offset declines in other areas.
Intermodal transportation remains a critical growth area in the logistics industry, thanks to e-commerce and global trade patterns. Union Pacific Corporation (NYSE:UNP)’s strong network and strategic positioning offer it a competitive advantage in capturing growth opportunities. Furthermore, its pricing power, aided by operational improvements and service reliability, enables the company to optimize its revenue per unit. By its focus on high-value intermodal corridors and use of the pricing strategies, the company is expected to fuel revenue growth and drive profitability. Union Pacific Corporation (NYSE:UNP)’s service-led growth approach, together with its healthy market position, can help it capitalise on the opportunities and surpass the market expectations for earnings growth.
9. Exxon Mobil Corporation (NYSE:XOM)
Forward P/E as of April 11: ~13.4x
Average Upside Potential: ~22.1%
Number of Hedge Fund Holders: 104
Exxon Mobil Corporation (NYSE:XOM) is engaged in the exploration and production of crude oil and natural gas. Jason Gabelman, an analyst from TD Cowen, remains optimistic about the company’s stock, given its focus on maintaining a reasonable near-term valuation. This, together with the clear pathway to FCF growth, continues to support the analyst’s optimism. Furthermore, Exxon Mobil Corporation (NYSE:XOM)’s strategic efforts in upgrading the portfolio while, at the same time, managing its capital expenditures effectively with the help of technology-driven efficiencies and a healthy project organization cement its financial health. Given the structural cost reductions achieved over the past few years and a commitment to value creation, the company exhibits potential for sustainable growth, says the analyst.
Exxon Mobil Corporation (NYSE:XOM)’s expansion into the low-carbon power sector offers strong growth potential. With the global energy markets pivoting towards cleaner sources, its investments in this area can place it well as a leader in the energy transition. Furthermore, the diversification can result in the opening up of new revenue streams, which can attract environmentally-conscious investors and can potentially offset the risks related to the future regulations on fossil fuels. Exxon Mobil Corporation (NYSE:XOM) remains focused on positioning itself for future growth via strategic initiatives. It is expected to leverage synergies from its Pioneer Natural Resources acquisition.
8. Cisco Systems, Inc. (NASDAQ:CSCO)
Forward P/E as of April 11: ~14.5x
Average Upside Potential: ~25.5%
Number of Hedge Fund Holders: 84
Cisco Systems, Inc. (NASDAQ:CSCO) is engaged in designing, manufacturing, and selling Internet Protocol-based networking and other products related to the communications and information technology industry. Citi analysts maintained a positive stance on the company’s stock. The firm’s analysts highlighted its recent collaboration with Nvidia, which is expected to contribute to its AI order outlook. The firm’s optimism stems from the expected growth in the AI sector. Furthermore, Cisco Systems, Inc. (NASDAQ:CSCO)’s strategic moves and partnerships, mainly in the AI domain, can strengthen its position in the market.
Cisco Systems, Inc. (NASDAQ:CSCO)’s AI-driven growth strategy is expected to deliver favorable results. Given the expansion of the enterprise data center market and its critical role in it, Cisco Systems, Inc. (NASDAQ:CSCO) is well-placed to capitalize on the opportunities offered by the elevated demand for advanced AI applications and services. On February 25, the company announced plans for an expanded partnership with NVIDIA to offer AI technology solutions to enterprises. Cisco Systems, Inc. (NASDAQ:CSCO)’s expertise in networking, along with the investments in AI-specific products and services, can result in strong revenue growth. Its capability to provide end-to-end solutions for AI infrastructure can offer a competitive edge and create new market opportunities. Since enterprises continue to adopt AI workloads, they might need strong networking capabilities to aid the data-intensive applications.
7. Comcast Corporation (NASDAQ:CMCSA)
Forward P/E as of April 11: ~7.96x
Average Upside Potential: ~27.5%
Number of Hedge Fund Holders: 80
Comcast Corporation (NASDAQ:CMCSA) operates as a media and technology company. Scotiabank upped the price objective on the company’s stock to $45 from $44.50, keeping a “Sector Perform” rating. The firm sees the Telecom, Media, & Technology sector as the one which can help during a period of uncertainty as a result of economy and tariff wars. Elsewhere, Benchmark analysts maintained their optimistic outlook on the company’s stock, reiterating a “Buy” rating and a $55.00 price objective. Notably, Comcast NBCUniversal has announced its intent to pursue the first-ever Universal entertainment resort complex in the UK and Europe. This will be the first Universal-branded theme park and resort in Europe, enhancing the company’s global footprint.
Comcast Corporation (NASDAQ:CMCSA) announced its intent to create a new publicly traded company comprising a strong portfolio of NBCUniversal’s cable television networks, which include USA Network, CNBC, MSNBC, Oxygen, E!, SYFY and Golf Channel together with complementary digital assets such as Fandango and Rotten Tomatoes, GolfNow and Sports Engine, via a tax-free spin-off. Comcast Corporation (NASDAQ:CMCSA) will be well-placed to continue to invest in the strategic core growth businesses throughout Content & Experiences and Connectivity & Platforms businesses, such as residential broadband, wireless, business services, streaming, studios, and theme parks. Notably, the transaction is expected to be accretive to revenue growth at Comcast Corporation (NASDAQ:CMCSA).
6. Alphabet Inc. (NASDAQ:GOOGL)
Forward P/E as of April 11: ~17.6x
Average Upside Potential: ~33.6%
Number of Hedge Fund Holders: 234
Morningstar believes that Alphabet Inc. (NASDAQ:GOOGL) has a wide moat, stemming from its intangible assets, network effect, cost advantage, and customer switching costs. The company’s core advertising business remains deeply entrenched in advertising budgets, enabling the company to reap the benefits arising from a secular increase in digital advertising spending. With enterprises seeking to digitize their workloads, Alphabet Inc. (NASDAQ:GOOGL) possesses significant opportunity in the public cloud space.
Morningstar expects the Google Search business to grow at a mid-to-high single-digit level over the upcoming 5 years. Furthermore, the firm anticipates YouTube to grow at a low double-digit rate in the upcoming 5 years as a healthy advertising business continues to be aided by the growing subscription business. Alphabet Inc. (NASDAQ:GOOGL) has a robust competitive position in the broader tech industry, thanks to its extensive distribution network and advanced AI infrastructure. Furthermore, Alphabet Inc. (NASDAQ:GOOGL)’s future growth remains heavily dependent on its AI initiatives and the successful AI integration throughout its product suite. Also, the expansion of AI capabilities in search, advertising, and cloud services offers numerous revenue growth opportunities.
Cooper Investors, an investment management firm, released its Q3 2024 investor letter. Here is what the fund said:
“Alphabet Inc.’s (NASDAQ:GOOGL) operating performance remains strong with sales growing 14% in the most recent quarter. Highlights included the ongoing secular growth of digital advertising driving Google search (+14%), YouTube’s continued success as a leading content platform (+13%) and the performance of the Cloud business (+29%). In conjunction with this strong sales momentum, Alphabet’s increased focus on expenses is delivering margin expansion such that Operating Income grew 26%.
Despite this operational momentum, Alphabet’s share price declined 11% in the quarter as a federal judge ruled against the company in its case with the US Department of Justice. The case pertains to Google’s monopolisation of both the search and digital advertising markets which is claimed to limit competition and innovation and/or in
Potential remedies include prohibiting exclusive agreements which make Google the default search engine on Apple or Samsung devices, forcing Alphabet to share its advertising technology with rivals, or in the extreme breaking the company apart. The timing and outcomes remain somewhat uncertain however we remain of the belief that at the fundamental level Alphabet’s products are best of breed across several verticals and are benefitting from secular industry trends and that these factors will be the ultimate determinant of long-term shareholder returns.”
5. NextEra Energy, Inc. (NYSE:NEE)
Forward P/E as of April 11: ~18.02x
Average Upside Potential: ~34.4%
Number of Hedge Fund Holders: 84
NextEra Energy, Inc. (NYSE:NEE) is engaged in generating, transmitting, distributing, and selling electric power to retail and wholesale customers. Morgan Stanley analyst David Arcaro maintained a “Buy” rating on the company’s stock, setting a price objective of $95.00. The analyst’s rating is backed by factors demonstrating the company’s strategic positioning and capabilities amidst the evolving energy market. NextEra Energy, Inc. (NYSE:NEE)’s extensive expertise and infrastructure throughout renewables, gas, and nuclear energy, together with the strong development pipeline, place it at the forefront in the growing power demand.
NextEra Energy, Inc. (NYSE:NEE)’s emphasis on renewable energy, which is regarded as the most scalable and cost-effective solution, remains in line with the broader industry’s pivot toward sustainable energy sources, says the analyst. Furthermore, the company’s capability to use advanced technology and data analytics across operations bolsters its competitive edge. NextEra Energy, Inc. (NYSE:NEE)’s market position enables it to capitalize on the dynamic renewable energy market. Its experience and scale in developing and operating renewable energy projects provide it with a significant edge.
Madison Investments, an investment advisor, released its Q3 2024 investor letter. Here is what the fund said:
“The top contributors in the quarter were NextEra Energy, Inc. (NYSE:NEE), Oracle Corporation, Progressive Corporation, Equifax Inc., and United Healthcare. NextEra has continued to perform well given its strong position in the renewable energy space, increasing demand for power, its transmission capabilities, as well as a tailwind from lower interest rates.”
4. Toyota Motor Corporation (NYSE:TM)
Forward P/E as of April 11: ~8.17x
Average Upside Potential: ~35.1%
Number of Hedge Fund Holders: 13
Toyota Motor Corporation (NYSE:TM) is engaged in designing, manufacturing, assembling, and selling passenger vehicles, minivans and commercial vehicles, and related parts and accessories. Reuters, while quoting the Nikkei newspaper, reported that the company targets to have ~15 EV models developed on its own by 2027. Toyota Motor Corporation (NYSE:TM) is targeting production of ~1 million cars a year by then. The company has 5 EV models developed in-house, manufacturing them in Japan and China, highlighted Reuters (while quoting the Nikkei). The expansion of production to the US, Thailand, and Argentina is expected to help hedge against tariff and foreign exchange risks and cut the delivery times.
Toyota Motor North America has released March 2025 US sales of 231,335 vehicles, reflecting an increase of 7.7% on a volume basis and an increase of 11.8% on a daily selling rate (DSR) basis as compared to March 2024. The sales of electrified vehicles for the month sat at 112,608, up by 44.1% on a volume basis and by 49.6% on a DSR basis, representing 48.7% of the total sales volume. Toyota Motor Corporation (NYSE:TM) highlighted that Toyota Battery Manufacturing, North Carolina (TBMNC) is its 11th manufacturing entity in the US and the first to produce batteries for HEVs, PHEVs, and BEVs in the country. Overall, the Toyota Motor Corporation (NYSE:TM)’s aggressive push in the broader EV market, aided by robust investments and the expansion of its vehicle line-up, places it well to reap the benefits of elevated demand for EVs.
3. Adobe Inc. (NASDAQ:ADBE)
Forward P/E as of April 11: ~17.2x
Average Upside Potential: ~48.9%
Number of Hedge Fund Holders: 117
Adobe Inc. (NASDAQ:ADBE) operates as a diversified software company. Morningstar believes that the company is a clear leader in software solutions for the creative industry and opines that it is well-placed to capitalize on the ongoing transition toward Gen AI. The firm believes that a relatively frictionless cross-selling opportunity remains in place for Adobe Inc. (NASDAQ:ADBE), as creative professionals are deeply connected to its products. Elsewhere, analyst Tyler Radke of Citi maintained a “Hold” rating on the company’s stock, retaining the price objective of $430.00.
The rating was backed by factors highlighting Adobe Inc. (NASDAQ:ADBE)’s current strategic position and prospects. The analyst highlighted optimism about its AI opportunities, mainly with its Firefly initiative and the potential for long-term revenue growth. Also, Radke noted the company’s efforts to align go-to-market initiatives and SKUs with the right audience segments. Adobe Inc. (NASDAQ:ADBE)’s extensive AI integration throughout the product suite places it well to capitalize on the elevated demand trends for AI-enhanced creative and productivity tools.
Guinness Global Innovators, an investment management company, published its Q4 2024 investor letter. Here is what the fund said:
“Adobe Inc. (NASDAQ:ADBE) faced challenges this year, ending as the Fund’s worst-performing stock (-25.5% USD). Investor concerns about Adobe’s AI strategy and underwhelming earnings reports played a key role in performance over the year. Adobe started the year with optimism surrounding its generative AI innovations and the company seemed poised to capitalize on the surging demand for creative and marketing automation tools. Its AI-driven platform, Firefly, launched in March 2023, quickly gained traction, generating over 16 billion creative outputs and setting adoption records. However, despite this strength, Adobe’s stock has underperformed, as earnings reports over the year have appeared softer than initially expected from investors. The market reaction however was not caused by scepticism about Adobe’s AI products and tools, but rather driven by concerns on the ability to monetise these quickly. The creative design market has seen intensifying competition with competitors like OpenAI, Canva and even startups introducing generative AI content tools such as text-to-video tools. Adobe’s strategy has appeared to be focused on prioritising widespread adoption over immediate monetization, echoing its successful strategy with PDF in previous years. While larger enterprises have adopted and appreciate Adobe’s ‘commercially safe’ tools compared to peers, Adobe sees a large opportunity amongst those that were not traditionally users of the Adobe’s tools, whether enterprise employees or non-enterprise customers and have thus chosen to drive proliferation of their tools in these ‘untapped’ consumers and delay monetisation. Whilst some AI tools have missed revenue expectations through the year, the increased proliferation and the increasing costs of creating content should improve Adobe’s prospects of monetisation into FY25. Further, despite these short-term challenges, Adobe has a track record of high-quality attributes and long-term growth prospects. Its extensive distribution network, and loyal customer base provide it with a durable competitive edge. The company’s subscription-based model, which accounts for over 90% of its revenue, ensures stable cash flows and high margins. Finally, its brand equity as the industry standard in creative and document solutions supports ongoing market leadership, allowing us to remain confident in Adobe’s ability to navigate current challenges and deliver sustained value over time.”
2. The Walt Disney Company (NYSE:DIS)
Forward P/E as of April 11: ~15.5x
Average Upside Potential: ~53.1%
Number of Hedge Fund Holders: 108
The Walt Disney Company (NYSE:DIS) operates as an entertainment company. Bernstein analysts, led by Laurent Yoon, reiterated an “Outperform” rating on the company’s stock, maintaining a price objective of $120.00. The assessment highlighted the multifaceted nature of the company’s operations, which consist of Linear/Sports, Parks, and streaming segments, with each possessing unique challenges and opportunities. Over the mid-term, the firm anticipates The Walt Disney Company (NYSE:DIS) to witness margin expansion in its Direct-to-Consumer (DTC) segment and additional cruise ship capacity.
The Walt Disney Company (NYSE:DIS)’s vast and diverse content portfolio, consisting of strong franchises, offers a healthy foundation for fueling streaming subscriber growth and retention. The extensive library, together with its ability to develop new, high-quality content, places the company well amidst the competitive streaming landscape. A range of The Walt Disney Company (NYSE:DIS)’s franchises possesses worldwide popularity, aiding the international expansion of the streaming services. Furthermore, its content caters across age groups, which makes it suitable for family subscriptions and reducing churn.
ClearBridge Investments, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:
“While we had already begun to shift toward a more defensive positioning entering the quarter, we made a number of adjustments in response to the rapid-fire developments in both economic and political policy. Among our largest new positions during the period was The Walt Disney Company (NYSE:DIS), as we believe that it has turned a corner on building out its streaming service, which should help margins inflect higher and help drive better earnings than the market currently anticipates. The shift in management’s strategy, from “market share growth at all costs” to a more focused approach on improving pricing should also help to improve both profitability and margins, and we believe that there remains meaningful upside compared to other streaming service providers at similar scale.”
1. Alibaba Group Holding Limited (NYSE:BABA)
Forward P/E as of April 11: ~10.4x
Average Upside Potential: ~55.4%
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) provides internet infrastructure, electronic commerce, online financial, e-commerce, retail, as well as internet content services through global marketplaces, and offers entertainment, digital media, logistics, and cloud computing solutions. Citi analyst Alicia Yap reaffirmed a “Buy” rating on the company’s stock with the consistent price objective of $169.00. The analyst exhibited a favourable outlook on the latest AI advancements and expects that Alibaba Group Holding Limited (NYSE:BABA), together with other Chinese tech entities, will continue to expedite and refine technological progress over the coming months.
Alibaba Group Holding Limited (NYSE:BABA)’s emphasis on AI forms part of its broader strategy to remain at the forefront of technological innovation and to offer cutting-edge solutions to its clients. With the company continuing to invest in AI and other technologies, Citi remains optimistic about the stock. The AI integration across the platforms can result in enhanced operational efficiency, improved user experiences, and new revenue streams. Using AI to enhance e-commerce platforms can result in improved ad-tech capabilities.
Nightview Capital, an investment management company that concentrates exclusively on publicly traded equity strategies, published its Q4 2024 investor letter. Here is what the fund said:
“Artificial intelligence is no longer just a promise—it’s becoming the defining force of the modern economy. From self-driving vehicles to humanoid robotics, intelligent systems are not only enhancing efficiency but unlocking entirely new markets. These systems process and learn from vast amounts of real-world data, iterating and improving at a scale no human could achieve.
In our view, this isn’t just innovation; it’s exponential evolution. Companies leading the AI revolution are building formidable data moats, making it nearly impossible for latecomers to compete. Every mile driven by an autonomous vehicle, every task completed by an industrial robot—these actions feed a cycle of continuous improvement.
Industries like transportation, healthcare, and logistics are on the brink of massive disruption, and we believe this is a pivotal moment.
Alibaba Group Holding Limited (NYSE:BABA): Core Opportunity” Alibaba’s focus on stabilizing its core businesses, coupled with growth of its cloud and AI divisions, positions the company for a breakout. With 25% of its market cap in cash, We believe Alibaba offers a highly compelling risk / reward opportunity from a valuation perspective.
Competitive Advantage: Core Business Recovery: Alibaba’s e-commerce platforms, including Taobao with 930 million monthly active users, remain instrumental in China’s retail landscape. Revenue grew 5% YoY in the latest quarter, reflecting strategic improvements in user experience and pricing…” (Click here to read the full text)
While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than BABA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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