Identifying undervalued stocks in an uncertain market environment is both a challenge and an opportunity for investors. Market cycles, economic sentiment, and valuation distortions often create conditions where fundamentally strong companies trade below their intrinsic value, which is generally termed as undervaluation. Understanding these trends and distinguishing between temporary market corrections and broader economic slowdowns is crucial for investors seeking long-term gains.
In an interview with CNBC on March 11, Chris Grisanti, MAI Capital Management chief market strategist, highlighted the importance of recognizing market signals and valuations to navigate the investment landscape effectively. He stressed that entry price is a critical factor in investing, especially as valuation distortions have grown in recent years with growth stocks significantly outperforming value stocks. Chris pointed to a shift in market trends, noting that past corrections were often led by tech stocks dragging the market down, resulting in what he viewed as natural and healthy pullbacks. However, this time, the decline is being led by economically sensitive sectors such as banks, airlines, and consumer discretionary stocks, signalling a potential economic slowdown. He cautioned that even irrational fears could become self-fulfilling, as businesses may delay spending and hiring, further exacerbating economic weakness.
Examining recent market movements, Chris noted that while tech stocks have continued to struggle, other sectors that previously showed strength, such as banking and airlines, are now also facing pressure. This broad-based decline has raised concerns about a deeper economic downturn. When asked about potential buying opportunities, he acknowledged that while airlines appear undervalued, their susceptibility to economic downturns makes them a riskier bet.
For investors seeking to capitalize on undervalued stocks, the key lies in identifying companies with strong fundamentals, stable cash flows, and a proven ability to withstand economic downturns. Companies with pricing power, consistent earnings growth, and strong balance sheets may provide attractive investment opportunities despite broader market headwinds. Additionally, sectors that have been disproportionately punished due to short-term sentiment rather than fundamental weaknesses may offer long-term value for patient investors.
While uncertainty remains in the market, periods of heightened volatility often create compelling opportunities for value-oriented investors. A disciplined approach that considers valuation metrics, industry trends, and company-specific strengths can help investors uncover undervalued stocks with significant upside potential.
With that, let’s look at our selection of the 10 best undervalued stocks to buy according to billionaires.
A close-up of a financial chart jumping as the large-capitalization value sector changes.
Our Methodology
To determine the 10 undervalued stocks to buy according to billionaires, we scanned Finviz and shortlisted the top 10 stocks that are trading at a forward price-to-earnings (P/E) below 15 and are also most favoured by billionaire investors. For the relevant data on billionaires, we leveraged Insider Monkey’s database on billionaire holdings. We then arranged the shortlisted stocks in ascending order based on the number of billionaire investors holding stakes in each company as of Q4 2024. Additionally, we provided insights into hedge fund sentiment surrounding these stocks, using data from Insider Monkey’s Q4 2024 database of hedge funds.
Note: All pricing data is as of market close on March 14.
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 Undervalued Stocks to Buy According to Billionaires
10. Alibaba Group Holding Ltd. (NYSE:BABA)
Number of Billionaire Investors: 17; Holdings: $2.6 Billion
Number of Hedge Fund Holders: 107
Forward P/E: 14.4
Alibaba Group Holding Ltd. (NYSE:BABA) is a prominent Chinese multinational technology company with strong market positions in e-commerce, cloud computing, and digital payments. Its main operations include platforms such as Alibaba, Taobao, Tmall, and Alibaba Cloud, which together cater to millions of businesses and consumers worldwide. The company’s ecosystem also extends into areas like logistics, entertainment, and enterprise solutions.
Baron Funds, an investment management firm, shared its “Baron Emerging Markets Fund” Q4 2024 investor letter, maintaining a positive view on Alibaba despite its underperformance in the last quarter of 2024. They commented:
“We retain conviction that Alibaba is well positioned to benefit from China’s ongoing growth in online commerce and cloud in China, though competitive market concerns remain.”
Alibaba Group Holding Ltd. (NYSE:BABA) has recently committed over $53 billion towards developing AI and cloud computing infrastructure, including data centers, over the next three years. Moreover, the company introduced its open-source AI model, QwQ-32B, reflecting its aim to lead in artificial intelligence. As China’s economy stabilizes, Alibaba is forecasted to regain growth momentum, especially in international e-commerce and cloud computing, driven by these substantial investments.
The stock has a consensus Buy rating, with a 1-year median price target of $165.7, suggesting an approximate 18% potential upside.
9. The Cigna Group (NYSE:CI)
Number of Billionaire Investors: 17; Holdings: $2.3 Billion
Number of Hedge Fund Holders: 72
Forward P/E: 10.6
The Cigna Group (NYSE:CI) is a leading global health services company offering insurance and healthcare solutions for individuals, employers, and government organizations. Cigna’s operations span medical, dental, disability, life, and pharmacy benefits, with a strong emphasis on managed care and cost-effective healthcare delivery. Through its Evernorth subsidiary, the company is expanding into health services, pharmacy benefit management, and digital health solutions.
In his January 31 report, Jefferies analyst David Windley maintained a Buy rating on The Cigna Group (NYSE:CI), citing a positive outlook. He noted that the company’s 2025 guidance appears conservative, especially if certain costs and investments are not fully realized. Additionally, relatively mild pharmacy benefit management regulations could provide further upside in the next six months. The analyst also highlighted that the company’s projected earnings per share growth for 2026 exceeds its long-term plan, with a 14% increase driven by core earnings growth and share buybacks. Despite challenges in the stop-loss market (coverage to protect against extremely high claims), management’s approach suggests potential for recovery and repricing, supporting high single-digit organic growth in 2025.
8. Citigroup Inc. (NYSE:C)
Number of Billionaire Investors: 17; Holdings: $4.5 Billion
Number of Hedge Fund Holders: 101
Forward P/E: 9.1; P/B: 0.68
Citigroup Inc. (NYSE:C) is a global financial services holding company offering banking, wealth management, and investment solutions across nearly 160 countries. The company is a leader in cross-border transactions and corporate banking, leveraging its vast international presence to serve multinational corporations and institutional investors.
Citigroup Inc. (NYSE:C) remains a key player in global banking, with a strong presence in corporate banking, wealth management, and capital markets. The company has been streamlining its operations through cost-cutting initiatives and exiting non-core markets to improve profitability. However, Morgan Stanley analyst Betsy Graseck, on March 13, lowered the price target from $110 to $109, although reaffirmed an Overweight rating. The analyst highlighted that the expected capital markets rebound in 2025 has not materialized as she anticipated, leading to reduced investment banking revenue estimates due to market volatility delaying deal activity. However, she noted that large-cap banks and mid-cap advisory stocks seem oversold based on her updated estimates.
7. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Billionaire Investors: 17; Holdings: $1.9 Billion
Number of Hedge Fund Holders: 88
Forward P/E: 8.8
Bristol-Myers Squibb Company (NYSE:BMY) is a global biopharmaceutical company focused on discovering, developing, and delivering innovative medicines for serious diseases. The company specializes in oncology, immunology, cardiovascular, neuroscience and haematology therapies.
In early February, Leerink Partners analyst David Risinger reiterated a Buy rating on Bristol-Myers Squibb Company (NYSE:BMY), citing strong long-term prospects. As per him, while the Phase 3 trial for Opdualag in adjuvant melanoma treatment did not meet its primary endpoint, the company’s overall outlook remains positive. The analyst sees significant opportunity in the adjuvant market and highlights Bristol-Myers’ robust pipeline, with multiple catalysts expected between 2025 and 2027. Despite the trial setback, he believes it does not materially change the bullish case for BMY, given the company’s strong research and development efforts.
6. Micron Technology Inc. (NASDAQ:MU)
Number of Billionaire Investors: 18; Holdings: $1.0 Billion
Number of Hedge Fund Holders: 94
Forward P/E: 14.1
Micron Technology Inc. (NASDAQ:MU) designs, develops, manufactures, and markets memory and storage products, including dynamic random-access memory (DRAM), flash memory (NAND), solid-state drives (SSDs), and High Bandwidth Memory (HBM) globally. The company is well-positioned to capitalize on technological advancements in AI, 5G, autonomous vehicles, and data centers.
A Wolfe Research analyst lowered Micron Technology Inc. (NASDAQ:MU) price target from $175 to $150 but reaffirmed an Outperform rating. The analyst expects a recovery in the second half of 2025, driven by a better supply/demand balance and continued growth in high-bandwidth memory. However, recent management commentary about pricing pressure and an unfavourable product mix led him to reduced estimates. Despite the near-term challenges, the analyst still considers Micron one of its top semiconductor picks.
5. Bank of America Corp. (NYSE:BAC)
Number of Billionaire Investors: 18; Holdings: $36.3 Billion
Number of Hedge Fund Holders: 113
Forward P/E: 11.1; P/B: 1.14
Bank of America Corp. (NYSE:BAC) is one of the largest financial institutions in the world, offering a comprehensive suite of banking, investment, and wealth management services. With a strong presence in retail banking, corporate lending, and capital markets, the company serves millions of consumers, businesses, and institutional clients.
In early March, Baird analyst David George upgraded Bank of America Corp. (NYSE:BAC) from Neutral to Outperform and raised the price target from $45 to $50. The analyst noted that despite recent pressure on the stock, the company remains a key player in U.S. banking and is now trading at an attractive price. He also highlighted the bank’s strong position as a creditor, robust market operations, solid deposit business, and overall strong execution.
4. JD.com Inc. (NASDAQ:JD)
Number of Billionaire Investors: 18; Holdings: $1.8 Billion
Number of Hedge Fund Holders: 78
Forward P/E: 9.3
JD.com Inc. (NASDAQ:JD) is one of China’s largest e-commerce platforms, known for its strong logistics network and commitment to product authenticity. Unlike traditional marketplace models, JD.com controls its own supply chain, offering fast and reliable deliveries through its extensive warehousing and fulfillment infrastructure.
Following strong 2024 earnings results, a Mizuho analyst raised the price target on JD.com Inc. (NASDAQ:JD) from $43 to $50 while reiterating an Outperform rating. The analyst noted that JD.com delivered better-than-expected results, with revenue growth and margin expansion driven by government trade-in programs for appliances and electronics, as well as an improved supermarket selection. The increase in price target reflected the company’s solid performance and positive outlook.
3. QUALCOMM Inc. (NASDAQ:QCOM)
Number of Billionaire Investors: 19; Holdings: $2.6 Billion
Number of Hedge Fund Holders: 79
Forward P/E: 13.5
QUALCOMM Inc. (NASDAQ:QCOM) is a leading global semiconductor company specializing in wireless telecommunications technology. The company is a pioneer in 5G, providing key chipsets and system-on-chip solutions for mobile devices, automotive applications, and IoT ecosystems. QUALCOMM’s Snapdragon processors power a vast range of smartphones and connected devices.
QUALCOMM Inc. (NASDAQ:QCOM) reported impressive Q1 2025 results on February 5, surpassing expectations. The company achieved a 17% rise in total revenue to $11.7 billion and net income of $3.8 billion, with a robust net margin of 27.3%. Its semiconductor unit, Qualcomm CDMA Technologies (QCT), saw strong performance across all major markets and the Qualcomm Technology Licensing (QTL) segment also thrived, with a 20% revenue increase.
Although there were concerns over a potential slowdown in smartphone industry growth, analysts broadly remained positive on the stock after the results. Bernstein analyst Stacy Rasgon reiterated a Buy rating on the company with a price target of $215. In addition, TD Cowen analyst Joshua Buchalter also affirmed a Buy rating on QUALCOMM Inc. (NASDAQ:QCOM) with a price target of $195, indicating around 25% upside potential.
2. PDD Holdings Inc. (NASDAQ:PDD)
Number of Billionaire Investors: 21; Holdings: $2.1 Billion
Number of Hedge Fund Holders: 85
Forward P/E: 9.5
PDD Holdings Inc. (NASDAQ:PDD) is a major Chinese e-commerce company, mainly recognized for its social commerce platform, Pinduoduo. The platform utilizes a unique group-buying model that encourages bulk purchases for discounts, establishing the company as a disruptive force in China’s online retail market. The company has also entered global markets through its international e-commerce platform, Temu.
Currently, PDD Holdings Inc. (NASDAQ:PDD) is facing challenges related to U.S. tariff scrutiny. As reported by Bloomberg in early February, logistics agents have instructed Chinese retailers on platforms like Temu to pay an additional 30% tariff after a recent hike in U.S. tariffs on imports from China and Hong Kong. Retailers have voiced concerns over potential delays in customs clearance, and a brief suspension by the US Postal Service on some inbound packages from China and Hong Kong has added to these worries. Additionally, the administration is tightening regulations on previously exempt packages, increasing the pressure on PDD.
Despite these short-term risks, PDD Holdings Inc. (NASDAQ:PDD) is actively investing in logistics and technology to enhance its operations. By focusing on supply chain efficiency, agricultural e-commerce, and AI-powered recommendation engines, the company is expanding its competitive edge. Its foray into international markets has opened new growth opportunities, ensuring long-term growth supported by increasing monetization potential.
1. Capital One Financial Corp. (NYSE:COF)
Number of Billionaire Investors: 22; Holdings: $5.6 Billion
Number of Hedge Fund Holders: 89
Forward P/E: 10.9; P/B: 1.08
Capital One Financial Corp. (NYSE:COF) is a diversified financial services company specializing in credit cards, consumer banking, and commercial banking. The company is one of the largest credit card issuers in the United States and offers a broad range of financial products, including auto loans, mortgages, and business banking services.
On March 11, Robert W. Baird analyst David George upgraded Capital One Financial Corporation (NYSE:COF) from Neutral to Outperform and raised the price target from $190 to $200. The upgrade follows a recent dip in the stock, which the analyst sees as an opportunity. Baird highlighted Capital One’s strong profitability potential among credit-sensitive financial firms and expects solid risk-adjusted returns in the coming years. Despite possible short-term economic challenges, the firm remains confident in Capital One’s ability to deliver strong earnings. The analyst estimates the company’s normalized earnings at around $22 per share (versus FY 2026 consensus estimate of $18.4) and suggests the stock’s fair value could reach $225 in the next couple of years.
While we acknowledge the potential of COF to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than COF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
