In this article, we look at the 10 Best Undervalued UK Stocks To Buy Now.
The Economy of the United Kingdom
According to a report by KPMG, the economy of the UK is going through a combination of consumption tailwinds and falling inflation which is expected to support modest positive growth in the country for the remainder of 2024 and in 2025. The United Kingdom’s economy is projected to achieve GDP growth of 0.5% in 2024, and 0.9% in 2025, while inflation is expected to hold steady at 2.6% in both 2024 and 2025. Unemployment rates are also projected to be 4.5% in 2024 and 4.9% in 2025. The interest rates are anticipated to drop towards 3% by the end of 2025 and elections are likely to resolve political uncertainty, which would encourage business. However, geopolitical uncertainty, conflicts, and trade tensions could lead to inflation spikes and sharp shifts in monetary policies. Despite the uncertainty, KPMG’s analysts remain optimistic about the future. Yael Selfin Vice Chair and Chief Economist at KPMG United Kingdom said:
“Global economic prospects are better for 2025, with inflation expected to return towards target and central banks more confident to cut policy rates from the current restrictive levels. The silver lining is a tailwind for big-ticket consumer purchases and business investment. Merger and acquisition activity could also continue to gather steam, as financial conditions ease and dry powder is deployed. However, the uncertainty remains around the political shifts, which could see more insular and protectionist economic policies.”
Investors view the UK market as particularly appealing due to its current valuations, which are similar to those of emerging markets when measured on a forward price-to-earnings basis. The UK equity index stands out for its substantial exposure to the energy sector, which could benefit significantly if the global economy outperforms expectations. Additionally, in times of escalating geopolitical tensions, the energy sector might also see gains, driven by rising prices. The composition of the UK equity market is well-structured, especially in terms of dividend yields and volatility. Compared to European equities, UK stocks are less volatile and offer higher dividend yields, making them an attractive option for investors at this time. Goldman Sachs is also anticipating modest growth in the United Kingdom’s 2025 and 2026 economic growth and forecasts the FTSE 100 Index to rise to 7,900 by the end of 2024. Goldman Sachs said:
“Low valuation, improving global demand and low supply aiding commodities stocks, and continued buybacks all support FTSE 100. We do not expect UKX to underperform as it did in 2023,”
According to Emma Wall, Head of Investment Analysis at Hargreaves Lansdown, the UK offers one of the best value opportunities among developed markets, particularly for those looking for undervalued investments. Despite its high performance in the FTSE 100, it is highlighted as being on a 45% discount compared to the U.S. market. Emma Wall sees the best value opportunity in the UK, citing the significant discount, international revenues, lack of leverage, and expectations of high dividend payouts as key reasons for this analysis.
The UK market presents a unique and compelling opportunity for investors, as the global economy shows signs of improvement and inflation stabilizes, the UK will benefit from economic growth despite some uncertainties, with that in context let’s take a look at the 10 best undervalued UK stocks to buy now.
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Our Methodology
For this article, we used the Finviz screener to screen for UK-based companies that are trading at a forward P/E ratio of under 20 as of August 9. We listed the stocks according to their hedge fund sentiment, which was taken from our database of 920 elite hedge funds as of Q1 of 2024.
Why do we care about what hedge funds do? 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Undervalued UK Stocks To Buy Now
10. Carnival Corporation & plc (NYSE:CUK)
Number of Hedge Fund Investors: 14
Forward P/E ratio as of August 10: 11.27
Carnival Corporation & plc (NYSE:CUK) is a British-American cruise operator that owns and operates a combined fleet of over 90 vessels across nine cruise line brands including Carnival Cruise Line, Holland America Line, and Princess Cruise. The cruise line industry was valued at $9.2 billion in 2023 and is expected to grow to $25.4 billion by 2033, at a CAGR of 10.6%. Carnival Corporation & plc (NYSE:CUK) is one of the largest and most prominent players in the cruise industry and has over 104,000 employees worldwide. The company is poised to benefit from favorable trends in the global travel and tourism market. As of the first quarter, the stock is held by 14 hedge funds with stakes worth $233.10 million. Aristeia Capital is the largest shareholder and has stakes worth $168.05 million, as of March 31.
On June 25, Carnival Corporation & plc (NYSE:CUK) reported that its Q2 net income increased by nearly $500 million compared to the previous year. The quarter saw a record operating income of $560 million, nearly five times higher than the previous year, driven by record revenues of $5.8 billion. Full-year 2024 net yield guidance has been raised to approximately 10.25% and net income forecast has been increased by about $275 million, due to higher itinerary prices and sustained demand from Americans for cruise holidays. 2024 has been a record year for cruise operators, with booking volumes reaching an all-time high. Looking ahead to 2025, early bookings are even higher in both price and occupancy than those in 2024.
Equity analyst Derren Nathan from Hargreaves Lansdown noted that Carnival Corporation & plc’s (NYSE:CUK) net debt remains high at $27.7 billion, and with the second quarter typically being the strongest for cash generation, significant debt reduction may not occur this year. Carnival prepaid $1.6 billion of debt during the second quarter. Cruise costs per available lower berth day rose by 4% during the second quarter. Carnival now anticipates a 2024 adjusted profit per share of about $1.18, up from its earlier forecast of 98 cents. Commenting on the company’s growth Carnival Corporation & plc’s (NYSE:CUK) CEO Josh Weinstein said:
“The company continues to experience strong bookings momentum driven by record booking volumes for 2025 sailings. While still early, the cumulative advanced booked position for full year 2025 is even higher than 2024 in both price (in constant currency) and occupancy.”
Carnival Corporation & plc (NYSE:CUK) is enhancing its fleet, with eight new ships slated for delivery across its brands by 2025. The stock has a forward PE ratio of 11.27 as of August 10, reflecting a 25.36% discount compared to its peers. Analysts expect the company’s earnings to grow by 100% this year. CUK is therefore one of the most undervalued UK stocks to buy now.
9. Torm Plc (NASDAQ:TRMD)
Number of Hedge Fund Investors: 16
Forward P/E ratio as of August 10: 4.95
Torm Plc (NASDAQ:TRMD) is a global shipping company that provides transportation for refined oil products, such as gasoline, diesel, and jet fuel. The crude oil carrier market is valued at $263.73 billion as of 2024 and is expected to reach $351.7 billion by 2032 growing at a CAGR of 3.66%. Torm Plc (NASDAQ:TRMD) is one of the major players in the industry and operates a fleet of around 90 modern vessels which are chartered by oil companies, refiners, and trading firms.
Like other shipping companies, Torm Plc’s (NASDAQ:TRMD) operations have been significantly disrupted by Houthi attacks in the Gulf of Aden and the Red Sea. Earlier in January, Torm Plc (NASDAQ:TRMD) halted fleet sailings in the region and decided to divert vessel shipping routes which has impacted operational costs and delivery times. Shipping companies such as Torm Plc (NASDAQ:TRMD) are offsetting the increased costs by raising freight rates and adding extra surcharges along with chartering additional vessels to meet demand.
However, Torm Plc (NASDAQ:TRMD) is well-positioned for strong performance in the near term and is a compelling buy for investors seeking undervalued stocks, due to its strong financials and attractive valuation. The company’s current assets are 3.6 times its current liabilities, indicating strong liquidity and the ability to meet short-term obligations. Torm Plc (NASDAQ:TRMD) is cheaper than its industry peers, the stock is trading at 4.95 times this year’s earnings estimate, a 57% discount to its sector. Analysts expect earnings to grow by 15% this year. Kepler Capital maintained a Buy rating on Torm Plc (NASDAQ:TRMD) due to its robust earnings, and operational metrics, and favorable demand trends for tanker services. Based on the consensus of other analysts, the stock has a Buy rating and an average price target of $44.70, which represents an upside of 13.23% from current levels. As of the first quarter, the stock is held by 16 hedge funds with stakes worth $1.80 billion. Oaktree Capital Management is the largest stakeholder in the company and has a position worth $1.70 billion, as of March 31.
8. British American Tobacco p.l.c. (NYSE:BTI)
Number of Hedge Fund Investors: 19
Forward P/E ratio as of August 10: 7.61
British American Tobacco p.l.c. (NYSE:BTI) is one of the largest tobacco companies in the world that manufactures and sells cigarettes, electronic cigarettes, and other products such as nicotine pouches in over 170+ countries worldwide. In 2023, British American Tobacco p.l.c. (NYSE:BTI) added about 3 million new customers and its nicotine pouches Vuse and Velo, played a significant role in the overall performance of the company as revenues from these products increased by 18% and 21% year over year, respectively.
British American Tobacco p.l.c. (NYSE:BTI) has a competitive advantage to drive portfolio growth and transformation within the wider tobacco industry by offering its vapor, heated tobacco, and modern oral tobacco products. The company aims to become a leader in smokeless nicotine alternatives and plans to generate 50% of its revenue from non-combustible products by 2035.
On July 18, the U.S. Food and Drug Administration (FDA) approved the marketing of various products under the Vuse brand and granted Marketing Granted Orders (MGOs) for the Vuse Alto device and its Golden Tobacco and Rich Tobacco flavor pods at nicotine levels of 1.8%, 2.4%, and 5%. British American Tobacco p.l.c. (NYSE:BTI) views these authorizations as a significant step in its multi-category approach to providing reduced-risk products, aligning with its goal of delivering “A Better Tomorrow.” The approvals represent the largest portfolio of vapor product authorizations given to any organization in the U.S.
Should you invest in British American Tobacco p.l.c. (NYSE:BTI)? The stock has a forward P/E ratio of 7.61, which is a 55% discount to the sector median of 17.19. For the year 2023, the company reported a revenue of $33.92 billion, a 3.1% increase in organic revenue compared to the previous year. Profits from operations were also up 3.1%. Revenue is expected to grow by almost 2% this year to $34.57 billion and net earnings and earnings per share are expected to grow by 4.86% by this year.
As of the first quarter, the stock is held by 19 hedge funds with stakes worth $588.68 million. Orbis Investment Management is the largest stakeholder in the company and has a position worth $385.39 million, as of March 31. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $37.66, which represents a 16% upside potential from its current level.
7. Cushman & Wakefield plc (NYSE:CWK)
Number of Hedge Fund Investors: 22
Forward P/E ratio as of August 10: 14.19
Cushman & Wakefield plc (NYSE:CWK) is a global full-service commercial real estate company with over 100 years of experience, 52,000 employees, and 400 offices worldwide. The company is one of the largest commercial real estate services firms globally and is valued at $2.88 billion as of August 10. The company offers a wide range of services including leasing, capital markets sales, valuation, project management, and facilities management. In the year 2023, the company reported revenue of $9.5 billion across its core services of property, facilities project management, and other services. The company has also received numerous industry and business awards for its culture and commitment and is working with Microsoft to deploy an advanced suite of artificial intelligence solutions to improve its operational efficiency and increase competitive advantage.
On May 15, Cushman & Wakefield plc (NYSE:CWK) signed an exclusive affiliate agreement with CBS International to provide commercial property services in Austria. This agreement extends their successful partnership, as CBS International has been Cushman & Wakefield’s affiliate in Serbia and Montenegro since 2018 and in Croatia since 2019. CBS International, with around 400 employees, will now operate in Austria as Cushman & Wakefield CBS International. They have established an office in Vienna and are staffed with local market specialists and a team. The Austrian team includes specialists in Capital Markets, Agency, Valuation & Advisory, and Research & Insight, supported by CBS International’s broader business network to deliver comprehensive services.
Cushman & Wakefield plc’s (NYSE:CWK) new CEO is enhancing free cash flow, which gives the company greater flexibility to invest in growth opportunities, reduce debt, or return capital to shareholders. Additionally, Cushman & Wakefield plc (NYSE:CWK) is benefiting from long-term trends in the commercial real estate market, particularly the increasing outsourcing of property and facility management, which is expected to boost margins and further enhance free cash flow over time. The company’s asset-light and diversified business model also plays a significant role in its appeal, as it requires less capital investment, offers scalability, and reduces reliance on any single revenue stream, thereby providing greater stability. Furthermore, the market’s anticipation of interest rate cuts in 2024, as indicated by the Federal Reserve is seen as a positive development that could lower borrowing costs and make commercial real estate investments more attractive. Vulcan Value Partners stated the following regarding Cushman & Wakefield plc’s (NYSE:CWK) in its Q4 2023 investor letter:
“Cushman & Wakefield plc (NYSE:CWK) provides commercial real estate services including property management, transaction management, leasing brokerage, and other services in the sale and servicing of commercial real estate. The company and new CEO made progress improving free cash flow during the quarter. However, the bigger factor in the quarter affecting the company and its peers, was the general market view on interest rates and the Fed’s December announcement that three rate cuts are likely expected in 2024. Cushman has a good business model that is asset light and diversified. The company is benefiting from secular trends such as the outsourcing of property and facility management which should help improve margins and free cash flow going forward.”
Cushman & Wakefield plc (NYSE:CWK) is trading 14.19 times its earnings, which is a 60% discount compared to the sector median of 36. The company’s earnings are expected to grow by 14% this year. The stock was held by 22 hedge funds at the end of the first quarter with stakes worth $161.27 million. As of March 31, Southpoint Capital Advisors is the largest shareholder in the company with a stake worth $57.53 million. Analysts hold a consensus Buy rating on the stock and the high price target of $14 implies an upside of 8.6%.
6. Barclays PLC (NYSE:BCS)
Number of Hedge Fund Investors: 22
Forward P/E ratio as of August 10: 6.37
Barclays PLC (NYSE:BCS) is a global banking and financial services company with 325 years of history and expertise in banking. The bank operates in over 50 countries and employs approximately 140,000 people worldwide. Barclays PLC (NYSE:BCS) has a market share of 10-15% in most products and operates a vast international network of branches that supports cross-border banking and client operations. Barclays PLC (NYSE:BCS) also has a strong investment banking division that provides a wide range of services such as mergers and acquisitions, trading, and capital raising. This expertise in investment banking sets Barclays PLC (NYSE:BCS) ahead of some of its competitors. As of Q1, the stock was held by 22 hedge funds with stakes amounting to $209.42 million. Marshall Wace LLP is the largest shareholder in the company and has a position worth $53.98 million.
On June 4, Barclays PLC (NYSE:BCS) reported that the recent decline in inflation has positively impacted consumer confidence regarding household finances. Consumer card spending grew by 1% in May alone. Barclays serves around a quarter of UK corporates and over 20 million UK retail customers, making it one of the largest wealth managers in the UK. The bank processes over 40% of the UK’s credit and debit card transactions and ranks top in UK investment banking fees according to Dealogic. In the US, Barclays is the 9th largest issuer in the credit card market and serves 20 million customers.
Over the past 12 months, the stock price has increased by nearly 50%. Revenue is expected to grow by 5.43% this year. The stock’s forward P/E ratio of 6.37 indicates a 42% discount compared to the sector median of 11.08. While Barclays has a total debt of $920.73 billion, it also holds a substantial cash reserve of $883.99 billion. Barclays PLC’s (NYSE:BCS) ongoing cost-cutting and restructuring efforts are expected to result in savings of up to £2 billion by the end of 2026. Additionally, the company projects that it will achieve a return on tangible equity of over 12% by the same year. As part of its new strategy, the company plans to concentrate more on lending to consumers and businesses. Due to these significant initiatives, which position the company for stronger financial performance and growth, it is considered one of the best-undervalued stocks to buy now.
5. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Investors: 37
Forward P/E ratio as of August 10: 8.55
Rio Tinto Group (NYSE:RIO) is a leading global mining and metals company that generates revenue by exploring, mining, and processing a variety of mineral resources and selling them to industrial customers, including manufacturers, construction firms, and energy producers. The company is known for its focus on operational efficiency and cost control by implementing advanced technologies and innovative mining practices which enhances its profitability. The company’s primary products include iron ore, aluminum, copper, diamonds, gold, energy products, and industrial minerals such as borates and titanium dioxide. Rio Tinto Group (NYSE:RIO) has a market cap of $101.90 billion as of August 10 and is one of three the largest mining companies in the world. Rio Tinto Group (NYSE:RIO) is strategically well-positioned to capitalize on the expected sustained commodity demand created by decarbonization, shifting regional industrial policies, and geopolitics. As of the first quarter, the stock is held by 37 hedge funds with stakes amounting to $1.42 billion. Fisher Asset Management owns the largest number of stocks in the company with a market worth $1.05 billion as of March 31.
Rio Tinto Group (NYSE:RIO) has been making substantial financial investments and expanding its low-carbon aluminum and iron production capabilities by acquiring strategic aluminum assets, leasing solar parks, and setting up long-term renewable energy contracts to position itself as a key player in the global low-carbon economy. On June 11, Rio Tinto Group (NYSE:RIO) agreed to acquire an 11.65% stake in Boyne Smelters Ltd. from Mitsubishi Corporation, which operates the Boyne Island aluminum smelter in Gladstone, Australia. On July 1, Rio Tinto Group (NYSE:RIO) announced a $285 million investment, in partnership with the Quebec government for the construction of a carbon-free aluminum electrolysis plant in Quebec, with an annual production capacity of 2,500 tonnes of aluminum without any direct greenhouse gas emissions. During the year 2023, Rio Tinto Group (NYSE:RIO) invested $1.1 billion to expand its “low-carbon” aluminum smelter at Complexe in Quebec, Canada. The Canadian government is supporting these efforts and has invested in the ELYSIS technology, the Quebec government also contributed around $113 million to the smelter expansion.
The stock is trading at a forward PE of 8.55, a 44% discount to its sector. Earnings per share are expected to increase by 0.6% which may not sound compelling, however, the stock trades at $63.24 as of August 10 and analysts forecast that the share price will increase by 26% and reach $83 over the next twelve months. The company has a total debt of $14.35 billion and has about $10.75 billion in cash.
4. BP p.l.c. (NYSE:BP)
Number of Hedge Fund Investors: 40
Forward P/E ratio as of August 10: 7.94
BP p.l.c. (NYSE:BP) is a well-known energy company involved in the exploration, refining, marketing, supply, and production of oil and natural gas products. The company also generates solar energy and is one of the largest manufacturers of terephthalic acid which is used for making plastic bottles, food containers, and textiles. BP p.l.c. (NYSE:BP) holds a significant market presence across nine industries including Oil Drilling, Gas Extraction, Petroleum Refining, Lubricant Oil manufacturing, and Oil Pipeline Transportation. BP p.l.c. (NYSE:BP) has a diverse range of brands across various energy and chemical sectors. The primary BP brand is recognized for fuel and lubricants, while Aral serves as a major fuel and lubricant brand in Germany. Castrol is a leading name in automotive and industrial lubricants. In the aviation sector, Air BP supplies fuel and services. The company also operates a BP Chargemaster for electric vehicle charging.
BP p.l.c. (NYSE:BP) has positioned itself ahead of competitors in the shift to renewable energy and plans to reduce its oil and gas production by 25% by 2030 as part of its carbon emissions reduction plan. BP p.l.c. (NYSE:BP) is collaborating with companies all around the world in its journey towards net zero and is investing heavily in lower-carbon initiatives, in which investments have risen by approximately 3% in 2019 to 23% by 2023. BP p.l.c.’s (NYSE:BP) strategic focus on renewables has enhanced its ability to lead in the energy transition and capitalize on emerging market opportunities.
On July 10 BP p.l.c. (NYSE:BP) confirmed that it plans to acquire a 10% stake in the Ruwais liquefied natural gas (LNG) project led by Abu Dhabi National Oil Company (ADNOC) in Al Ruwais Industrial City, Abu Dhabi to develop competitive gas positions and expand its LNG portfolio. On July 15, BP p.l.c. (NYSE:BP) was also awarded funding jointly by the German Federal Ministry for Economic Affairs and Climate Action and the Lower Saxony Government for a 100MW industrial-scale green hydrogen project. The project is located adjacent to BP p.l.c.’s (NYSE:BP) Lingen Refinery in Germany and will be the company’s first fully owned and operated large-scale green hydrogen plant. The project aims to produce 10-11 kilotons of green hydrogen annually and will supply energy to its Lingen refinery as well as industrial customers in the region. BP p.l.c.’s (NYSE:BP) Head of Germany, Patrick Wendeler, while expressing gratitude for the government support said:
“Today’s announcement underscores bp’s commitment to Germany as we progress our ‘and, not or’ strategy. Our Lingen refinery has helped provide German industry with the energy it needs for more than 70 years. Decarbonising German industry is a significant challenge, and we are grateful to the German government for helping us – alongside the green hydrogen projects from the IPCEI Hy2Infra wave – to play a small but role in helping solve that challenge. With this funding, we’re a step further towards progressing our green hydrogen project in Lingen that would enable us to provide low carbon hydrogen to industrial customers and our Lingen refinery in the future.”
BP p.l.c. (NYSE:BP) is one of the best undervalued UK stocks to buy now. The company operates in over 80 countries worldwide and is leading the energy transition in Europe. BP p.l.c. (NYSE:BP) is trading at a forward P/E ratio of 7.94 which is a 31.60% discount compared to the industry average of 11.68. Analysts have given the stock a Buy rating with an average price target of $42.73, which implies an upside of 22.25% from current levels. As of the first quarter, the stock is held by 40 hedge funds with stakes worth $2.07 billion. Fisher Asset Management is the largest stakeholder in the company and has a position worth $773 million, as of March 31.
3. GSK plc (LON:GSK)
Number of Hedge Fund Investors: 41
Forward P/E ratio as of August 10: 9.87
GSK plc (LON:GSK) is a global biopharma company that develops and manufactures vaccines, specialty medicines, and general medicines. The company is known for its medicines for treating diseases such as HIV, respiratory issues, cancer, immunology, neurology, metabolism, and cardiovascular conditions. GSK plc (LON:GSK) has a market cap of $82.10 billion as of August 10 and employs 70,000 people across 75 countries, operates 37 manufacturing facilities. GSK plc (LON:GSK) sells its products through wholesalers, pharmacies, hospitals, physicians, and other groups worldwide.
On July 3, GSK plc (LON:GSK) announced that they have restructured their existing collaboration with CureVac N.V. (NASDAQ:CVAC) into a new licensing agreement which allows GSK to develop and manufacture seasonal influenza and COVID-19 vaccines and rights to commercialize. This agreement is part of GSK’s ongoing investment in vaccine technologies aiming to create top-tier vaccines and enhance its mRNA capabilities. CureVac will receive an upfront payment of $511.61 million, with the potential for up to an additional $1.34 billion based on development, regulatory, and sales milestones. GSK plc (LON:GSK) is investing heavily in smart manufacturing within the biopharma industry and focusing on how technologies like robots, machine learning, and artificial intelligence can revolutionize the production of medicines and vaccines by real-time monitoring of production processes, improving yields, and predicting equipment maintenance needs. GSK plc’s (LON:GSK) successful launch of Arexvy, a vaccine for respiratory syncytial virus (RSV) in older adults, in both the U.S. and Europe also helped the company to achieve sustainable growth and expand profit margins. In its Q3 2023 investor letter, Ariel Global Fund made the following comment about GSK plc (NYSE:GSK):
“Global pharmaceutical and healthcare company, GSK plc (NYSE:GSK), also advanced in the period following a top- and bottom-line earnings beat and subsequent raise in full-year guidance. Shares were also aided by a successful U.S. and European launch of Arexvy, a respiratory syncytial virus (RSV) vaccine for older adults. Although risks around the Zantac litigation remain a concern, we believe GSK should generate sustainable growth and margin expansion as the company transitions its Pharma pipeline towards specialty medicines and vaccines. Furthermore, the company’s robust balance sheet provides the scope for bolt-ons, which has the potential to drive additional growth.”
Investing in GSK presents a compelling opportunity due to its forward P/E ratio of 9.87, which represents a 50% discount compared to the sector. As of the first quarter, the stock is held by 41 hedge funds for a total value of $1.84 billion. Fisher Asset Management is the largest shareholder in the company and owns 15.66 million shares amounting to $671.70 million as of March 31.
2. AstraZeneca PLC (NASDAQ:AZN)
Number of Hedge Fund Investors: 46
Forward P/E ratio as of August 10: 19.60
AstraZeneca PLC (NASDAQ:AZN) is one of the top ten largest pharmaceutical companies in the world and has a market cap of $251.73 billion as of August 10. AstraZeneca PLC (NASDAQ:AZN) has substantial financial resources, research capabilities, and market presence. The company has more than 80,000 employees in over 100 countries and its products are sold in more than 125 countries. AstraZeneca PLC (NASDAQ:AZN) is a leader in the oncology, cardiovascular, renal, and metabolic diseases, respiratory and immunology along with other general diseases. The company is also becoming a leader in the cancer therapeutics market. As of the first quarter, the stock is held by 46 hedge funds which amounts to almost $2.17 billion. Fisher Asset Management is the largest investor in the company and has shares worth $654 million as of March 31.
AstraZeneca PLC’s (NASDAQ:AZN) stock price has increased by almost 15% over the last 12 months to $81 as of August 10 due to positive developments in its oncology (cancer treatment) franchise, particularly from successful clinical trials named LAURA, ADRIATIC, and DESTINY-Breast06. Additionally, AstraZeneca provided long-term revenue guidance for the first time, projecting $80 billion in revenue by 2030, which is a 75% increase from its 2023 revenue of $45.8 billion. This projection suggests an annual growth rate of 8% over seven years, which is higher than the growth targets of its competitors, such as GSK, Johnson & Johnson, and Novartis. Baron Health Care Fund in its Q2 2024 investor letter stated regarding AstraZeneca PLC (NASDAQ:AZN):
“Performance in pharmaceuticals and health care distributors was bolstered by solid gains from AstraZeneca PLC (NASDAQ:AZN) and McKesson Corporation, respectively. AstraZeneca is a global biopharmaceutical company with a focus on three main therapy areas based on its core competencies: oncology, cardiovascular and metabolic diseases, and respiratory illnesses. AstraZeneca’s shares increased given incremental positive news flow (LAURA, ADRIATIC, and DESTINY-Breast06 clinical trials) surrounding the oncology franchise. The company also published long-term guidance for the first time, projecting $80 billion in revenue by 2030, or 75% higher than 2023’s $45.8 billion. This projection implies an annual growth rate of 8% over seven years, compared with the 5% to 7% targets set by GSK and Johnson & Johnson and the 5% target set by Novartis.”
On June 17, AstraZeneca PLC (NASDAQ:AZN) announced that the FDA had approved a combination of Imfinzi plus two chemotherapy medications for oncology, called carboplatin and paclitaxel, for the treatment of primary advanced/recurrent endometrial cancer, which can affect over 67,000 women in 2024, according to the American Cancer Society. Imfinzi sales amounted to $1.11 billion in Q1 2024, an increase of 23.7% year-on-year, due to high demand in the United States and Europe for the treatment of patients with biliary tract cancer and small cell lung cancer. Enhertu, which is a high-efficacy medicine to treat patients with breast cancer also demonstrated a sales growth of 79.4% year over year and amounted to revenue of $461 million in the first three months of 2024, due to high demand from patients and doctors in the United States for the treatment of metastatic HER2-positive breast cancer, as well as non-small cell lung cancer.
AstraZeneca PLC (NASDAQ:AZN) has set an ambitious goal to reach $80 billion in total revenue by 2030. The stock has a forward PE ratio of 19.60, which is almost 4% lower than the sector average. The company still appears attractive given that earnings are expected to increase by 11% to $4.03 per share this year.
1. Shell Plc (NYSE:SHEL)
Number of Hedge Fund Investors: 51
Forward P/E ratio as of August 10: 8.57
Shell Plc (NYSE:SHEL) is a global energy company that generates revenue through the exploration, production, refining, and trading of LNG, crude oil products, and other energy commodities to customers all around the world. Shell Plc (NYSE:SHEL) is investing $10-15 billion in low-carbon energy solutions between 2023 and the end of 2025 and is transitioning away from fossil fuels to low-carbon energy solutions. Shell Plc (NYSE:SHEL) is invested in renewable energy and is generating electricity using wind, solar, and hydrogen. Shell Plc (NYSE:SHEL) believes LNG will be crucial in the energy transition as an alternative to coal plans to expand its LNG business by 20-30% and aims to increase its LNG volumes by 15-25% by 2030. This focus on renewables enhances Shell Plc’s (NYSE:SHEL) ability to innovate and capture growth opportunities in the evolving energy market.
On June 18, Shell Plc’s (NYSE:SHEL) subsidiary Shell Eastern Trading Pte. Ltd., signed an agreement to acquire Pavilion Energy Pte. Ltd., a company headquartered in Singapore that has a global LNG trading business with a supply volume of approximately 6.5 million tonnes per annum and operates in trading, shipping, and natural gas supply and has marketing activities in Asia and Europe. The acquisition will be completed by Q1 2025 by using Shell Plc’s (NYSE:SHEL) existing cash capital and aims to support its LNG volumes for its gas business.
Shell Plc (NYSE:SHEL) is trading at a forward PE of 8.57, a 26% discount to its sector, and analysts expect the company to grow its earnings by 1% this year. The stock is trading at $71.88 as of August 10, up 14% from the previous year and analysts project a further upside potential of 15% to $83.78. As of the first quarter, the stock is held by 51 hedge funds and the stakes amount to $5.54 billion. Fisher Asset Management is the largest shareholder in the company and has a stake worth $1.56 billion as of March 31.
While we acknowledge the potential of SHEL, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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