Matt Powers, Managing Partner at Powers Advisory Group, joined the discussion on CNBC’s ‘Power Lunch’ on March 11 to provide insights into the shift from growth to value investing and the resurgence of traditional dividend strategies. Powers emphasized that this transition has become increasingly evident, particularly following last week’s market activity and the events of March 10. He noted that while the market behavior on March 11 might tell a slightly different story, the broader trend is unmistakable. For years, growth stocks dominated portfolios, but now investors are gravitating toward value and dividend investing, which had been largely overlooked for over a decade. Powers attributed this shift to various catalysts, which included tariffs and policy uncertainty from Washington and President Trump’s unpredictable stances. He described investors as exhausted, and welcomed the normalization of equity markets and a return to diversification and traditional investing.
Powers highlighted the importance of diversification, contrasting high-growth portfolios with those focused on dividends. He pointed out that ETFs have outperformed large-cap growth funds year-to-date, with a notable 11-point difference in returns. The dividend fund is up 5%, while the large-cap growth fund is down 6%. He explained that tech stocks dominate large-cap growth funds and account for nearly half of their portfolios. In contrast, dividend-focused funds are more diversified across sectors such as healthcare, financials, and staples. This diversification reduces concentration risk and provides defensive characteristics in an uncertain market environment. Powers elaborated on the leadership shift between these two types of funds. While growth ETFs feature holdings like the MAG7, dividend ETFs focus on blue-chip companies. A year ago, growth stocks were investor favorites, but now value stocks are taking the lead, which is a trend reflected in their performance. He stressed the importance of broadening diversification within portfolios and not ignoring value opportunities.
In this context, we’re here with a list of the 10 most profitable value stocks to buy now.
Methodology
We sifted through the Finviz stock screener to compile a list of the top stocks with a forward P/E ratio under 15. We then selected the 10 stocks with a TTM net income greater than $1 billion and that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Note: All data was recorded on March 13.
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 Most Profitable Value Stocks to Buy Now
10. Chevron Corp. (NYSE:CVX)
TTM Net Income as of March 13: $17.661 billion
Forward P/E Ratio as of March 13: 13.53
Number of Hedge Fund Holders: 81
Chevron Corp. (NYSE:CVX) is an energy company that is involved in all aspects of the oil and gas industry, from exploration and production to refining and marketing. It operates through its Upstream and Downstream segments. It also focuses on LNG, petrochemicals, and renewable energy, and serves markets worldwide.
The company’s Upstream segment, especially its Permian Basin operations, is the company’s growth engine. In 2024, Permian production grew by nearly 18%, which was driven by efficient drilling and completion methods. This allowed the company to achieve record production with 40% fewer rigs. Permian output is expected to hit one million barrels of oil equivalent per day in 2025.
The company’s new oil project in Kazakhstan is now producing and adding significant output and is expected to generate billions in cash flow. Its Gulf of Mexico operations are also expanding towards 300,000 barrels per day. The company has projects in Western Australia, West Africa, and the Eastern Mediterranean. Chevron Corp. (NYSE:CVX) aims to maintain capital discipline and targets $2 to $3 billion in structural cost reductions by 2026. The company anticipates production growth of around 6% annually through 2026, and expects to add $10 billion of annual free cash flow by 2026.
9. Goldman Sachs Group Inc. (NYSE:GS)
TTM Net Income as of March 13: $14.276 billion
Forward P/E Ratio as of March 13: 11.53
Number of Hedge Fund Holders: 81
Goldman Sachs Group Inc. (NYSE:GS) is a financial powerhouse that offers services across investment banking, trading, asset and wealth management, and platform solutions. It serves corporations, governments, and individuals. It provides everything from M&A advisory and underwriting to investment management, wealth planning, and transaction banking.
In Q4 2024, the firm’s Asset & Wealth Management segment reached a record $3.1 trillion in managed assets. This segment provides investment and advisory services to both individuals and institutions. Its consistent fee-based income is vital for the company’s overall value. The firm is moving away from direct equity and debt investments and is prioritizing fee-generating activities. To capture a larger share of the expanding private credit market, it has launched the Capital Solutions Group, which uses investment banking and market expertise to offer financing and risk management solutions.
Goldman Sachs Group Inc. (NYSE:GS) is focused on digital expansion and is growing its fund offerings. The firm is refining wealth management strategies and is aiming for high-single-digit annual growth. It’s also cutting costs and using AI and automation to boost efficiency.
Ariel Appreciation Fund favors the company due to its strong quarterly earnings, expected benefits from a new political administration’s policies, and the positive outlook on its core businesses. Here’s what the fund stated regarding Goldman Sachs Group Inc. (NYSE:GS) in its Q4 2024 investor letter:
Several stocks in the portfolio delivered solid returns in the quarter. Global investment bank, The Goldman Sachs Group, Inc. (NYSE:GS) outperformed on a robust quarterly earnings beat, highlighted by strength across its investment banking, trading and asset management segments. Meanwhile, the U.S. election has been widely viewed as a positive catalyst across the industry. Investors expect the incoming administration to 1 The “Magnificent Seven” are the largest stocks in the S&P 500 Index driving market performance: Apple Inc. (AAPL), Amazon.com, Inc. (AMZN), Alphabet Inc. (GOOGL), Meta Platforms Inc. (META), Microsoft Corp. (MSFT), NVIDIA Corp. (NVDA) and Tesla, Inc. (TSLA). 2 Hobson, Mellody and John W. Rogers Jr. “What the Stock market Taught Us This Year: Don’t Fall for These Investing Traps.” Wall Street Journal, 5 December 2023. emphasize deregulation and exhibit a greater openness to business combinations compared to the prior regime. Hence, management’s positive commentary around the operating momentum of its core franchises, an improving M&A outlook and the resilience of the U.S. economy sent shares higher.
8. ConocoPhillips (NYSE:COP)
TTM Net Income as of March 13: $9.245 billion
Forward P/E Ratio as of March 13: 11.01
Number of Hedge Fund Holders: 86
ConocoPhillips (NYSE:COP) is an energy company that explores, produces, and markets crude oil, natural gas, and LNG. It operates across six continents and manages a diverse portfolio which includes North American shale, international conventional assets, Canadian oil sands, and global LNG projects.
The company’s Lower 48 operations are focused on US oil and gas production and drive the majority of the company’s revenue. In 2024, production increased by 5% year-over-year, which contributed to a 4% overall company growth. Further expansion is planned for 2025. In Q4 2024, Lower 48 output reached 1,308,000 barrels of oil equivalent per day. This was broken down as 833,000 barrels of oil equivalent per day in Permian Basin, 296,000 in Eagle Ford, and 151,000 barrels in Bobcat.
The company will reduce Lower 48 capital spending by $1.4 billion in 2025 to increase efficiency. This reduction is due to cost savings from the Marathon acquisition and better drilling techniques. This acquisition supports the company’s US shale presence, increases production, and promises significant cost savings. ConocoPhillips (NYSE:COP) anticipates over $1 billion in acquisition savings by the end of 2025, with more than half already included in the 2025 budget.
7. Merck & Co Inc. (NYSE:MRK)
TTM Net Income as of March 13: $17.117 billion
Forward P/E Ratio as of March 13: 10.36
Number of Hedge Fund Holders: 91
Merck & Co Inc. (NYSE:MRK) is a healthcare company that operates across pharmaceutical and animal health sectors. It offers drugs like Keytruda (immunotherapy) and Gardasil (vaccine), alongside veterinary solutions. It focuses on innovation and partnerships to address critical medical needs.
Keytruda’s 2024 sales reached $29.5 billion, which was an 18% year-over-year increase. This was due to its expanding use in various cancer treatments, both in metastatic and earlier stages. The company is innovating administration methods and developing a subcutaneous version. This method involves injecting the medication into the layer of fatty tissue that lies under the skin. Gardasil’s 2024 sales totaled $8.6 billion. This was a 3% decline, which was attributed to the drop in Chinese sales. Specifically, Q4 2024 sales were $1.6 billion, which indicated an 18% decrease. Sales in China were down due to decreased consumer spending, which led to lower-than-expected demand and excess inventory.
On February 10, TD Cowen revised its stance on Merck & Co Inc. (NYSE:MRK) and downgraded the stock from Buy to Hold. The price target was shifted downward from $121 to $100. The firm’s optimism decreased due to the increasing concerns surrounding Gardasil’s sales challenges in China. The firm also pointed out that the company faces Keytruda’s impending loss of exclusivity, which is scheduled for 2028 in the US and 2031 in the European Union.
Oakmark Equity and Income Fund acknowledges Keytruda’s success and strong pipeline. It stated the following regarding Merck & Co Inc. (NYSE:MRK) in its Q3 2024 investor letter:
“Merck & Co., Inc. (NYSE:MRK) is a global pharmaceutical firm with leading oncology, vaccine and animal health franchises. Premier products in Merck’s portfolio include Keytruda, Gardasil, Winrevair and Bravecto. Outsized contributor Keytruda is an immuno-oncology drug that treats several cancers and tumors. Keytruda is an astounding clinical and commercial success that is on track to become one of the best-selling prescription drugs to date. Investor angst surrounding Keytruda’s pending U.S. patent expiration in 2028 presented a chance to buy shares at a discounted valuation. We believe opportunities to extend Keytruda’s duration through life cycle management are underappreciated. More importantly, discounted cash flows from products already on market cover today’s entire stock price, meaning there is minimal value ascribed to a promising pipeline with strong sales potential. We believe Merck is led by a capable management team that looks to reinvest these cash flows in an accretive manner.”
6. Pfizer Inc. (NYSE:PFE)
TTM Net Income as of March 13: $8.031 billion
Forward P/E Ratio as of March 13: 8.66
Number of Hedge Fund Holders: 92
Pfizer Inc. (NYSE:PFE) is a biopharmaceutical company that discovers, develops, and markets a range of medicines and vaccines. From cardiovascular and infectious disease treatments to oncology and rare disease therapies, it serves diverse patient needs through a robust portfolio and strategic collaborations.
The company’s oncology division is strengthened by the recent Seagen acquisition, which brought Pfizer Inc. (NYSE:PFE) a portfolio of antibody-drug conjugates (ADCs) and strengthened its oncology pipeline. The company’s Padcev medication, combined with pembrolizumab, is a cancer treatment regimen. It’s the leading first-line treatment for advanced bladder cancer in the US. Potential trial data for this treatment in 2025 could triple the patient population addressed.
The company is actively running Phase 3 trials for atirmociclib in breast cancer, sigvotatug vedotin in lung cancer, and candida in head and neck and lung cancers. These trials aim to expand treatment options and address unmet medical needs. Pfizer Inc. (NYSE:PFE) expects multiple Phase 3 readouts in 2025, which, if successful, could lead to new approvals and further growth.
Parnassus Value Equity Fund bought Pfizer Inc. (NYSE:PFE) as the fund anticipated growth from the Seagen acquisition. It stated the following in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
5. Wells Fargo & Co. (NYSE:WFC)
TTM Net Income as of March 13: $19.722 billion
Forward P/E Ratio as of March 13: 11.89
Number of Hedge Fund Holders: 96
Wells Fargo & Co. (NYSE:WFC) provides financial services globally through banking, investment, mortgage, and finance products. It operates through four key segments: Consumer Banking & Lending, Commercial Banking, Corporate & Investment Banking, and Wealth & Investment Management.
The company’s credit card division expanded in 2024. The company opened over 2.4 million new credit card accounts. Credit card spending surged by more than $17 billion compared to the previous year. The company launched 11 new card products since 2021, which reflected the dedication to product development. This resulted in a 3% revenue increase year-over-year, which was driven by higher loan balances and increased spending.
Wells Fargo & Co. (NYSE:WFC) has maintained strong credit standards during this growth. While average loans declined throughout most of the bank, credit card balances increased. The company will now continue to monitor the credit card portfolio, and improve its digital capabilities, marketing efforts, fraud capabilities, and private decisioning.
Oakmark Fund highlighted the company’s strong Q3 2024 earnings, efficient cost management, share repurchases, and positive market sentiment to reinforce the fund’s belief in the company’s competitive advantage and value potential. It stated the following regarding Wells Fargo & Co. (NYSE:WFC) in its Q4 2024 investor letter:
“Wells Fargo & Company (NYSE:WFC) was the top contributor during the quarter. The U.S.-headquartered diversified bank’s stock price rose after reporting what we see as solid third-quarter earnings where the company’s efficiency ratio continued to improve as expenses were well controlled. The fee income segment also performed well, growing 12%. In addition, Wells Fargo had the opportunity to repurchase $3.5 billion in shares during the period, bringing the full-year repurchase to roughly $16 billion. In November, the stock price continued its upward trend following the U.S. presidential election as investors are optimistic that the financials sector will benefit from looser regulations and lower corporate taxes, thus stimulating a better environment for dealmaking. We continue to believe that Wells Fargo is a competitively advantaged bank that can use its superior business mix and return potential to unlock further value.”
4. Citigroup Inc. (NYSE:C)
TTM Net Income as of March 13: $12.682 billion
Forward P/E Ratio as of March 13: 9
Number of Hedge Fund Holders: 101
Citigroup Inc. (NYSE:C) is a financial services company that provides a spectrum of products and services to diverse clients. It operates through five segments: Services, Markets, Banking, US Personal Banking, and Wealth. It offers services ranging from treasury and trade solutions to investment banking and wealth management.
The firm’s Services division drives most of its revenue and includes the Treasury and Trade Solutions (TTS) and Security Services. In 2024, it reached a record year, with revenues climbing 9% year-over-year to $19.6 billion. This growth occurred despite a low-interest-rate environment. This success is driven by significant market share gains in both TTS and Security Services, which was highlighted by a decade-high performance in the Q4. This performance is underpinned by strong underlying fee drivers, which include US dollar clearing, commercial card spend, cross-border transactions, and assets under custody.
Citigroup Inc. (NYSE:C) aims to solidify its leadership with large institutions and expand its commercial client market share within TTS. It’s also looking to invest in digital and data capabilities to deepen relationships with asset managers and owners within Security Services. Continuous investment in technology and platform modernization remains a priority.
Diamond Hill Capital Long-Short Fund stated the following regarding Citigroup Inc. (NYSE:C) in its first quarter 2024 investor letter:
“Other top Q1 contributors included Meta Platforms, Citigroup Inc. (NYSE:C) and Walt Disney. Banking and financial services company Citigroup’s restructuring efforts are ongoing, and it continues remediating regulatory issues and building capital in anticipation of increased requirements. The company expects to see expenses fall meaningfully in the second half of 2024, bolstering the outlook from here.”
3. Exxon Mobil Corp. (NYSE:XOM)
TTM Net Income as of March 13: $33.680 billion
Forward P/E Ratio as of March 13: 13.93
Number of Hedge Fund Holders: 104
Exxon Mobil Corp. (NYSE:XOM) is an energy company that explores, produces, and refines crude oil and natural gas. It operates across Upstream, Energy Products, Chemical Products, and Specialty Products segments. It provides fuels, petrochemicals, and specialty products under its Exxon, Esso, and Mobil brands, while also pursuing lower-emission technologies and business opportunities.
The company’s Upstream division, which is responsible for oil and gas production, achieved record production levels in 2024. It was the highest in over 40 years and was driven by the company’s advantaged assets. The Permian Basin was a major highlight, with record production from both its existing and newly acquired Pioneer assets. These assets refer to the oil and gas properties acquired by Exxon Mobil Corp. (NYSE:XOM) through its acquisition of Pioneer Natural Resources.
The company projects $3 billion in annual synergies from this merger, and expects Permian production to climb from 1.5 million barrels per day in 2024 to 2.3 million by 2030. This is a 50% increase. The company is growing its advantaged assets. It’s improving resource recovery in the Permian, and starting up the Yellowtail project in Guyana, which aims for 60% of production from advantaged assets by 2030.
2. Bank of America Corp. (NYSE:BAC)
TTM Net Income as of March 13: $27.132 billion
Forward P/E Ratio as of March 13: 10.79
Number of Hedge Fund Holders: 113
Bank of America Corp. (NYSE:BAC) is a financial institution that operates through four segments: Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets. It provides banking, investment, lending, and risk management solutions.
The firm’s Consumer Banking division is a major profit center and generated nearly $11 billion in 2024, which represented 40% of the company’s total earnings. In the Q4 2024 alone, revenue for Consumer Banking reached $10.6 billion. The division secured over 200,000 net new checking accounts and continued a six-year streak of quarterly growth.
Digital adoption and customer satisfaction scores at Bank of America Corp. (NYSE:BAC) reached record highs. The bank is focused on continued growth, investing in digital capabilities, and maintaining disciplined deposit pricing. It’s also expecting continued growth in consumer loan categories.
Diamond Hill Large Cap Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its Q2 2024 investor letter:
“Other top contributors in Q2 included Bank of America Corporation (NYSE:BAC) and Extra Space Storage. Shares of financial services company Bank of America rose in the quarter as it looks increasingly likely net interest income will inflect and begin growing again in 2024’s back half and into 2025.”
1. JPMorgan Chase & Co. (NYSE:JPM)
TTM Net Income as of March 13: $58.471 billion
Forward P/E Ratio as of March 13: 12.39
Number of Hedge Fund Holders: 123
JPMorgan Chase & Co. (NYSE:JPM) is a financial services leader that operates through Consumer & Community Banking, Commercial & Investment Bank, and Asset & Wealth Management segments. It offers banking, lending, investment, and wealth management solutions.
The company’s Consumer & Community Banking (CCB) segment reported $18.4 billion in revenue for Q4 2024, which represented a 1% year-over-year increase. The growth was largely driven by its Card Services business, which saw an 11% increase in card outstandings and a boost in Net Interest Income (NII) due to higher revolving balances. Nearly 10 million new card accounts were acquired during 2024.
JPMorgan Chase & Co. (NYSE:JPM) anticipates continued growth in the card business, although at a slightly moderated pace compared to 2024. The company expects to see more visible deposit growth in H2 2025, with consumer checking deposits already showing positive signs. It will also focus on wealth management growth and expand its branch network, under its commitment to the CCB segment.
Carillon Eagle Growth & Income Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its first quarter 2024 investor letter:
“JPMorgan Chase & Co. (NYSE:JPM) contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
While we acknowledge the growth potential of JPMorgan Chase & Co. (NYSE:JPM), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JPM 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.
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