In this article, we will discuss the 10 Most Undervalued Long Term Stocks to Buy Now.
The stocks showcased initial enthusiasm post Trump’s election, as the S&P 500 saw an increase of 2.5% on the day after the November vote, says U.S. Bank. The broader markets, as measured by the S&P 500, are up less than 4% since November 5, 2024, and have seen significant volatility. The index reached fresh highs near January’s end, and again on February 19. However, it then retraced in both instances due to the increasing uncertainty related to the economic implications of the Trump administration policies. Among other factors, the most critical was Trump’s implemented and proposed tariff hikes that can influence the US and global businesses.
Rates and Inflation Under Trump’s Administration
As per the U.S. Bank, one critical consideration is how Trump’s policies might affect inflation and how soon interest rates, which are elevated, can decline. There can be a temporary inflation uptick, says Rob Haworth, senior investment strategy director with U.S. Bank Asset Management. With higher inflation, the US Fed might become reluctant about adding to the 3 interest rate cuts the markets saw late last year. As per Haworth, markets don’t expect the US Fed to cut rates more than one or two times in 2025 considering the current inflation concerns.
Elsewhere, Nomura believes that economic fundamentals are strong, thanks to healthy private sector balance sheets and easy financial conditions. The firm expects growth to slow in 2025, but it sees the broader economy in a good position to tackle the drag resulting from uncertain trade policy.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
What’s Next for Capital Markets?
As per Morgan Stanley, the capital markets activity, for M&As and capital expenditures spending, is well-placed for a resurgence in 2025. The current economic backdrop—reduced interest rates, subdued inflation, and modest but positive GDP growth— hints at a rebound in strategic investments and capital raising throughout debt and equity. In 2025, strategic deals and private equity M&A are anticipated to witness growth. With inflation and interest rates moderating, companies have been gaining an appetite to fund their strategic events with the help of debt and equity capital markets.
Russell Investments believes that the new U.S. administration’s focus on deregulation and tariff-based policies is expected to reduce market concentration. Furthermore, the firm and its active managers remain focused on the sectors in which AI adoption has been accelerating.
With such trends, let us now have a look at the 10 Most Undervalued Long Term Stocks to Buy Now.
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Our Methodology
To list the 10 Most Undervalued Long Term Stocks to Buy Now, we used a screener to shortlist stocks that trade at a forward P/E of less than ~20x and have a 10-year revenue growth of at least 7%. Next, we mentioned the hedge fund sentiment around each stock, as of Q4 2024. Finally, the stocks are arranged in ascending order of their hedge fund sentiment.
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 Undervalued Long Term Stocks to Buy Now
10. Chubb Limited (NYSE:CB)
Forward P/E as on February 28: ~13.2x
10-Year Sales Growth: ~11.4%
Number of Hedge Fund Holders: 53
Chubb Limited (NYSE:CB) offers insurance and reinsurance products. JMP Securities reiterated the “Market Outperform” rating on the company’s stock with a price target of $325.00. The firm’s analysts lauded the company’s strong presence in global markets as a critical factor for the potential superior growth prospects. They believe that emerging markets such as Asia and Latin America are the regions that are expected to surpass the growth of more developed areas like the US and Europe. The analysts highlighted the company’s partnership with Nubank in Brazil to roll out a fully digital life insurance product, which was mentioned as a move that can contribute to Chubb Limited (NYSE:CB)’s expansion in the digital insurance space.
The analysts’ reiterated price target stems from the confidence in the company’s strategic direction and its potential to capitalize on the opportunities available in the global insurance industry. Chubb Limited (NYSE:CB) remains optimistic about its ability to continue growing operating earnings and EPS at a double-digit rate, courtesy of its 3 major sources: P&C underwriting, investment income, and life income. The London Company, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
Initiated: Chubb Limited (NYSE:CB) – CB engages in the provision of commercial and personal property and casualty insurance, personal accident and health (A&H), reinsurance, and life insurance. While the company is headquartered outside the U.S., roughly 2/3 of its profits are generated in the U.S. with Asian markets representing another 20% of earnings. CB has a portfolio of top-performing, multibillion-dollar businesses that have substantial scale and yet potential for growth. CB has a culture of superior underwriting discipline, and management has a strong track record of expense control. CB also has a well-balanced mix of business by customer and product, with extensive distribution channels. We are attracted to CB’s globally diversified business model, superior underwriting and expense management, consistent and best-in-class profitability, upside potential from growth in Asia, and the potential to benefit from higher interest rates in its investment portfolio.
9. AstraZeneca PLC (NASDAQ:AZN)
Forward P/E as on February 28: ~17.2x
10-Year Sales Growth: ~7.4%
Number of Hedge Fund Holders: 55
AstraZeneca PLC (NASDAQ:AZN) is a biopharmaceutical company, which is focused on the discovery, development, manufacture, and commercialization of prescription medicines. Leerink Partners analyst Andrew Berens maintained a bullish stance on the company’s stock, providing a “Buy” rating on February 10. The analyst’s rating is backed by a combination of factors affecting the company’s strategic position and market potential. As per the analyst, the acquisition of FibroGen China by AstraZeneca PLC (NASDAQ:AZN) is critical, enabling it to secure full ownership of roxadustat in China.
The move consolidates AstraZeneca PLC (NASDAQ:AZN)’s market dominance in China and aligns with its global expansion strategy. Apart from this, the deal is projected to offer it with a significant revenue stream. Therefore, a range of strategic initiatives continue to support AstraZeneca PLC (NASDAQ:AZN)’s focus on strengthening market leadership and maximizing shareholder value, added the analyst. Elsewhere, Bank of America Securities analyst Sachin Jain maintained a “Buy” rating on the company’s stock. The positive high-level results from a planned interim analysis of the SERENA-6 Phase III trial showed that AstraZeneca PLC (NASDAQ:AZN)’s camizestrant in combination with a cyclin-dependent kinase (CDK) 4/6 inhibitor (palbociclib, ribociclib or abemaciclib) showcased a highly statistically significant and clinically meaningful improvement in the primary endpoint of progression-free survival (PFS).
Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Poor performance from AstraZeneca PLC (NASDAQ:AZN) also factored into the underperformance in pharmaceuticals. The company is currently dealing with several ongoing investigations into employees in its China business. We believe shares are undervalued relative to what remains an attractive long-term growth outlook driven by indication expansion for current products (Tagrisso and Enhertu) as well as a range of pipeline assets.”
8. The Cigna Group (NYSE:CI)
Forward P/E as on February 28: ~10.4x
10-Year Sales Growth: ~21.6%
Number of Hedge Fund Holders: 72
The Cigna Group (NYSE:CI) offers insurance and related products and services. Erin Wright, an analyst from Morgan Stanley, gave a “Buy” rating on the company’s stock with a price target of $379.00. The rating is supported by a combination of factors highlighting the potential growth and resilience in its operations. The expectation of a margin improvement in Cigna Healthcare, mainly expected in 2026 with some advances in 2025, aids the analyst’s rating. Furthermore, the analyst also highlighted The Cigna Group (NYSE:CI)’s projected EPS growth and the strategic divestment of Medicare businesses, which can contribute positively to the company’s financial health. Collectively, such factors exhibit a strong potential for long-term value creation, justifying the optimistic outlook.
The Cigna Group (NYSE:CI)’s robust presence in the pharmacy benefit management (PBM) and specialty drug segments places it well for future growth. With healthcare costs continuing to rise, PBMs continue to play a critical role in managing drug spending for employers and health plans. The company’s Evernorth segment, which includes its PBM services, has been reflecting strength and can act as a critical driver of revenue and profit growth. The specialty drug market continues to witness rapid expansion as a result of advancements in biotechnology and treatment of complex conditions. Therefore, The Cigna Group (NYSE:CI)’s expertise in this area can enable it to capitalize on the trend toward personalized and increased-cost therapies.
7. AbbVie Inc. (NYSE:ABBV)
Forward P/E as on February 28: ~17.04x
10-Year Sales Growth: ~10.9%
Number of Hedge Fund Holders: 85
AbbVie Inc. (NYSE:ABBV) is a research-based biopharmaceutical company, which is engaged in the research and development, manufacturing, commercializing, and selling medicines and therapies. Guggenheim upped the price target to $214 from $212, keeping a “Buy” rating after updating the company model following strong Q4 and initial FY25 guidance. In Q4 2024, the worldwide net revenues came in at $15.102 billion, reflecting an increase of 5.6% on a reported basis, or 6.1% on an operational basis. For FY 2025, AbbVie Inc. (NYSE:ABBV) expects adjusted diluted EPS of $12.12 – $12.32.
Guggenheim remains optimistic about the company, considering the solid growth outlook at least through the end of the decade. AbbVie Inc. (NYSE:ABBV) has reaffirmed its expectations for a high single-digit compound annual revenue growth rate through 2029, assuming 2024 as the base year. Elsewhere, BMO Capital analyst Evan Seigerman upped its price target to $215 from $208, keeping an “Outperform” rating. As per the analyst, AbbVie Inc. (NYSE:ABBV)’s Skyrizi and Rinvoq $4 billion guidance increase highlights the growth profile for the company in H2 of the decade, moving on from the Humira loss of exclusivity narrative.
Notably, AbbVie Inc. (NYSE:ABBV) anticipates combined Skyrizi and Rinvoq 2027 revenues of over $31 billion, reflecting an increase of ~$4 billion as compared to previous guidance for combined revenues of over $27 billion in 2027. Polaris Capital Management, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“U.S. biopharma/biotech companies topped the health care sector, with the majority of holdings posting returns in excess of 10%. AbbVie Inc. (NYSE:ABBV) showed positive top-line growth from its immunosuppressive drugs, Skyrizi and Rinvoq. Abbvie’s management continues to work through the loss of exclusivity from Humira, switching patients to Skyrizi or Rinvoq rather than Humira biosimilars.”
6. Bristol-Myers Squibb Company (NYSE:BMY)
Forward P/E as on February 28: ~8.8x
10-Year Sales Growth: ~11.7%
Number of Hedge Fund Holders: 88
Bristol-Myers Squibb Company (NYSE:BMY) is engaged in discovering, developing, licensing, manufacturing, marketing, distributing, and selling biopharmaceutical products. The company made good progress in 2024, with a healthy Q4 2024 topline growth fueled by critical products and important pipeline advancements. Bristol-Myers Squibb Company (NYSE:BMY) achieved the landmark US approval of Cobenfy last year for the treatment of schizophrenia in adults, and it projects this medicine to have a significant impact on patients and the company as a new growth enabler.
In Q4 2024, the company saw revenues of $12.3 billion, reflecting a rise of 8%, or 9% when adjusted for foreign exchange impacts, primarily due to Growth Portfolio and increased demand for Eliquis, partially mitigated by the impact of generics on Sprycel, Revlimid, Abraxane and Pomalyst. In a positive development, Bristol-Myers Squibb Company (NYSE:BMY) announced that the US Food and Drug Administration (FDA) has accepted the supplemental biologics license application for Opdivo® (nivolumab) plus Yervoy® (ipilimumab) as a potential first-line treatment option for adult and pediatric patients (12 years and older) with unresectable or metastatic microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR) colorectal cancer (mCRC). Bristol-Myers Squibb Company (NYSE:BMY) possesses significant opportunities for growth and expansion. Its focus on cell therapies and targeted protein degraders in hematology and oncology can offer avenues for long-term success.
5. Apollo Global Management, Inc. (NYSE:APO)
Forward P/E as on February 28: ~17.8x
10-Year Sales Growth: ~32.6%
Number of Hedge Fund Holders: 90
Apollo Global Management, Inc. (NYSE:APO) is a private equity firm that specializes in investments in credit, private equity, infrastructure, secondaries and real estate markets. Morgan Stanley analyst Michael Cyprys maintained a “Hold” rating on the company’s stock, setting a price target of $170.00. The rating is backed by factors associated with the announcement where the company and Bridge Investment Group have entered into a definitive agreement for Apollo Global Management, Inc. (NYSE:APO) to acquire Bridge in an all-stock transaction with an equity value of ~$1.5 billion.
As per the analyst, the acquisition is expected to improve Apollo Global Management, Inc. (NYSE:APO)’s real estate capabilities significantly. Furthermore, while the acquisition can enhance the company’s origination capabilities and can benefit Athene via potential synergies, the overall impact on Apollo Global Management, Inc. (NYSE:APO)’s financial performance remains to be fully realized. Bridge manages ~$50 billion of high-quality AUM in real estate products and targets both institutional and wealth clients. The transaction is projected to be immediately accretive to Apollo Global Management, Inc. (NYSE:APO)’s fee-related earnings upon closing.
Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Alternative asset manager Apollo Global Management, Inc. (NYSE:APO) contributed to performance. The company held a well-received Investor Day during which management highlighted the firm’s expansive credit management capabilities and introduced bullish five-year growth targets. Apollo also participated in the broader rally of financial stocks spurred by the Republican elections sweep, which has bolstered expectations for greater capital markets activity and looser regulations. Investors expect a more business-friendly administration will support growth initiatives for alternative managers, including plans to introduce private investments into retirement accounts. Finally, Apollo was added to the S&P 500 Index during the quarter, which prompted passive buying of the shares. We remain invested due to Apollo’s long-term growth prospects, formidable competitive advantages, and strong management team.”
4. PayPal Holdings, Inc. (NASDAQ:PYPL)
Forward P/E as on February 28: ~14.2x
10-Year Sales Growth: ~14.7%
Number of Hedge Fund Holders: 94
PayPal Holdings, Inc. (NASDAQ:PYPL) operates a technology platform enabling digital payments for merchants and consumers. Gustavo Gala from Monness reiterated a “Buy” rating on the company’s stock with a price target of $120.00. The rating is backed by a combination of factors highlighting the company’s strong growth potential and strategic initiatives. PayPal Holdings, Inc. (NASDAQ:PYPL) is expected to see strong growth in transaction margins and EPS by 2027, courtesy of enhancements in checkout process and higher monetization of Venmo.
Furthermore, PayPal Holdings, Inc. (NASDAQ:PYPL)’s partnership with VeriFone can expand into brick-and-mortar locations and the roll-out of new functionalities for merchants is projected to improve customer engagement and fuel revenue growth, says the analyst. Its focus on Buy Now, Pay Later services, together with the integration of agentic AI to personalize consumer experiences, can act as potential growth drivers. PayPal Holdings, Inc. (NASDAQ:PYPL)’s strategic restructuring and platformization efforts are projected to improve cost structures and ramp up product iterations, resulting in better-targeted offerings and healthier customer engagement. As per the analyst, given the robust financial outlook and a strong plan for sustainable growth, PayPal Holdings, Inc. (NASDAQ:PYPL)’s shares are considered undervalued.
Longleaf Partners, managed by Southeastern Asset Management, released its Q4 2024 investor letter. Here is what the fund said:
“PayPal Holdings, Inc. (NASDAQ:PYPL) – Digital payments platform PayPal was a contributor for the quarter and the year. The company delivered strong results, with gross margin dollars continuing to grow in the mid-high single digits for the last few quarters. Effective cost management further contributed to double-digit FCF growth, a key metric in our analysis. PayPal also demonstrated its commitment to enhancing shareholder value by repurchasing shares at a 10% annualized basis in the most recent quarter, leading to even stronger FCF per share growth. Much of what we envisioned at our initial investment has materialized quicker than anticipated. This strong performance has been driven by the improved leadership of relatively new CEO Alex Chriss.”
3. Alibaba Group Holding Limited (NYSE:BABA)
Forward P/E as on February 28: ~13.2x
10-Year Sales Growth: ~30.0%
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) offers technology infrastructure and marketing reach to support merchants, brands, retailers, and other businesses to engage with their users and customers. CMB International Securities analyst Saiyi He maintained a “Buy” rating on the company’s stock on February 21, setting a price target of $157.70. The rating stems from several factors indicating a favourable outlook for Alibaba Group Holding Limited (NYSE:BABA). It reported healthy Q3 2025 results, with total revenue exceeding expectations and reflecting robust YoY growth. This was mainly aided by healthy performance of both the Taobao & Tmall Group and the Cloud Intelligence Group, which surpassed the market expectations in adjusted EBITA, says the analyst.
In the quarter ended December 31, 2024, the company’s revenue came in at RMB280,154 million (US$38,381 million), reflecting a rise of 8% YoY. The analyst added that growth in Alibaba Group Holding Limited (NYSE:BABA)’s cloud revenue, courtesy of higher demand for AI-related services, aids a healthy future for its cloud segment. The Alibaba International Digital Commerce Group is projected to witness profitability earlier than previously expected, leading to a brighter overall earnings outlook, says Saiyi He.
Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Alibaba Group Holding Limited (NYSE:BABA) is the largest retailer and e-commerce company in China. Alibaba operates shopping platforms Taobao and Tmall as well as businesses in logistics, local services, digital media, and cloud. Shares fell on continued weakness in core domestic commerce growth. Quarterly results were roughly in line with expectations, with relative strength in profitability, but the timing for acceleration in core gross merchandise value is still unclear. 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.”
2. UnitedHealth Group Incorporated (NYSE:UNH)
Forward P/E as on February 28: ~15.9x
10-Year Sales Growth: ~11.8%
Number of Hedge Fund Holders: 150
UnitedHealth Group Incorporated (NYSE:UNH) operates as a diversified health care company in the US. The company reported full-year and Q4 2024 results implying diversified growth in serving people more extensively at Optum and UnitedHealthcare. The company’s FY 2024 operating cost ratio came in at 13.2% as compared to 14.7% in 2023, implying gains from business portfolio refinement and robust improvement in operating efficiencies and consumer experiences. The business portfolio refinement, which includes strategic transactions, is expected to enhance growth opportunities and contributed ~80 bps, nearly half at Optum Health with the remainder split between UnitedHealthcare and Optum Insight.
For 2025, UnitedHealth Group Incorporated (NYSE:UNH) affirmed its performance outlook, including revenues of $450 billion – $455 billion, net earnings of $28.15 – $28.65 per share, adjusted net earnings of $29.50 – $30.00 per share and cash flow from operations of between $32 billion – $33 billion. The shift from fee-for-service to value-based care benefits UnitedHealth Group Incorporated (NYSE:UNH) because it has a significant network of doctors and data analytics to fuel efficiency. Bretton Capital Management, an investment management company, published its Q4 2024 investor letter. Here is what the fund said:
“We invest in UnitedHealth Group Incorporated (NYSE:UNH) because we believe this revealed preference is real. The regulatory landscape changes constantly, there is plenty of noise in the system, and it is possible to imagine a world where health insurers would not be necessary. However, the massive healthcare system we’re in today structurally relies on private companies to play the crucial role of managing care and negotiating prices, and we don’t think the US government is prepared to take all that over. It was a bad year for our investment, as the stock returned a negative 2.4%, but it trades for a meaningful discount to the market despite consistently delivering double digit earnings growth for years, including 10% last year.
First, the elephant in the room. On December 4, Brian Thompson, who ran UnitedHealth’s insurance business, was assassinated in New York City. Shell casings had the words “deny” and “depose” written on them, a bullet was inscribed with “delay.” Five days later, Luigi Mangione was arrested in Pennsylvania with what appears to be the murder weapon and a manifesto criticizing the American healthcare system. Mangione has since become a cult celebrity.
Healthcare is not a normal market. Governments have decided that healthcare is worth intervening in to achieve noneconomic outcomes, most notably providing care for people who can’t afford it. Each country’s regulatory system designs its system and rations healthcare in its own way: the UK employs providers directly and attempts a central triage function to allocate care; continental European systems typically have private providers but some version of all-payer rate setting; and the US has a decentralized model where providers can charge whatever they want, but payers can choose not to pay it, plus government-run systems like Medicare and Medicaid that cover about 35% of Americans. Every system implements some type of brake on costs, usually a combination of the government and private companies, and the US system leans more on the private sector for this than others. Our system is not without its benefits. It is vastly more lucrative for providers like surgeons and medical device companies. It also allows for some measure of money signal; if you are a rich weekend warrior with an orthopedic issue, the American system will offer a dizzying array of cutting-edge specialists where the UK would suggest getting used to the feeling of aging and stiffening one’s upper lip. However, our system violates the social expectation of the word “insurance…” (Click here to read the full text)
1. Alphabet Inc. (NASDAQ:GOOGL)
Forward P/E as on February 28: ~19.2x
10-Year Sales Growth: ~18.1%
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOGL) provides various products and platforms. The company’s Q4 2024 was a strong one thanks to its leadership in AI and momentum throughout the business. Its AI-powered Google Cloud portfolio continues to see healthy customer demand, with YouTube continuing to be the leader in streaming watch time and podcasts. Together, Cloud and YouTube managed to exit 2024 at an annual revenue run rate of $110 billion. The consensus among Wall Street analysts is that Alphabet Inc. (NASDAQ:GOOGL)’s investments in AI and cloud infrastructure are expected to place it well for future growth, despite short-term pressures.
AI-powered solutions are expected to differentiate Google Cloud Platform from competitors, bringing in more enterprise customers and fueling revenue growth. Alphabet Inc. (NASDAQ:GOOGL)’s AI advancements are expected to result in new product categories and services, which can help open up additional revenue streams over and above traditional advertising. Reuters, while highlighting the comments from CFO Anat Ashkenazi, mentioned that Alphabet Inc. (NASDAQ:GOOGL) continues to spend significantly on infrastructure development to aid AI research and integration into products including Search and Cloud services. Notably, the majority of capex for 2025 is expected to go into building servers and data centers.
Qualivian Investment Partners, an investment partnership focused on long-only public equities, published its Q3 2024 investor letter. Here is what the fund said:
“Alphabet Inc. (NASDAQ:GOOGL): Q2 2024 revenues and EPS beat expectations, with total revenues growing 14%, Search ad revenues growing 14%, YouTube ads growing 13%, and Google Cloud revenues growing 29%. Revenue growth in the quarter constituted a continued sequential improvement from earlier quarters in the year, suggesting a continued rebound in Alphabet’s core business except for YouTube ad revenues, which missed expectations and showed deceleration in the growth rate as compared to Q1 when it grew 21%. Operating margins improved by 310 bps vs. the same quarter last year.
Management continued to highlight developments with their generative AI program, which is seen as a foundational platform with opportunities across their businesses but particularly in search and cloud. However, this comes with material capex investment well ahead of the expected economic benefits from Gen AI, and the level of spending is leading investors to worry about the ROI on that spend for Alphabet, as well as the other hyperscalers (Microsoft and Amazon). We continue to have confidence in Alphabet’s ability to generate strong revenue, earnings, and cash flow growth well above the S&P 500’s in the years to come and view it as a core holding for the long term.”
While we acknowledge the potential of GOOGL 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. If you are looking for a deeply undervalued AI stock that is more promising than GOOGL 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 Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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