On a down day for major market averages, Paul Hickey, co-founder of Bespoke Investment Group, and Phil Camporeale, portfolio manager at JP Morgan Asset Management, discussed the ongoing volatility. They both appeared on CNBC’s ‘Closing Bell Overtime’ on March 5 to talk about how tariff policy raises uncertainty around growth and earnings outlook.
Camporeale highlighted the difficulty of navigating the rapid pace of headlines surrounding trade discussions out of Washington. Entering the year with a 10% equity overweight, JP Morgan has since reduced this to 5%, reallocating some exposure to US, developed non-US, and emerging markets. Camporeale noted that while policy uncertainty raises questions about growth and earnings outlooks, the US economy remains strong, with a 4% unemployment rate, 3% GDP growth, and solid corporate balance sheets. He said that despite short-term market turbulence, recession risks remain low, and their portfolio maintains an equity overweight alongside high-yield exposure. He also pointed out that it is still early in President Trump’s second term and too soon to draw definitive conclusions about its impact. He believes that lower interest rates could pave the way for positive fiscal and deregulation policies that have yet to fully materialize. Despite current market fears, he remains optimistic about the economy’s strength and low recession probability.
Hickey weighed in on the uncertainty dominating markets, emphasizing that no one can predict the full impact of tariffs. He referenced Target CEO Brian Cornell’s comments earlier in the day about the lack of certainty regarding tariffs, taxes, rates, and the economy. Hickey remarked that this stew of uncertainty is keeping investors cautious. He noted that intraday rallies, such as the one seen earlier in the day after bouncing off the 200-day moving average, are often short-lived due to unpredictable policy developments. For instance, Trump’s speeches have recently been followed by market declines, adding to investor hesitancy. He also highlighted historical context for pullbacks like the current one: since World War II, there have been 64 instances of a 5% drop from all-time highs in the S&P 500. While not uncommon, he advised caution in the short term due to unpredictable market reactions.
Both experts agreed that uncertainty around tariffs and other policies will continue influencing market behavior in the near term. However, they emphasized different aspects, Camporeale focused on economic strength and strategic positioning within portfolios, while Hickey stressed caution amid ongoing unpredictability in policy-driven market movements.
Given this context, we’re here with a list of the 10 most undervalued US stocks to buy according to hedge funds.
Methodology
We used the Finviz stock screener to compile a list of the top US stocks that had a forward P/E ratio under 15. We then selected the 10 stocks 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. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
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 US Stocks to Buy According to Hedge Funds
10. Western Digital Corp. (NASDAQ:WDC)
Forward P/E Ratio as of March 6: 5.97
Number of Hedge Fund Holders: 85
Western Digital Corp. (NASDAQ:WDC) is a data storage company that provides a portfolio of devices and solutions that span client, enterprise, and consumer markets. Under its Western Digital, SanDisk, and WD brands, it offers traditional hard disk drives, cutting-edge solid state drives, advanced flash-based embedded storage and data platforms, among other products.
The company’s HDD (hard disk drive) business is growing due to the data storage demands of AI and autonomous driving. FQ2 2025 sales in this segment were the highest they’ve been in the past 12 quarters. Data center revenue reached an all-time high and made up 55% of the company’s total revenue in FQ2. The average price per HDD unit increased 5% sequentially to $172. The HDD gross margin was 38.6%, up 13.8% year-over-year. The company anticipates that gross margins will continue to improve as they increase adoption of its UltraSMR product line. This product line is the company’s advanced hard drive technology that increases storage capacity by overlapping data tracks on the disk platters.
On February 12, Wells Fargo analyst Aaron Rakers maintained a Buy rating and $85 price target for Western Digital Corp. (NASDAQ:WDC). This was due to the company’s projected revenue growth from data storage demands fueled by AI and autonomous driving, with the total addressable market expanding from $65 billion in 2024 to $100 billion by 2030.
9. ConocoPhillips (NYSE:COP)
Forward P/E Ratio as of March 6: 10.01
Number of Hedge Fund Holders: 86
ConocoPhillips (NYSE:COP) is an exploration and production company that discovers, extracts, and distributes a range of energy resources. These include crude oil, natural gas, and LNG, with operations that are positioned across six distinct segments that span North America, Europe, Asia, and beyond.
Its Lower 48 operations are a major revenue driver and achieved 5% production growth in 2024. The Lower 48 operations refer to oil and gas production activities within the 48 contiguous US states, excluding Alaska and Hawaii. This contributed to the company’s overall 4% growth. In Q4 2024, Lower 48 production reached 1,308,000 barrels of oil equivalent per day.
For 2025, ConocoPhillips (NYSE:COP) plans to reduce Lower 48 capital spending by $1.4 billion, which is a 15% reduction. Despite this, it projects low single-digit production growth, using $1 billion in run-rate synergies from the Marathon acquisition by the end of 2025, with over half already factored into capital guidance. This acquisition added substantial high-quality and low-cost oil and gas assets to the company’s portfolio. Total 2025 capital expenditure is projected at $12.9 billion.
