10 Most Undervalued US Stocks to Buy According to Hedge Funds

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1. Bank of America Corp. (NYSE:BAC)

Forward P/E Ratio as of March 6: 11.43

Number of Hedge Fund Holders: 113

Bank of America Corp. (NYSE:BAC) is a global financial services provider that delivers a range of banking, investment, and risk management solutions to individuals, businesses, and institutions worldwide. It operates through its 4 core segments: Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets.

Its Consumer Banking segment contributed ~$11 billion to the company’s total 2024 revenue. This was 40% of the company’s earnings. Q4 2024 revenue for this segment was $10.6 billion. The segment added over 200,000 net new checking accounts and marked six years of growth. Investment balances reached $518 billion, with $25 billion in full-year flows. Deposits stabilized, ending at $952 billion, with average deposits up $4 billion from Q3, while the rate paid declined to 0.64%.

Digital engagement at Bank of America Corp. (NYSE:BAC) was strong, with over 14 billion digital logins in 2024. Digital sales crossed 60% in Q4 2024, and the Erica capability surpassed 2.5 billion interactions. Erica capabilities encompass its AI-powered ability to interact with customers, provide financial information, and perform banking tasks through the Bank of America app. The company now plans continued investment and expects growth in loans and deposits.

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.”

While we acknowledge the growth potential of Bank of America Corp. (NYSE:BAC), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BAC 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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