In this article, we discuss 10 undervalued stocks to buy today according to Paul Tudor Jones. If you want to see more undervalued stocks in the billionaire’s portfolio, click 5 Undervalued Stocks to Buy Today According to Paul Tudor Jones.
Paul Tudor Jones’ Tudor Investment Corp is known for its value investing strategy, as the billionaire looks for stocks that are trading at a significant discount to their earnings and growth potential. While his Q1 portfolio had 637 new arrivals and the billionaire made additional purchases in 588 equities, he believes that the stock market is not a good place to be currently. He thinks that the tightening monetary policy and rising rates are likely to plunge the economy into a deep recession.
Paul Tudor Jones advised investors to preserve their capital, and if they wish to venture into the current stock market, they should buy and sell quickly to realize short-term share price gains.
Some of the most notable companies that billionaire Paul Tudor Jones held positions in Q1 2022 included Airbnb, Inc. (NASDAQ:ABNB), Amazon.com, Inc. (NASDAQ:AMZN), and Zoom Video Communications, Inc. (NASDAQ:ZM).
Our Methodology
We used the Q1 2022 portfolio of billionaire Paul Tudor Jones for this analysis, selecting the undervalued stock picks of his hedge fund during the quarter. The price to earnings ratios are mentioned for all securities. We made sure to pick stocks with a P/E ratio of under 15 as of May 27.
Undervalued Stocks to Buy Today According to Paul Tudor Jones
10. Turquoise Hill Resources Ltd. (NYSE:TRQ)
Number of Hedge Fund Holders: 21
P/E Ratio as of May 27: 9.98
Turquoise Hill Resources Ltd. (NYSE:TRQ) is a subsidiary of Rio Tinto Group, operating as a mining company. Turquoise Hill Resources Ltd. (NYSE:TRQ) primarily explores for copper, gold, and silver deposits. Paul Tudor Jones’ hedge fund boosted its stake in the company by 9% in Q1 2022, holding 690,472 shares worth $20.7 million. The stock has featured on Tudor Investment Corp’s portfolio since the third quarter of 2020.
On May 10, Turquoise Hill Resources Ltd. (NYSE:TRQ) posted earnings for Q1, reporting an EPS of $1.37, beating analysts’ estimates by $1.04. The revenue of $402.65 million also outperformed market consensus by $24.28 million.
Scotiabank analyst Orest Wowkodaw upgraded Turquoise Hill Resources Ltd. (NYSE:TRQ) on May 12 to Outperform from Sector Perform with a price target of C$44, up from C$43. The analyst sees a “significantly more attractive” risk/reward profile after the company’s lower than projected preliminary Phase II capex, which he says further de-risks the investment thesis.
According to Insider Monkey’s Q1 data, Turquoise Hill Resources Ltd. (NYSE:TRQ) was found in 21 public hedge fund portfolios, up from 12 funds in the earlier quarter. Matthew Halbower’s Pentwater Capital Management reported a leading position in the company, comprising 18.8 million shares worth $565.5 million.
In addition to Airbnb, Inc. (NASDAQ:ABNB), Amazon.com, Inc. (NASDAQ:AMZN), and Zoom Video Communications, Inc. (NASDAQ:ZM), Turquoise Hill Resources Ltd. (NYSE:TRQ) is on the radar of elite investors.
Here is what Massif Capital has to say about Turquoise Hill Resources Ltd. (NYSE:TRQ) in its Q4 2020 investor letter:
“Turquoise Hill remains a challenging company to evaluate and a problematic company to manage within our portfolio. The company holds rights to a world-class asset, but one with very different characteristics than Ivanhoe’s Kamoa Kakula. Kamoa is a flat, low depth, high-grade block of copper ore that is relatively easy to mine. Turquoise Hill’s OT mine is a deep underground mine with good grades and high tonnage, but it is very challenging to monetize. The planned extraction method, block cave mining, is still a relatively new approach to mining an asset in the grand scheme of things. The scale of the OT mine exacerbates the challenge. Management challenges compound technical risks. Rio-Tinto (the mine operator and developer via a 51% stake in Turquoise Hill) and Turquoise Hill seem to always be at odds with each other, and both parties seem to always be at odds with the Mongolian Government.
Although we have spent significant time underwriting the technical, managerial, and political risks associated with the investment, we are continuously surprised by how frequently issues occur for this company. With that in mind, we constructed a collar on the position during the fourth quarter, selling call options for January 2022 at a $20 strike and using the proceeds to buy January 2022 puts on the position at a $7 strike. This will allow us to confidently hold the position in the near term, knowing we have locked in a gain of at least 50% from our purchase price while still allowing for significant potential price appreciation from the current $12 price.”
9. HCA Healthcare, Inc. (NYSE:HCA)
Number of Hedge Fund Holders: 62
P/E Ratio as of May 27: 10.14
HCA Healthcare, Inc. (NYSE:HCA) operates general and acute care hospitals in the United States, providing medical and surgical, emergency, and outpatient services. Tudor Investment Corp boosted its HCA Healthcare, Inc. (NYSE:HCA) stake by 4324% in Q1, holding 49,016 shares worth $12.2 million. Paul Tudor Jones initially invested in the stock in 2011 and has held the position consistently over the years, apart from a few breaks.
HCA Healthcare, Inc. (NYSE:HCA) announced earnings for the March quarter on April 22, reporting an EPS of $4.12, below consensus estimates by $0.12. Revenue for the period grew 6.93% year-over-year to $14.95 billion, beating Street forecasts by $225.27 million.
On May 26, Bernstein analyst Lance Wilkes upgraded HCA Healthcare, Inc. (NYSE:HCA) to Outperform from Market Perform, while lowering the price target to $271 from $273 as part of a broader research note on U.S. Healthcare Services. The analyst is positive on the sector and believes it is well positioned to navigate an inflationary environment. For HCA Healthcare, Inc. (NYSE:HCA), the analyst is optimistic about the company’s resilience to overcome high labor costs and consequent earnings recovery.
Among the hedge funds tracked by Insider Monkey, 62 funds were bullish on HCA Healthcare, Inc. (NYSE:HCA) at the end of Q1 2022, compared to 66 funds in the prior quarter. Harris Associates is the leading shareholder of the company, with 7.6 million shares worth $1.9 billion.
Here is what First Eagle Investment Management has to say about HCA Healthcare, Inc. (NYSE:HCA) in its Q3 2021 investor letter:
“HCA Healthcare owns and operates 185 hospitals and approximately 2,000 sites of care in the US and UK. Admissions to its facilities, depressed during the worst of the Covid-19 outbreak in 2020, have begun to rebound. HCA reported a nearly 20% year-over-year increase in admissions during the second quarter and a 14% increase in revenue, and forecast that volume would continue to improve throughout the year. We maintain our positive opinion of the company’s management team, believing them to be effective stewards of both the balance sheet and HCA’s business operations.”
8. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 54
P/E Ratio as of May 27: 11.52
The Bank of New York Mellon Corporation (NYSE:BK) was founded in 1784 and is headquartered in New York, providing a range of financial products and services in the United States and internationally. The bank operates through Securities Services, Market and Wealth Services, Investment and Wealth Management, and Other segments.
Securities filings for Q1 2022 reveal that Paul Tudor Jones increased his hold on The Bank of New York Mellon Corporation (NYSE:BK) by 4689%. His hedge fund now owns 231,234 shares of the company, worth about $11.5 million. With a P/E ratio of 11.52, it is one of the most undervalued stocks in Paul Tudor Jones’ portfolio. The company paid a $0.34 per share quarterly dividend to shareholders on May 11, and posted a Q1 EPS of $0.94, above consensus by $0.08.
On May 19, Deutsche Bank analyst Brian Bedell downgraded The Bank of New York Mellon Corporation (NYSE:BK) to Hold from Buy with a price target of $45, down from $54. The analyst downgraded the stock as part of his mid-Q2 outlook for the brokers, asset managers, and exchanges.
According to Insider Monkey’s Q1 data, 54 hedge funds were bullish on The Bank of New York Mellon Corporation (NYSE:BK), up from 49 funds in the last quarter. Warren Buffett’s Berkshire Hathaway held the biggest stake in the company, consisting of 72.3 million shares worth $3.5 billion.
Here is what Ariel Investments has to say about The Bank of New York Mellon Corporation (NYSE:BK) in its Q4 2021 investor letter:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”
7. Stanley Black & Decker, Inc. (NYSE:SWK)
Number of Hedge Fund Holders: 38
P/E Ratio as of May 27: 14.43
Stanley Black & Decker, Inc. (NYSE:SWK) is an American company that engages in the tools, storage, and industrial businesses. Paul Tudor Jones’ Tudor Investment Corp increased its stake in Stanley Black & Decker, Inc. (NYSE:SWK) by 552% in Q1 2022, holding 76,692 shares worth $10.7 million. With a price to earnings ratio of 14.43, it is one of the undervalued names in the Tudor Investment Corp portfolio.
On April 29, Baird analyst Timothy Wojs maintained an Outperform rating on Stanley Black & Decker, Inc. (NYSE:SWK) and lowered the price target on the shares to $160 from $188. The analyst sees the shares range bound in the short-term, but he expects longer-term value as investors focus on normalized EPS/FCF with improved execution.
According to Insider Monkey’s database, Stanley Black & Decker, Inc. (NYSE:SWK) was part of 38 hedge fund portfolios at the end of March 2022, compared to 42 funds in the previous quarter. Jeffrey Gates’ Gates Capital Management held the largest stake in the company, comprising 1.14 million shares worth $160.7 million.
Here is what Saturna Capital Sextant Funds has to say about Stanley Black & Decker, Inc. (NYSE:SWK) in its Q3 2021 investor letter:
“Stanley Black & Decker performed well through the first part of the year but struggled over the summer. China accounts for much of its production, and their zero-tolerance approach to pandemic safety measures has led to disruption, compounded by shipping difficulties and rising materials expenses. We still believe one outcome of the pandemic will be a buoyant home improvement market, given that one never knows when the next pandemic lockdown may occur.”
6. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 61
P/E Ratio as of May 27: 11.00
Morgan Stanley (NYSE:MS) is an American financial services holding company operating through Institutional Securities, Wealth Management, and Investment Management segments. The company serves individual, corporate, and government customers in the Americas, Europe, the Middle East, Africa, and Asia. 13F disclosures for the first quarter of 2022 reveal that Paul Tudor Jones’ fund owned 106,985 shares of Morgan Stanley (NYSE:MS), worth $9.35 million.
On May 3, Oppenheimer analyst Chris Kotowski upgraded Morgan Stanley (NYSE:MS) to Outperform from Perform with a $111 price target. According to the analyst, loan growth and soaring interest rates are beneficial for the banking industry, which is positioned to handle recession better than any other sector. Banks should remain “solidly profitable with their dividends intact”, said the analyst. Per his valuation model, Morgan Stanley (NYSE:MS) stock has over 30% upside potential in the 12-18 months ahead.
Boykin Curry’s Eagle Capital Management held the largest stake in Morgan Stanley (NYSE:MS) in Q1 2022, with 14.12 million shares worth $1.2 billion. Overall, 61 hedge funds were bullish on the stock at the end of March 2022.
Like Airbnb, Inc. (NASDAQ:ABNB), Amazon.com, Inc. (NASDAQ:AMZN), and Zoom Video Communications, Inc. (NASDAQ:ZM), institutional investors are pouring into Morgan Stanley (NYSE:MS).
Here is what Artisan Value Fund has to say about Morgan Stanley (NYSE:MS) in its Q3 2021 investor letter:
“Morgan Stanley, a leading global financial services company, came into the portfolio in late 2020 as a result of its purchase of E*TRADE. The acquisition is a great fit for Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily de-risked the business by adding less volatile fee streams to complement its leading positions in cyclical businesses such as advisory, equities and FICC (fixed income, currencies and commodities). We believe the company will prove its resiliency and value over the long term.”
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Disclosure: None. 10 Undervalued Stocks to Buy Today According to Paul Tudor Jones is originally published on Insider Monkey.
