On March 26, Jack Caffrey of JPMorgan Asset Management provided an analysis of market trends in a discussion on CNBC’s ‘Squawk Box’. He emphasized diversified portfolios built around different exposures during periods of volatility. Caffrey believes in the importance of ‘time in the market’ over ‘timing the market’. He highlighted the difficulty in predicting when fear or euphoria will dominate, as some of the best market days follow extreme pessimism. Caffrey also discussed the October sell-offs in 2022 and 2023, where many strategists expected further market tests at levels like 3200 or 3300 on the S&P 500. However, instead of panic selling, the market experienced rebounds in 2023 and 2024. He observed that implied volatility reached the high 20s during recent corrections, but did not indicate widespread panic.
Caffrey also discussed how the MAG7 drives market trends. While these stocks led growth in early 2020, their momentum eventually faded. This led to corrections instead of broadening. Investors began exploring second and third derivative trades stemming from AI developments, such as increased electricity demand and improvements in natural gas markets. He noted that mean reversion often occurs when primary trades become well-understood and widely owned. He suggested that markets would likely be led by earnings rather than valuation. Caffrey acknowledged that while some stocks within the MAG7 have posted earnings growth that makes their valuations more reasonable, traders are increasingly seeking opportunities in overlooked sectors like energy and businesses benefiting from a weaker dollar. For instance, oil prices have remained down despite energy leading the market performance this year.
Stimulus measures in Europe are also shifting from monetary to fiscal policies, which creates additional opportunities for investors. That being said, we’re here with a list of the 11 cheap NYSE stocks to invest in according to hedge funds.
A financial planner analysis their portfolio and making decisions on stocks and assets.
Our Methodology
We sifted through the Finviz stock screener to compile a list of the top NYSE-listed stocks. We then selected the 11 stocks with a forward P/E ratio under 15, as of April 8, that were also 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 900 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).
11 Cheap NYSE Stocks to Invest in According to Hedge Funds
11. Discover Financial Services (NYSE:DFS)
Forward P/E Ratio as of April 8: 11.17
Number of Hedge Fund Holders: 91
Discover Financial Services (NYSE:DFS) provides digital banking products and services, and payment services in the US through two segments. Its Digital Banking segment offerings range from Discover-branded credit cards to individuals to direct-to-consumer deposit products. The Payment Services segment operates the PULSE to access ATMs, debit, and electronic funds transfer networks among other services.
Earlier on January 27, Brian Foran of Truist maintained a Buy rating on the company while raising the price target from $233 to $262 due to the company’s robust financial performance. In Q4 2024, the company’s net interest margin for its Credit Card division reached 11.96%, which showed an improvement of 0.98% increase year-over-year. Payment rates also slightly decreased because of the modest 1% improvement in card receivables.
The company’s credit card accounts from 2023 are anticipated to be more profitable than those from 2022. Notably in Q4, Discover Financial Services’ (NYSE:DFS) total earnings were $5.11, which was higher than analyst estimates of $3.20 per share. The total revenue of $4.76 billion also exceeded the estimates of $4.41 billion.
Middle Coast Investing stated the following regarding Discover Financial Services (NYSE:DFS) in its Q3 2024 investor letter:
“The good transitions tend to tie back to the macroeconomy. Financial companies are seen as the big winners in a soft landing. Each of our winners have good things happening with them, too. Discover Financial Services (NYSE:DFS) is cleaning up many of its problems from the past few years. Whether or not its deal with Capital One goes through, Discover’s business has gotten much stronger in the past six months.”
10. Merck & Co. (NYSE:MRK)
Forward P/E Ratio as of April 8: 9.02
Number of Hedge Fund Holders: 91
Merck & Co. (NYSE:MRK) is a healthcare company that operates through two segments: Pharmaceutical and Animal Health. The company offers human health pharmaceuticals for various areas, which include oncology, vaccines, hospital acute care, cardiovascular, and neuroscience among others. It also provides veterinary pharmaceuticals, like vaccines and health management solutions and services.
The company’s Keytruda sales increased by 18% year-over-year in 2024 and reached $29.5 billion. In Q4 alone, these sales surged by 21% and generated $7.8 billion, which was driven by global demand across both metastatic and earlier-stage cancers. On February 24, DBS analyst Nico Chen reaffirmed a Buy rating on the company while also maintaining his $100 price target due to Keytruda’s rapid growth.
Merck & Co. (NYSE:MRK) has secured regulatory approvals for Keytruda-based regimens in China, Japan, and the US. It will also be seeking regulatory approval for other treatments by mid-2025, such as its investigational doravirine/islatravir (DOR/ISL) two-drug HIV-1 regimen. This new treatment proved as effective as standard therapies in two studies of adults with controlled HIV after 48 weeks.
GreensKeeper Asset Management stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its Q3 2024 investor letter:
“Merck & Co., Inc. (NYSE:MRK) was our second-largest detractor this quarter, declining -8.3%. MRK’s leading HPV vaccine, GARDASIL 9, faced challenges internationally due to inventory buildup within its Chinese distributor, which is expected to reduce shipments for the remainder of 2024. Despite this short-term impact, the long-term outlook for GARDASIL 9 remains promising. Meanwhile, the company’s $27 billion Keytruda cancer juggernaut continues to grow at a healthy clip, powering earnings growth.”
9. Pfizer Inc. (NYSE:PFE)
Forward P/E Ratio as of April 8: 7.7
Number of Hedge Fund Holders: 92
Pfizer Inc. (NYSE:PFE) specializes in biopharmaceutical products. It offers medicines and vaccines. For cardiovascular and migraine, it has the Eliquis, Nurtec ODT/Vydura, Zavzpret, and Premarin family brands. For infectious diseases with unmet medical needs, it has the Prevnar family, Abrysvo, Nimenrix, FSME/IMMUN-TicoVac, and Trumenba brands. For COVID-19 prevention and treatment, and potential future mRNA and antiviral products, it has the Comirnaty and Paxlovid brands.
The company’s treatment for advanced urothelial cancer, which is Padcev combined with pembrolizumab, is leading in the US with the potential to reach 3x more patients. Braftovi/Mektovi have also experienced a 27% global sales increase year-over-year, which is supported by new data showing improved survival rates in colorectal cancer. Lorbrena has become a standard lung cancer treatment with a 37% global sales increase. All of these are treatments in the company’s oncology segment.
For further expansions in the oncology pipeline, there are ongoing Phase 3 trials for sigvotatug vedotin in lung cancer. A Phase 3 readout for multiple myeloma is also expected. In 2025, the company will aim for multiple regulatory approvals and Phase 3 results. Recent positive Phase 3 results for breast cancer therapy vepdegestrant, combined with FDA Fast Track designation, highlight Pfizer Inc.’s (NYSE:PFE) commitment to innovation and strong financial performance.
8. Wells Fargo & Co. (NYSE:WFC)
Forward P/E Ratio as of April 8: 10.72
Number of Hedge Fund Holders: 96
Wells Fargo & Co. (NYSE:WFC) is a financial services company that provides diversified banking, investment, mortgage, and consumer & commercial finance products and services internationally. It operates through four segments: Consumer Banking & Lending, Commercial Banking, Corporate & Investment Banking, and Wealth & Investment Management.
The company’s credit card division added over 2.4 million new accounts in 2024 and experienced a $17 billion improvement in spending year-over-year. Due to higher loan balances and increased spending, the company launched 11 new card products since 2021 has contributed to a 3% revenue rise. Despite overall loan declines within the bank, credit card balances grew, which reflected strong credit standards.
The company’s expenses also fell by 12% in 2024, mainly due to lower FDIC assessments and cost efficiencies. However, higher compensation and tech costs offset some savings. Credit loss provisions decreased overall, excluding credit cards. RBC Capital Markets analyst Gerard Cassidy recently increased Wells Fargo & Co.’s (NYSE:WFC) rating from Sector Perform to Outperform.
Hotchkis & Wiley Large Cap Fundamental Value Fund stated the following regarding Wells Fargo & Company (NYSE:WFC) in its Q4 2024 investor letter:
“Wells Fargo & Company (NYSE:WFC) is one of the nation’s largest depositories and banks by assets. In addition to having a very high market share of deposits, they also enjoy high market share within the geographies they operate in such as western and southeastern US. In our opinion, WFC is one of the best franchises in banking with a history of very high returns on assets and equity. Performance over the quarter was strong due to potential deregulation with the onboarding of a new presidential regime and speculation that the company’s asset cap could be lifted as early as 1H25.”
7. Johnson & Johnson (NYSE:JNJ)
Forward P/E Ratio as of April 8: 14.24
Number of Hedge Fund Holders: 98
Johnson & Johnson (NYSE:JNJ) engages in the R&D, manufacture, and sale of various products in the healthcare field through the Innovative Medicine and MedTech segments. It distributes its products to wholesalers, hospitals, and retailers, as well as physicians, nurses, hospitals, eye care professionals, and clinics.
In 2024, the company’s operational sales surged by a 7% year-over-year increase, excluding the impact of COVID-19 vaccine. The company’s total number of billion-dollar revenue platforms is now 26, including the recent addition of SPRAVATO. Its Innovative Medicine segment exceeded $14 billion in sales for the third consecutive quarter, with 10 brands achieving double-digit growth. A focus on cash flow helped the company generate about $20 billion in free cash flow by the end of 2024, which was an increase of $1.6 billion year-over-year.
As March was concluding, Johnson & Johnson (NYSE:JNJ) announced plans to invest more than $55 billion in US manufacturing, R&D, and technology over the next 4 years. This is 25% higher from the previous investment period. These investments could potentially contribute ~$100 billion annually to the US economy. On April 4, UBS reaffirmed its Buy rating and $180 price target on the company due to its strong core business. The firm highlighted a 14% sequential rise in total prescription growth for Tremfya, which is its drug for plaque psoriasis and psoriatic arthritis.
6. Citigroup Inc. (NYSE:C)
Forward P/E Ratio as of April 8: 7.82
Number of Hedge Fund Holders: 101
Citigroup Inc. (NYSE:C) is a diversified financial service holding company that provides various financial products and services to consumers, corporations, governments, and institutions. It operates through five primary segments that are known as Services, Markets, Banking, US Personal Banking, and Wealth.
In 2024, the company was able to exceed its full-year revenue growth target by improving by 5% year-over-year to generate an amount of $81.1 billion. Due to these results, Betsy Graseck from Morgan Stanley kept a Buy rating on the company on March 10, while maintaining a price target of $110. The company’s Services division particularly saw a 9% year-over-year revenue increase, which was driven by a 17% rise in fee revenue and higher deposit volumes.
The division gained market share in Trade and Treasury Solutions (TTS) and security services and achieved its best fourth-quarter results in 10 years with 6% market growth. Citigroup Inc. (NYSE:C) is also expanding its Flex Pay tool through partnerships like that with Apple Pay. Flex Pay allows credit card customers to make fixed monthly payments for purchases of $75 or more. It has seen consistent double-digit growth, which includes a 25% increase from 2023 to 2024.
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.”
5. Exxon Mobil Corp. (NYSE:XOM)
Forward P/E Ratio as of April 8: 13.4
Number of Hedge Fund Holders: 104
Exxon Mobil Corp. (NYSE:XOM) explores and produces crude oil and natural gas. It operates through its Upstream, Energy Products, Chemical Products, and Specialty Products segments. It’s involved in the manufacture, trading, transportation, and sale of crude oil, natural gas, petroleum products, petrochemicals, and other specialty products.
On February 4, DBS analyst Suvro Sarkar reaffirmed a Buy rating on the company while keeping a price target of $133 due to the company’s strong financial performance, particularly the Upstream segment which explores and produces oil and gas. It achieved record production in 2024 led by the performance in the Permian Basin and Guyana. By 2030, Permian production is anticipated to reach 2.3 million barrels per day. This number equaled 1.5 million in 2024.
In 2025, Exxon Mobil Corp. (NYSE:XOM) will implement projects like Yellowtail in Guyana and advanced Permian recovery techniques to focus on low-cost, low-emission, and high-return growth. Yellowtail is Guyana’s largest deepwater oil project, and advanced techniques boost Permian Basin oil and gas extraction. Guyana is also pursuing a gas partnership with Suriname to build an industrial hub.
4. Alibaba Group Holding Ltd. (NYSE:BABA)
Forward P/E Ratio as of April 8: 10.39
Number of Hedge Fund Holders: 107
Alibaba Group Holding Ltd. (NYSE:BABA) offers technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses engage with their users and customers. It has seven segments and also operates Taobao and Tmall, which are digital retail platforms. It also offers Alimama, which is a proprietary monetization platform.
The company has planned substantial AI infrastructure spending over the next 3 years. On March 28, Mizuho analyst James Lee highlighted the company’s strong AI strategy which prepares it for improved internal productivity and enhanced product experiences. Qwen AI, which is its family of LLMs, has over 90,000 derivative models and over 290,000 companies are using its APIs. The company is now developing Qwen 2.5 Max, which is its most advanced LLM with applications across various AI tasks.
The company is also expanding its Cloud Intelligence Group, which develops and provides cloud computing and AI services. This segment experienced triple-digit percentage revenue growth year-over-year for 6 consecutive quarters in FQ3 2025. The total revenue grew by 11% in this quarter. The cloud computing division particularly grew by 13% due to rapid AI expansions.
3. Bank of America Corp. (NYSE:BAC)
Forward P/E Ratio as of April 8: 9.62
Number of Hedge Fund Holders: 113
Bank of America Corp. (NYSE:BAC) offers financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments. It operates through four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets.
In 2024, the company’s Consumer Banking division made $11 billion in revenue, which contributed 40% to the total earnings. With the addition of over 200,000 net new checking accounts, the division marked 6 years of growth. The company’s digital engagement was also strong, with over 14 billion logins and digital sales higher than 60% in Q4. The company’s AI-powered Erica platform surpassed 2.5 billion interactions in this quarter.
It’s investing in digital capabilities and maintaining disciplined deposit pricing for continued growth. On March 7, David George of Baird upgraded the company’s rating from Neutral to Outperform, while raising its price target from $45 to $50. As of now, Bank of America Corp. (NYSE:BAC) has a client base of 68 million, operates 3,900 branches, and 16,000 ATMs, and serves 56 million digital users.
Hardman Johnston Global Equity Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its Q4 2024 investor letter:
“Bank of America Corporation (NYSE:BAC) is the second largest bank in the developed world and operates the third largest branch network in the US. With 86% of revenues coming from the US, the bank is a clear beneficiary of the lower regulatory environment expected from the incoming administration. The company’s business is highly diversified across retail, commercial, wealth management, and investment banking, with significant scale across all verticals. Management believes there is a big opportunity going forward in growing and monetizing its mass retail client base. Wealth is another huge opportunity, with the Merrill Lynch platform enabling customers to make more transactions and purchase additional products. Lastly, Bank of America has an opportunity to increase efficiency through cost reduction and online banking. Our expectation is for the bank’s ROE to move significantly higher, driving EPS growth and higher multiples.”
2. Vistra Corp. (NYSE:VST)
Forward P/E Ratio as of April 8: 14.22
Number of Hedge Fund Holders: 120
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company through five segments: Retail, Texas, East, West, and Asset Closure. It serves ~5 million customers with a generation capacity of ~41,000 megawatts with a portfolio of natural gas, nuclear, coal, solar, and battery energy storage facilities.
In 2024, the company acquired 3 nuclear sites and gained around 1 million customers together with 2,000 new employees. It then became the second-largest nuclear fleet in the US. It made a $2.8 billion net income. Later in December of the same year, the company announced that it deployed 2 new solar projects in Illinois.
The company’s 1,185-megawatt (MW) Baldwin Power Plant in Illinois will now operate until 2027 instead of closing operations in 2025. It invested ~$135 million in Illinois energy, and the solar facility will generate ~140,000 MWh of clean energy for the next 2 decades.
Meridian Hedged Equity Fund stated the following regarding Vistra Corp. (NYSE:VST) in its Q4 2024 investor letter:
“Vistra Corp. (NYSE:VST) is an integrated retail and power generation company with operations across the U.S., primarily serving Texas and the Midwest. We believe Vistra is well-positioned to capitalize on the structural tightening of power markets, as electricity demand accelerates, and baseload generation capacity continues to retire. This trend has been amplified by the rapid growth of AI, which is driving unprecedented demand for data centers and the power required to run them. These factors create a favorable pricing environment for Vistra’s generation fleet, especially its nuclear and gas assets. The company has locked in much of this value via hedging, providing clear visibility into future cash flows. Vistra has also successfully grown its retail business and completed a strategic acquisition of Energy Harbor, which added a portfolio of nuclear, retail, and renewable assets.”
1. JPMorgan Chase & Co. (NYSE:JPM)
Forward P/E Ratio as of April 8: 11.74
Number of Hedge Fund Holders: 123
JPMorgan Chase & Co. is a financial services company that operates through the Consumer & Community Banking, Commercial & Investment Bank, and Asset & Wealth Management segments. Among other traditional services, it offers multi-asset investment management solutions in equities, fixed income, alternatives, and money market funds to institutional clients and retail investors.
The company’s software engineers have seen a 10% to 20% increase in productivity due to an in-house coding assistant recently. This enabled the company’s 63,000-strong tech workforce to focus on higher-value AI and data projects. Driven by this, Mike Mayo of Wells Fargo reiterated a Buy equivalent Overweight rating on the company with a $300 price target. There are 450 current AI use cases and the CEO projects 1,000 by next year. Additionally, President Daniel Pinto estimates that AI could add $1 billion to $1.5 billion in value.
As for Q4 2024, the company’s Consumer & Community Banking (CCB) segment’s revenue rose by a modest 1% and generated $18.4 billion due to an 11% rise in card outstanding and higher Net Interest Income (NII) in its Card Services business. Around 10 million new card accounts were acquired in 2024 but projections for 2025 are slightly moderate as compared to 2024.
Carillon Eagle Growth & Income Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2024 investor letter:
“JPMorgan Chase & Co. (NYSE:JPM) also contributed to performance due to optimism regarding the election outcome. Investors expect a wave of deregulation, and a more permissive stance on M&A could bode well for JPMorgan’s capital markets businesses.”
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 time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this 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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