In this article, we are going to discuss the 12 best Fortune 500 stocks to buy according to hedge funds.
The Fortune 500 list includes companies that generate the highest revenue in the United States. In total, Fortune 500 companies represent two-thirds of the US GDP with $18.8 trillion in revenues, $1.7 trillion in profits, and $43 trillion in market value (as of March 28, 2024), and they employ approximately 31 million people worldwide. Large-cap stocks, which form most of the Fortune 500, are typically safer investments and offer relative stability in times of economic difficulty.
READ ALSO: 11 Best Performing Dow Stocks so Far in 2025
After registering significant gains over the last two years, the broader US market fell sharply on Friday in the wake of weaker-than-expected economic reports and softening consumer demand. A recent report by S&P Global showed that business activity in the US is slowing down, with growth decelerating to a 17-month low. The slowdown is primarily a reflection of rising uncertainty about the business environment, especially in relation to federal government policies regarding domestic spending cuts and the constant threat of looming tariffs.
There are also serious concerns of high inflation due to the said tariffs, causing consumers to be more wary of their spending habits. According to the Tax Foundation, if the tariffs threatened by President Trump are actually imposed, it would amount to an average tax increase of more than $800 per US household in 2025. The tariffs on China alone will add $172 to the tax burden per household, while the rumored imposts on Canadian oil will drive up the price of gas, affecting the entire economy.
That said, some policy measures promised by the Trump administration can also bode well for US corporations and the overall business environment, including taking a less heavy-handed approach towards mergers than under President Biden’s administration. Moreover, the cornerstone of Trump’s second term will be to relax tax policies and extend or make permanent many of the provisions of the 2017 Tax Cuts and Jobs Act that expire at the end of 2025. The President has campaigned on further reducing the base corporate rate to 20%, with an additional cut to 15% for companies that produce goods on American soil.
Another important thing to be mindful of was recently highlighted by Bank of America in a note earlier this month, warning investors of the high concentration levels in the market, where a handful of firms command the lion’s share of investments. This is partially because of passive investing, where investors shovel money into indexes indiscriminately. Passive funds now hold a higher percentage of the US stock market than active funds, which can distort market prices and severely mislead investors. To avoid a potential drawdown, the bank has advised its investors to diversify and consider investing in baskets of quality stocks with lower exposure to the Magnificent Seven stocks.
With that said, here are the Best Large Cap Fortune 500 Stocks According to Hedge Funds.
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Methodology:
To collect data for this article, we referred to the top 50 companies among the Fortune Global Rankings as of January 20, 2024. We then picked out 12 companies with the highest number of hedge fund investors according to the Insider Monkey database as of Q4 2024. Following are the Best Fortune 500 Stocks to Buy According to Hedge Funds.
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).
12. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 95
Costco Wholesale Corporation (NASDAQ:COST) operates an international chain of membership warehouses, mainly under the ‘Costco Wholesale’ name, that carry quality, brand-name merchandise at substantially lower prices than are typically found at conventional wholesale or retail sources.
Shares of Costco Wholesale Corporation (NASDAQ:COST) have surged by over 42% over the last year, thanks to its consistent earnings growth and rock-solid business model. The company’s Q1 2025 revenue rose 7.5% YoY to $62.15 billion, beating analysts’ estimates by over $155.8 million. Net income also came in at $4.04 per share in the reported quarter, beating expectations by $0.25. Moreover, the retailing giant opened seven new warehouses during the quarter, including one relocation and six net new buildings, of which four were outside of the US. The company is projecting 29 openings during the entire FY 2025, of which three will be relocations, and so 26 net new buildings.
One of Costco Wholesale Corporation (NASDAQ:COST)’s biggest success stories is its e-commerce business. The division – which tilts heavily toward discretionary purchases like home furnishings, gold bars, jewelry, and consumer electronics – soared by 21% in January 2025 compared to a 17% increase in the prior month.
Costco Wholesale Corporation (NASDAQ:COST) maintains a 20-year streak of consistent dividend growth, putting it among the 14 Best Large Cap Dividend Growth Stocks to Buy Now. The company declared a quarterly dividend of $1.16 per share last month.
11. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 101
Citigroup Inc. (NYSE:C) is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers. The company has a physical presence in 94 markets around the world and its clients include 85% of Fortune 500 companies.
Citigroup Inc. (NYSE:C) exceeded expectations in Q4 2024 with a net income of $2.9 billion, or $1.34 per share, fueled by strength in trading and dealmaking. The company’s overall net income for 2024 came in at $12.7 billion, up by a significant 40% YoY, while its annual revenue totaled $81.1 billion, reflecting a 3% YoY increase. Citi’s focus on cost controls and operational efficiencies is also paying off, with operating expenses declining by 18% YoY in Q4. The company also announced an innovative $25 billion private credit partnership with its long-term client Apollo. The program will initially focus on North America but it can expand to more geographies later.
Citigroup Inc. (NYSE:C) has paid uninterrupted dividends for 34 consecutive years and offers a quarterly dividend of $0.56 per share. The company’s board also approved a $20 billion stock buyback program last month, including share repurchases of up to $1.5 billion during the first quarter of 2025.
Citigroup Inc. (NYSE:C) is one of the Best Performing Bank Stocks So Far in 2025, with gains of over 16% since the beginning of the year.
10. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 104
Next on our list of the Best Large Cap Stocks According to Hedge Funds is Exxon Mobil Corporation (NYSE:XOM), one of the largest integrated fuels, lubricants, and chemical companies in the world. With operations in more than 60 countries around the globe, the oil major’s competitive edge stems from its diversified world-class asset portfolio.
Exxon Mobil Corporation (NYSE:XOM) is riding high after its US shale business is booming following the $59.5 billion acquisition of Pioneer Natural Resources last year. Its Guyana business is also paying off, helping it generate $34 billion in earnings and $55 billion in cash flow from operations in 2024 – its third-highest tally in the past decade despite weaker market conditions. Exxon’s strong financial position has allowed it to distribute more than $125 billion in dividends and buybacks in the last five years, $30 billion more than the closest competitor.
Exxon Mobil Corporation (NYSE:XOM) announced at the end of last year that its annual project spending will rise to between $28 billion and $33 billion between 2026 and 2030, with a goal of lifting its oil and gas output by 18%. As a result, the oil giant is expecting to deliver incremental growth potential of $20 billion in earnings and $30 billion in cash flow by the end of the decade, allowing it to keep its commitment to sustainable, competitive, and growing shareholder returns. XOM’s cost-reduction target was also increased to $18 billion by 2030, up from the earlier target of $15 billion by 2027.
Shares of Exxon Mobil Corporation (NYSE:XOM) were held by 104 hedge funds in the IM database at the end of Q4 2024, 18 more than the previous quarter. XOM has surged by over 89% over the last five years, against gains of approx. 83% by the broader market.
