12 Oversold Value Stocks to Buy According to Hedge Funds

1. Builders FirstSource, Inc. (NYSE:BLDR)

Number of Hedge Fund Holders: 59

​Builders FirstSource, Inc. (NYSE:BLDR) is a leading supplier of building materials, manufactured components, and construction services to professional homebuilders, remodelers, and commercial contractors in the US. The company offers a wide range of products including lumber, engineered wood, windows, doors, roofing, and gypsum, as well as prefabricated components like roof and floor trusses and wall panels. It also provides value-added services such as design, estimating, and installation. BLDR ranked second on our recent list of 10 Undervalued Stocks to Invest in According to Goldman Sachs.

Builders FirstSource, Inc. (NYSE:BLDR) displayed solid resilience in Q4 2024, reporting net sales of $3.8 billion, despite an 8% YoY decline largely driven by softer core organic demand and commodity price deflation. Even with a 300 basis point dip in gross margin compared to the previous year, the company preserved a strong margin of 32.3%. Throughout the year, it achieved notable operational progress, realizing $117 million in productivity gains and completing 13 acquisitions with a combined trailing revenue of approximately $420 million.

Looking ahead to 2025, Builders FirstSource, Inc. (NYSE:BLDR) anticipates net sales in the range of $16.5 billion to $17.5 billion and adjusted EBITDA between $1.9 billion and $2.3 billion. The company remains committed to expanding its value-added offerings and accelerating its digital transformation, with its digital platform generating close to $1 billion in sales to date and expected to drive an additional $200 million in revenue this year. Supported by a strong financial foundation, BLDR is navigating ongoing challenges in multifamily and single-family housing markets by enhancing operational efficiency and pursuing strategic growth through acquisitions and technology investment. With a forward P/E of 10.97, BLDR is one of the oversold stocks to buy according to hedge funds.

Overall, Builders FirstSource, Inc. (NYSE:BLDR) ranks first on our list of the 12 oversold value stocks to buy according to hedge funds. While we acknowledge the potential of BLDR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BLDR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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