In this article, we discuss 14 Best Affordable Stocks to Buy According to Hedge Funds.
The broader market has taken a significant hit, dropping 10% from its peak and wiping out $5.28 trillion in market value in just three weeks. It was worth $52.06 trillion on February 19, but it nosedived to $46.78 trillion as of March 14, 2025. Trade tensions under President Trump, weaker economic growth, and low consumer confidence are all playing a role. Plus, the AI stock boom is cooling off – one of Wall Street’s biggest AI players has fallen 17%, and a popular tech-focused ETF is down 16%. However, even after the drop, the wider market is still looking pricey, trading at 24.1 times its trailing earnings, well above its historical average.
Some experts had previously warned that challenges were looming ahead. On January 22, Rob Arnott, the founder of Research Affiliates, sounded the alarm on US big-cap stocks. He pointed out that the Equity Risk Premium (ERP), which measures how much extra return stocks offer over risk-free government bonds, is at one of its lowest levels in history. In simple terms, this means stocks are looking seriously overvalued, and a downturn could be on the horizon. Arnott blames this on soaring valuations, especially in tech, and rising real interest rates. He still sees opportunities in emerging markets and value stocks, but the overall US market, dominated by overpriced tech giants, looks risky. Arnott puts the odds of a bear market at 50% for both 2025 and 2026, which is much higher than usual.
With markets in turmoil, Wall Street is getting nervous. A new CNBC Fed Survey showed that recession fears are climbing fast, with the probability jumping to 36%, the highest in six months, up from just 23% in January 2025. Trade policies, especially tariffs, which have now replaced inflation as the biggest perceived threat to the US economy, are driving these concerns. As a result, economic growth projections for 2025 have been cut sharply, with GDP now expected to grow just 1.7% instead of the previous 2.4% estimate. Investors are worried that policy uncertainty is spiraling out of control. Despite all this, most survey respondents still believe the Federal Reserve will step in with at least two rate cuts this year.
In light of this uncertainty, investors may be wondering how to navigate the market effectively. Given the current market conditions, it is a great time for individuals looking to enter the stock market. A smart approach would be to focus on budget-friendly stocks to minimize potential losses. With that in mind, let’s explore some of the best affordable stocks favored by Wall Street hedge funds.
Stock market charts. Photo by Kaboompics.com on Pexels
Our Methodology
For this article, we used the Finviz screener to filter out a list of stocks priced under $50, with P/E ratios below 20 as of March 22. Then, we manually checked which of the resulting stocks were most popular among hedge funds. We gauged hedge fund sentiment around each stock from Insider Monkey’s Q4 database of 1009 elite funds. The list is ranked in ascending order of the number of hedge fund holders in each firm.
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).
14. CSX Corporation (NASDAQ:CSX)
Number of Hedge Fund Holders: 63
Share Price as of March 22: $29.57
P/E Ratio as of March 22: 16.52
CSX Corporation (NASDAQ:CSX) is a freight transportation company operating in the United States and Canada. It provides rail, intermodal, and trucking services, transporting chemicals, agricultural products, minerals, automotive materials, and coal. On March 10, the company announced that it had raised $600 million by issuing a public offering of 5.050% notes that will be repaid in 2035. This brings its total debt to $19.2 billion. The notes were issued under an existing agreement with The Bank of New York Mellon Trust Company. This offering supports CSX’s capital strategy and future investments. It is one of the best affordable stocks to buy, priced under $30 with a P/E ratio of 16.5 as of March 22.
CSX Corporation (NASDAQ:CSX) reported a drop in earnings for Q4 2024, with operating income at $1.11 billion, down from $1.32 billion last year. Net income for the quarter also fell to $733 million from $882 million in Q4 2023, partly due to a $108 million non-cash impairment charge. Despite this, total shipping volume increased by 1% to 1.58 million units. Still, CSX returned $3.2 billion to shareholders for full-year 2024, through $2.2 billion in stock buybacks and $900 million in dividends.
Among the hedge funds tracked by Insider Monkey, 63 funds held stakes in CSX Corporation (NASDAQ:CSX) at the end of December 2024, compared to 51 funds in the September quarter.
13. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 66
Share Price as of March 22: $16.05
P/E Ratio as of March 22: 7.72
Hewlett Packard Enterprise Company (NYSE:HPE) helps businesses manage and analyze data with solutions across cloud computing, networking, and IT infrastructure. HPE offers servers, networking gear, and financing options, along with consulting and research through Hewlett Packard Labs. It is one of the best affordable stocks to buy now.
In Q1 2025, Hewlett Packard Enterprise Company (NYSE:HPE) achieved a 17% year-over-year revenue growth, marking its fourth consecutive quarter of improvement. This growth was driven by a 30% increase in the server business and strong performance in the hybrid cloud. Total revenue for the quarter reached $7.9 billion, up 16% in actual dollars and 17% in constant currency. GAAP EPS came in at $0.44, a 52% increase from the same quarter last year but down 56% sequentially, yet exceeding the company’s guidance ranging from $0.31 and $0.36. HPE also returned $223 million to shareholders through dividends and share buybacks during Q1.
On March 6, Hewlett Packard Enterprise Company (NYSE:HPE) announced a quarterly dividend of $0.13 per share. The dividend is payable on April 18, to shareholders on record as of March 21.
According to Insider Monkey’s fourth quarter database, 66 hedge funds were long Hewlett Packard Enterprise Company (NYSE:HPE), compared to 64 funds in the last quarter. Slate Path Capital was the leading stakeholder of the company, with a position worth roughly $271 million.
12. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 68
Share Price as of March 22: $49.80
P/E Ratio as of March 22: 7.82
General Motors Company (NYSE:GM), a Michigan-based multinational automotive manufacturer, ranks 12th on our list of the best affordable stocks. On March 20, Piper Sandler analyst Alexander Potter upped his price target for General Motors from $45 to $48 and maintained a Neutral rating. He acknowledged GM’s strong leadership and solid performance but pointed out that in the auto industry, strong earnings often lead to a downturn. This could explain why GM’s stock is trading on the lower end of its historical P/E range.
On February 26, General Motors Company (NYSE:GM) announced that it is raising its quarterly dividend by $0.03 to $0.15 per share, starting with the April 2025 payout. The company also disclosed a new $6 billion share buyback plan, with $2 billion set for an accelerated repurchase. For 2025, GM expects to invest between $10 to $11 billion in capital projects, including battery cell production, and over $8 billion in research and development.
For the full year 2024, General Motors Company (NYSE:GM) reported $14.9 billion in EBIT-adjusted earnings, landing at the high end of its guidance. Adjusted EPS jumped 38% year-over-year to $10.60, helped by share buybacks. Revenue for the year grew 9% to $187 billion, driven by higher wholesale volumes and average transaction prices above $50,000. US market share climbed to 16.5% for the year and hit 17.5% in Q4, the highest since 2018 (excluding 2020). GM also saw solid EV momentum, wholesaling 189,000 EVs and delivering over 146,000.
According to Insider Monkey’s Q4 data, 68 hedge funds were bullish on General Motors Company (NYSE:GM), compared to 64 funds in the earlier quarter. Harris Associates was the biggest stakeholder of the company, with 30.2 million shares valued at $1.6 billion.