15 Best Very Cheap Stocks to Buy Right Now

Published on April 28, 2023 at 4:28 am by Fahad Saleem in Hedge Funds, News

In this article, we will take a look at the 15 best very cheap stocks to buy right now. To see more such companies, go directly to 5 Best Very Cheap Stocks to Buy Right Now.

Stock valuations are again a topic of discussion currently as some analysts are warning against the market’s optimism that is sending tech valuations soaring to record levels. While several analysts believe the Federal Reserve to raise interest rates just one more time in 2023 before hitting a temporary pause, there’s a section in the market that is hoping for rate cuts. This optimism is having a direct effect on the technology sector which looks great in the short term. The S&P 500 Information Technology Index is up 23% in 2023, compared to a 7.7% gain of the broader S&P 500 index in the same period. According to an analysis by Bloomberg, this was the IT sector’s strongest start to a year since 2009. However, this optimism is unfounded and could cause pain for investors in the coming weeks or months. The Bloomberg report said that tech stocks in the S&P 500 are trading at about 25 times their prospective earnings.

“To justify such a multiple, the Fed would need to cut rates by at least 300 basis points,” the report said, citing data from Bloomberg Intelligence.

The report cited Quincy Krosby, chief global strategist at LPL Financial, who said the following:

“Traders are betting on a big about-face in the Fed’s interest-rate policy, but there is no certainty as to whether, and when, this will happen. Longer-term, the sector’s growth prospects are attractive, but not at the current valuations.”

Data from Research Affiliates shows that valuations of US stocks are reaching extremely high levels.

Research Affiliates looked at the CAPE ratio metric and found that the US stock benchmark trades at a multiple around 29, pricier than it has been more than 90% of the time since 1881.

But not all sectors emit this euphoria. The banking sector, which was devastated by the collapse of multiple banks earlier this year, is still reeling from steep share price declines. Some analysts believe some bank stocks are offering attractive entry points since the fundamentals of several banks that are currently down remain strong.

Baird analyst David George recently said in a note that the sentiment around bank stocks has been “abysmal” over the past few weeks and “market participants seem to be pricing in permanent profitability destruction, which we think is unlikely.” The analyst said that the banking sector’s risk/reward is “very attractive following panic selling.” George believes these stocks have priced in a “catastrophe.”

Technology share chart

Our Methodology

For this article, we scanned Insider Monkey’s database of 943 hedge funds and picked 15 tech stocks with PE ratios less than 15 as of April 25. These are the best very cheap stocks to buy according to hedge funds.

Best Very Cheap Stocks to Buy Right Now

15. GSK plc (NYSE:GSK)

Number of Hedge Fund Holders: 39

British pharmaceutical giant GSK plc (GSK) ranks 15th in our list of the very cheap stocks to buy now. Recently, the European Medicines Agency (EMA) accepted GSK plc (GSK)’s application requesting an expanded approval of Jemperli to treat a type of uterus cancer.

Earlier this month, GSK plc (GSK) announced to acquire Canadian biotech company Bellus Health (NASDAQ:BLU) for about $2 billion. Bellus Health is focused in developing treatment of cough.

As of the end of the fourth quarter of 2022, 39 hedge funds have stakes in GSK plc (GSK). The biggest stakeholder of GSK plc (GSK) is Steve Cohen’s Point72 Asset Management which owns a $227 million stake in the company.

Ariel Investment made the following comment about GSK plc (NYSE:GSK) in its Q3 2022 investor letter:

“By comparison, health care leader GSK plc (NYSE:GSK) was the largest detractor from performance in the quarter. Investors are concerned about legal liabilities associated with its antacid drug Zantac. While it is impossible to know the outcome with certainty, our preliminary assessment suggests that the decline in market capitalization exceeds the likely financial impact on the company.”

14. Shell plc (NYSE:SHEL)

Number of Hedge Fund Holders: 40

Shell plc (NYSE:SHEL) is gaining after the company posted upbeat guidance for the fiscal first quarter. Shell plc (NYSE:SHEL) expects solid performance for its integrated gas and oil products division in the quarter as compared to the last quarter of 2022.

As of the end of the last quarter of 2022, 40 hedge funds tracked by Insider Monkey were long Shell plc (NYSE:SHEL). The biggest stakeholder of Shell plc (NYSE:SHEL) was William B. Gray’s Orbis Investment Management which owns a $393 million stake in the company.

Artisan Global Equity Fund made the following comment about Shell plc (NYSE:SHEL) in its Q4 2022 investor letter:

“We scaled back our weighting in clean energy this quarter, which is a part of the portfolio’s environment theme, to take profits after a successful run in 2022. We did so by trimming our position in Shell plc (NYSE:SHEL), a stock we added to the portfolio in Q1 2022. As an integrated energy company, approximately one third of Shell’s revenues come from transition fuels, such as LNG, and another third comes from new energy sources such as green hydrogen. LNG is one of the cleanest fossil fuels and represents a potential bridge to the future by replacing higher carbon energy sources with lower carbon ones while renewable technologies mature. As the largest LNG supplier in the world, we believe Shell is particularly well-positioned to help Europe meet its energy needs as it looks for ways to replace imported Russian oil and gas with new sources after the embargo.”

13. Canadian Natural Resources Limited (NYSE:CNQ)

Number of Hedge Fund Holders: 41

Canadian Natural Resources Limited (NYSE:CNQ) in March increased its quarterly dividend by 5.9%. The latest dividend was payable on April 5 to shareholders of record as of March 17. As of the end of the fourth quarter of 2022, 41 hedge funds had stakes in Canadian Natural Resources Limited (NYSE:CNQ), according to Insider Monkey’s database of 943 hedge funds. The biggest hedge fund stakeholder of Canadian Natural Resources Limited (NYSE:CNQ) was Donald Yacktman’s Yacktman Asset Management which owns an $843 million stake in the company.

12. Altria Group, Inc. (NYSE:MO)

Number of Hedge Fund Holders: 45

Dividend yield over 8%. Over five decades of consistent dividend increases. PE ratio under 15. These are just a few reasons that make Altria Group, Inc. (NYSE:MO) one of the best long-term stocks to buy now.

Hedge funds also like Altria Group, Inc. (NYSE:MO). 45 hedge funds in Insider Monkey’s database had stakes in Altria Group, Inc. (NYSE:MO) as of the end of the fourth quarter of 2022. The most significant stakeholder of Altria Group, Inc. (NYSE:MO) was Rajiv Jain’s GQG Partners which owns a $557 million stake in the company.

Broyhill Asset Management made the following comment about Altria Group, Inc. (NYSE:MO) in its Q4 2022 investor letter:

“We rebalanced our tobacco exposure during the year, reducing our investment in Altria Group, Inc. (NYSE:MO) as the future of the company’s combustible cigarette business became increasingly questionable given pending US legislation and a lackluster portfolio of reduced risk products. We reinvested the proceeds in Philip Morris so that relative position sizing is more consistent with our increased conviction.”

11. DR Horton Inc (NYSE:DHI)

Number of Hedge Fund Holders: 46

With a strong dividend growth history and a PE ratio under 8, DR Horton Inc (NYSE:DHI) is one of the very cheap stocks to buy now. Earlier this month, DR Horton Inc (NYSE:DHI) jumped after the company posted strong quarterly results. For 2023 DR Horton Inc (NYSE:DHI) expects its revenue to come in the range of $31.5 billion to $33 billion, versus the consensus estimate of $28.5 billion.

A total of 46 hedge funds tracked by Insider Monkey had stakes in DR Horton Inc (NYSE:DHI), up from 42 funds in the previous quarter. The biggest hedge fund stakeholder of DR Horton Inc (NYSE:DHI) is Edgar Wachenheim’s Greenhaven Associates which owns a $335 million stake in the company

10. 3M Company (NYSE:MMM)

Number of Hedge Fund Holders: 52

With over six decades of consistent dividend increase and an attractive PE ratio, 3M Company (NYSE:MMM) is one of the safest and cheapest stocks to buy now. 3M Company (NYSE:MMM) recently posted Q1 results. Adjusted EPS in the period came in at $1.97, beating estimates by $0.37. Revenue in the period came in at $7.7 billion, beating estimates by $190 million.

3M Company (NYSE:MMM) recently revealed its plans to cut 6,000 jobs as part of a broader restructuring move.

9. Verizon Communications Inc. (NYSE:VZ)

Number of Hedge Fund Holders: 56

Verizon Communications Inc. (NYSE:VZ) is in the spotlight after posting Q1 earnings report. Verizon Communications Inc. (NYSE:VZ) added 633,000 subscribers in the quarter. Verizon Communications Inc. (NYSE:VZ) also saw an addition of 127,000 post-paid phone subscribers, beating analyst estimates of 116,000.

Adjusted EPS in the quarter came in at $1.20, beating estimates by $0.01. Consolidated revenue in the quarter fell 1.9% year over year to reach $32.9 billion, missing estimates by $740 million.

8. Chevron Corporation (NYSE:CVX)

Number of Hedge Fund Holders: 57

Chevron Corporation (NYSE:CVX) is in the limelight after the stock was upgraded in April by Scotiabank’s Paul Cheng to Outperform from Sector Perform. The analyst, who believes Chevron Corporation (NYSE:CVX) could outperform ExxonMobil, also increased his price target for the oil giant to $200 from $195. Cheng believes the risk/reward profile for Chevron Corporation (NYSE:CVX) has improved. Over the past 12 months the stock has gained about 8% through April 25.

As of the end of the fourth quarter of 2022, 57 hedge funds tracked by Insider Monkey had stakes in Chevron Corporation (NYSE:CVX). The biggest hedge fund stakeholder of Chevron Corporation (NYSE:CVX) is Warren Buffett’s Berkshire Hathaway who has a $29 billion stake in the company.

Carillon Eagle Growth & Income Fund made the following comment about Chevron Corporation (NYSE:CVX) in its Q4 2022 investor letter:

“Energy performed well during the fourth quarter, with the sector up about 23%. Investors returned to the sector after the Organization of the Petroleum Exporting Countries (OPEC) signaled it would reduce production. Chevron Corporation (NYSE:CVX) reported strong quarterly results while buying back stock, paying a healthy dividend, and maintaining a strong balance sheet.”

7. Deere & Company (NYSE:DE)

Number of Hedge Fund Holders: 63

Agricultural machinery company Deere & Company (NYSE:DE) ranks 7th in our list of the very cheap stocks to buy now. In February, Deere & Company (NYSE:DE) posted its fiscal first quarter results. GAAP EPS in the quarter came in at $6.55, beating estimates by $1.10. Revenue in the period increased by about 32.2% year over year to total $12.65 billion, beating estimates by $1.51 billion. In the same month Deere & Company (NYSE:DE) increased its quarterly dividend by 4.2%.

Out of the 943 hedge funds tracked by Insider Monkey, 63 hedge funds had stakes in Deere & Company (NYSE:DE). The collective worth of these hedge funds’ stakes is $3.6 billion. The biggest hedge fund stakeholder of Deere & Company (NYSE:DE) is Michael Larson’s Bill & Melinda Gates Foundation Trust which has a $1.7 billion stake in the company.

ClearBridge Large Cap Value Strategy made the following comment about Deere & Company (NYSE:DE) in its Q4 2022 investor letter:

“Our industrials holdings produced robust absolute returns for the quarter. While the ISM Manufacturing Index fell in November to contractionary levels, our industrial holdings have largely been able to maintain earnings due to strong competitive positions, historically large backlogs and company-specific drivers. For example, Deere & Company (NYSE:DE) continues to benefit from a strong upgrade cycle as record farmers’ income is driving broad and rapid adoption of the company’s precision agricultural equipment.”

6. HCA Healthcare, Inc. (NYSE:HCA)

Number of Hedge Fund Holders: 64

HCA Healthcare, Inc. (NYSE:HCA) is on the rise after the company posted strong Q1 results and gave an upbeat guidance. Net income in the quarter came in at $1.36 billion, or $4.85 a share, much better than the consensus estimate of $1.18 billion, or $4.05 a share.

Revenue in the quarter jumped 4.3% year over year to total $15.59 billion. HCA Healthcare, Inc. (NYSE:HCA) also increased its full-year 2023 revenue guidance to a range of $62.5 billion – $64.5 billion from $61.5 billion – $63.5 billion.

Renaissance Large Cap Growth Strategy made the following comment about HCA Healthcare, Inc. (NYSE:HCA) in its Q4 2022 investor letter:

“Lastly, HCA Healthcare, Inc. (NYSE:HCA) was another contributor. The company is seeing solid improvements in surgical volumes and overall healthcare usage. Meanwhile, labor expenses, which have weighed heavily on operating margins, appear to be reversing as extra headcount brought on to accommodate spikes in patient volumes due to COVID is finally subsiding.”

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