In this article, we discuss 15 most undervalued NASDAQ stocks to buy according to hedge funds. If you want to see more stocks in this selection, 5 Most Undervalued NASDAQ Stocks To Buy According To Hedge Funds.
On December 30, the stock market finished its worst year since 2008. The Dow Jones Industrial Average decreased by 73.55 points, or 0.22%, finishing at 33,147.25. The S&P 500 dropped by 0.25% and closed at 3,839.50. The NASDAQ Composite went down by 0.11% and closed at 10,466.88. All three of the primary indices experienced their worst year since 2008 and broke a three-year period of gains. In 2022, the Dow performed the best among the indexes, declining approximately 8.8%. The S&P 500 dropped by 19.4% and was over 20% below its all-time high. The NASDAQ, which is heavily focused on technology, fell by 33.1%.
Heading into 2023, some investors believe that the downturn is not yet over. They anticipate that the bear market will continue until an economic recession occurs or the Federal Reserve changes its approach. Additionally, some predict that stocks will reach new lows before recovering in the latter half of 2023. Art Cashin, director of floor operations for UBS, said on CNBC’s “The Exchange” on December 30:
“I would love to tell you that it is going to be like the ‘Wizard of Oz’ and everything is going to be in glorious color in a moment or two. I think we may have a bumpy first quarter, and depending on the Fed it may last a little longer than that.”
The NASDAQ-100 index includes the 100 largest technology companies listed on the NASDAQ stock exchange. In 2022, it performed poorly, falling by 33% as investors reduced their investments in the high-growth technology sector. However, based on the historical annual returns of the NASDAQ-100 dating back to 1986, having consecutive years of decline is very uncommon. In fact, the index has only declined for two consecutive years on one occasion, during the dot-com crash between 2000 and 2002. Despite the current challenges such as high inflation and rising interest rates, based on past history, there is a possibility that the NASDAQ could experience a strong year in 2023.
A lot of NASDAQ stocks currently present attractive buying opportunities as they are trading on discounts. Some of the most undervalued NASDAQ stocks to buy according to hedge funds include Intel Corporation (NASDAQ:INTC), Chesapeake Energy Corporation (NASDAQ:CHK), and Moderna, Inc. (NASDAQ:MRNA). Investors can also check out 12 Best Performing NASDAQ Stocks in 2022, 15 Best NASDAQ Stocks To Buy, and 11 Cheap NASDAQ Stocks To Buy.
Our Methodology
We scanned Insider Monkey’s database of holdings of 920 elite hedge funds tracked as of the end of the third quarter of 2022 and picked the top 15 NASDAQ stocks — companies listed on the NASDAQ Exchange — that have P/E ratios of less than 10 as of January 24. The list is arranged in ascending order of the number of hedge fund holders in each firm.
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Most Undervalued NASDAQ Stocks To Buy According To Hedge Funds
15. The Goodyear Tire & Rubber Company (NASDAQ:GT)
Number of Hedge Fund Holders: 32
P/E Ratio as of January 24: 3.65
The Goodyear Tire & Rubber Company (NASDAQ:GT) is headquartered in Akron, Ohio, and the company develops, manufactures, distributes, and sells tires for automobiles, trucks, buses, aircraft, motorcycles, earthmoving equipment, and mining and industrial equipment under the Goodyear, Cooper, Dunlop, Kelly, Debica, Sava, Fulda, Mastercraft, and Roadmaster brands.
While it is one of the most popular undervalued NASDAQ stocks to buy according to hedge funds, Deutsche Bank analyst Emmanuel Rosner on January 19 issued a Sell catalyst call on The Goodyear Tire & Rubber Company (NASDAQ:GT) ahead of its earnings release, citing concerns that its Q4 performance and 2023 guidance may not meet expectations. He also believes that there is limited potential for growth in volume or margin expansion. The analyst has a Hold rating on the company’s shares along with a price target of $11.
According to Insider Monkey’s data, Ken Griffin’s Citadel Investment Group held the largest stake in The Goodyear Tire & Rubber Company (NASDAQ:GT) at the end of the third quarter of 2022, comprising 3.2 million shares worth $32.7 million.
In addition to Intel Corporation (NASDAQ:INTC), Chesapeake Energy Corporation (NASDAQ:CHK), and Moderna, Inc. (NASDAQ:MRNA), The Goodyear Tire & Rubber Company (NASDAQ:GT) is one of the most undervalued NASDAQ stocks to monitor.
Here is what ClearBridge Small Cap Value Strategy has to say about The Goodyear Tire & Rubber Company (NASDAQ:GT) in its Q3 2022 investor letter:
“We exited a number of stocks during the period, including Goodyear Tire & Rubber (NASDAQ:GT). We sold our position in Goodyear due to the cavalcade of concerns including the company’s elevated debt levels, inflationary pressures from higher input prices, continued manufacturing challenges in the auto industry and complications with the company’s manufacturing volume. With substantial exposure to the automotive industry through other portfolio holdings, we elected to consolidate our exposure within those higher-conviction holdings.”
14. Nexstar Media Group, Inc. (NASDAQ:NXST)
Number of Hedge Fund Holders: 32
P/E Ratio as of January 24: 7.51
Nexstar Media Group, Inc. (NASDAQ:NXST) is a Texas-based television broadcasting and digital media company that is engaged in acquiring, developing, and running television stations and interactive community websites in the United States. It is one of the most undervalued NASDAQ stocks to buy according to hedge funds.
On January 19, after the CW Network, owned by Nexstar Media Group, Inc. (NASDAQ:NXST), and LIV Golf announced a U.S. broadcast television and streaming agreement, Guggenheim analyst Curry Baker told investors that this deal is beneficial for both parties. He thinks that cost discipline and updating the programming schedule are essential for the CW Network’s strategy, and the LIV Golf agreement seems to meet these requirements. The analyst expects more programming announcements in the upcoming months. He continues to recommend Nexstar Media Group, Inc. (NASDAQ:NXST) as his top Broadcast pick and maintained a Buy rating and a $220 price target on the shares.
According to Insider Monkey’s Q3 data, Amy Minella’s Cardinal Capital held the largest position in Nexstar Media Group, Inc. (NASDAQ:NXST), consisting of 965,922 shares worth $161 million.
Here is what Richie Capital Group has to say about Nexstar Media Group, Inc. (NASDAQ:NXST) in its Q1 2022 investor letter:
“Nexstar Media Group (NXST up 24.8%) – The television broadcasting and digital media company surged during the quarter after presenting at an investor conference where management pointed to a strong 2022 for both political advertising and retransmission. They have exposure to more than 80% of markets with competitive mid-term political races. NXST is developing new ad categories such as sports betting and they are focused on expanding digital ad revenue and providing digital solutions to local advertisers. Auto advertising will return in the fall as auto dealerships re-enter the market to sell their replenished inventory.”
13. Golar LNG Limited (NASDAQ:GLNG)
Number of Hedge Fund Holders: 33
P/E Ratio as of January 24: 3.11
Golar LNG Limited (NASDAQ:GLNG) designs, builds, and operates marine infrastructure for the liquefaction and regasification of LNG. The company was founded in 1946 and is headquartered in Hamilton, Bermuda. Golar LNG Limited (NASDAQ:GLNG) announced Q3 net income of $141.1 million and adjusted EBITDA of $85.2 million for Q3 2022 during November. The company also reported cash and cash equivalents of $498.2 million and $130.9 million of restricted cash. It is one of the most undervalued NASDAQ stocks to invest in.
On November 17, Deutsche Bank analyst Amit Mehrotra increased the firm’s price target on Golar LNG Limited (NASDAQ:GLNG) to $33 from $17, and maintained a Buy rating on the shares. He revised his model to include a sum-of-the-parts analysis, which takes into account the expected EBITDA contribution of Hilli and Gimi, the company’s cash and liquid assets.
According to Insider Monkey’s third quarter data, Golar LNG Limited (NASDAQ:GLNG) was part of 33 hedge fund portfolios, compared to 27 in the prior quarter. William B. Gray’s Orbis Investment Management is the largest stakeholder of the company, with approximately 9 million shares worth $224 million.
Here is what RiverPark Short Term High Yield Fund & RiverPark Strategic Income Fund has to say about Golar LNG Limited (NASDAQ:GLNG) in its Q1 2022 investor letter:
“Golar LNG Ltd. is a lessor and operator of liquefied natural gas (LNG) transport ships, floating natural gas liquefying systems (FLNGs) and a floating storage regasification unit (FSRU). LNG ships take on natural gas that has been cooled into a liquid state to permit transport to distant ports for re-gasification and distribution. The FLNGs, positioned near offshore gas production wells, efficiently liquefy natural gas on-site using cold seawater, avoiding the need for pipelines linked to on-shore liquefaction facilities. The FSRU stores LNG and has onboard facilities that convert LNG back into its gaseous state. Comfortable with the quality of the company’s hard assets and confident that cash flow from operations would permit deleveraging, in October 2021, we participated in the new issuance of Golar’s 7% unsecured bonds due 2025. The new issue proceeds were used to repay their convertible bond due in February 2022. At that time, leverage net of cash was 6.6x and leverage net of cash and equity investments was 4.8x…” (Click here to see the full text)
12. PacWest Bancorp (NASDAQ:PACW)
Number of Hedge Fund Holders: 33
P/E Ratio as of January 24: 6.18
PacWest Bancorp (NASDAQ:PACW) is a California-based bank holding company for Pacific Western Bank. The bank has around 70 full-service branches in California, Durham, and Denver. On December 15, Wells Fargo analyst Jared Shaw downgraded PacWest Bancorp (NASDAQ:PACW) from Overweight to Equal Weight and lowered the price target from $32 to $26. He believes that the shares are currently fairly valued. He also mentioned that the current operating environment is not favorable for PacWest Bancorp (NASDAQ:PACW) as the asset growth is slowing down, funding costs are increasing, and the management is mainly focused on increasing CET1 ratio to 10% from 8.5%. Furthermore, he added that bank shares usually do not perform well when there are increased credit concerns.
According to Insider Monkey’s data, PacWest Bancorp (NASDAQ:PACW) is one of the most undervalued NASDAQ stocks to invest in as per elite hedge funds. At the end of Q3 2022, 33 funds were long PacWest Bancorp (NASDAQ:PACW), with Lansing Davis’ Davis Capital Partners holding a significant stake in the company.
11. East West Bancorp, Inc. (NASDAQ:EWBC)
Number of Hedge Fund Holders: 33
P/E Ratio as of January 24: 9.87
East West Bancorp, Inc. (NASDAQ:EWBC) is a California-based bank holding company for East West Bank, operating through Consumer and Business Banking, Commercial Banking, and Other segments. East West Bancorp, Inc. (NASDAQ:EWBC)’s Q3 2022 revenue of $627.36 million climbed 33.8% year-over-year, beating market estimates by $6 million. It is one of the most undervalued NASDAQ stocks among smart investors.
On December 5, Morgan Stanley analyst Manan Gosalia initiated coverage of East West Bancorp, Inc. (NASDAQ:EWBC) with an Equal Weight rating and a price target of $84, as he assumed coverage of 12 mid-cap banks and took over coverage of several others. He prefers to invest in banks that are well-prepared to handle the challenges from tightening liquidity conditions as interest rates rise.
According to insider Monkey’s Q3 data, 33 hedge funds were bullish on East West Bancorp, Inc. (NASDAQ:EWBC), compared to 35 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 1.05 million shares worth $70.75 million.
Here is what Aristotle Capital Management Value Equity has to say about East West Bancorp, Inc. (NASDAQ:EWBC) in its Q1 2022 investor letter:
“We purchased East West Bancorp in the third quarter of 2017; however, our history with the business stretches back further having twice previously invested. Companies we consider to be high-quality like East West tend to remain high quality, and we have long admired the business for its uniqueness among the otherwise homogeneous U.S. banking industry. Its dominant market share built over generations in Asian communities – and difficult-to-replicate experience due to culture, geography and business practices – create distinct competitive advantages in our view. During our most recent holding period, the bank achieved sustained loan growth, a catalyst we identified, through its continued leadership position as the financial “bridge” for customers doing business in the U.S. and China. Moreover, East West also realized market share gains in its headquarters state of California. With these catalysts nearing completion, we decided to exit our investment to fund the purchase of Oshkosh. As always, we will continue to study East West and, in the future, may once again find an opportunity to be investors.”
10. Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Fund Holders: 34
P/E Ratio as of January 24: 3.60
Avis Budget Group, Inc. (NASDAQ:CAR) is a New Jersey-based company that provides car and truck rentals, car sharing, and ancillary products and services to businesses and consumers. In addition to reporting market-beating results, the company announced adjusted EBITDA in the Americas of $1.2 billion for the third quarter 2022, driven by record demand. It is the best quarterly adjusted EBITDA in Americas’ history. Avis Budget Group, Inc. (NASDAQ:CAR) is one of the most undervalued NASDAQ stocks to monitor.
On December 6, Susquehanna analyst Christopher Stathoulopoulos initiated coverage of Avis Budget Group, Inc. (NASDAQ:CAR) with a Neutral rating and a price target of $225, as he has expanded his coverage of the travel and leisure industry. He said that pent-up demand and supply chain pressures have allowed Avis Budget Group, Inc. (NASDAQ:CAR) to over-earn and the duration of this situation is the main point of discussion when investing. He expects conditions to return to normal gradually, but noted that it is difficult to predict when this will happen.
According to Insider Monkey’s third quarter database, 34 hedge funds were long Avis Budget Group, Inc. (NASDAQ:CAR), compared to 38 funds in the prior quarter. Karthik Sarma’s SRS Investment Management is the biggest position holder in the company, with 18.4 million shares worth $2.7 billion.
Here is what Broyhill Asset Management has to say about Avis Budget Group, Inc. (NASDAQ:CAR) in its Q4 2021 investor letter:
“Avis surged 166% during the final two quarters of the year. The company hit a new record for quarterly EBITDA – third quarter EBITDA was higher than any full year in Avis history – while buying back nearly $1B of stock and announcing another $1B increase in their repurchase authorization. Shares hit an intra-day peak of $545 after reporting earnings, ultimately closing at $357, more than doubling the prior close. Frenzied retail trading, prompted by management commentary around electric vehicles adoption, prompted a dozen trading halts throughout the day. The mania grew so intense that TD Ameritrade stopped allowing short sales in Avis, as short interest represented ~ 30% of the float.”
9. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)
Number of Hedge Fund Holders: 37
P/E Ratio as of January 24: 8.17
Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is a New York-based company that provides outsourced aircraft and aviation operating services. It operates through two segments, Airline Operations and Dry Leasing. In August 2022, Apollo Global Management, Inc. (NYSE:APO) agreed to acquire Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) for $5.2 billion, or $102.50 a share. On January 18, the company announced that the deal is likely to conclude in the next several weeks. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is one of the most undervalued NASDAQ stocks to consider.
According to Insider Monkey’s data, 37 hedge funds were long Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) at the end of September 2022, compared to 28 funds in the last quarter. Herbert Frazier’s Hill City Capital is the biggest stakeholder of the company, with 1.4 million shares worth $137 million.
FPA made the following comment about Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) in its Q3 2022 investor letter:
“Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is an outsourced air freight carrier that we believe traded on cheap multiples of earnings and book value compared to peers. In August, the company agreed to be bought by a consortium led by Apollo Capital for $102.50 per share, a 57% premium to the recent share price.”
8. Liberty Global plc (NASDAQ:LBTYK)
Number of Hedge Fund Holders: 38
P/E Ratio as of January 24: 1.83
Liberty Global plc (NASDAQ:LBTYK) is a London-based company that provides broadband internet, video, fixed-line telephony, and mobile communications services to residential and business customers. In July 2022, Pivotal Research analyst Jeffrey Wlodarczak reiterated a Buy recommendation on Liberty Global plc (NASDAQ:LBTYK) but lowered the price target on the shares to $35 from $38. The analyst cited euro and pound weakness and assumptions around a moderate recession in Europe for the target drop.
According to Insider Monkey’s data, Liberty Global plc (NASDAQ:LBTYK) was part of 38 hedge fund portfolios at the end of September 2022, compared to 35 in the prior quarter. Seth Klarman’s Baupost Group is the largest stakeholder of the company, with 47.85 million shares worth $789.5 million. It is one of the most undervalued NASDAQ stocks to monitor.
7. DISH Network Corporation (NASDAQ:DISH)
Number of Hedge Fund Holders: 40
P/E Ratio as of January 24: 4.62
DISH Network Corporation (NASDAQ:DISH) is a Colorado-based company that provides pay-TV services in the United States. On January 17, DISH Network Corporation (NASDAQ:DISH) announced that it priced a $1.5 billion offering of 11.75% senior secured notes due 2027, to be issued at a price of 102% of the principal amount. The notes are in addition to the $2 billion offering of 11.75% senior secured notes due 2027 announced in November. The offering is expected to close on January 26. DISH Network Corporation (NASDAQ:DISH) is one of the most undervalued NASDAQ stocks to consider.
On January 10, Goldman Sachs analyst Brett Feldman resumed coverage of DISH Network Corporation (NASDAQ:DISH) with a Neutral rating and a price target of $14. He believes that DISH Network Corporation (NASDAQ:DISH)’s wireless initiatives carry a high level of execution risk and may take longer to reach scale than the company anticipates. Additionally, he predicts that cord-cutting will continue to accelerate, putting additional stress on Dish’s pay-TV business. This may make it hard for the company to obtain capital at favorable terms, the analyst wrote in a research note to investors.
According to Insider Monkey’s data, 40 hedge funds were long DISH Network Corporation (NASDAQ:DISH) at the end of September 2022, compared to 41 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is the largest stakeholder of the company, with 17 million shares worth $237 million.
Here is what ClearBridge Investments has to say about DISH Network Corporation (NASDAQ:DISH) in its Q2 2021 investor letter:
“Portfolio holdings in the communication services and financials sectors also made strong contributions. Dish Network continues to make progress on the buildout of its greenfield 5G network, with Las Vegas slated to become the first market launched later this year. The company gained credibility, and its stock reacted favorably, after it announced a partnership with Amazon to deploy a 5G cloud-native network using AWS’s cloud infrastructure. While the stock has been volatile in recent quarters, we continue to feel confident in Dish’s long-term prospects, which include competing as a fourth U.S. wireless carrier. Charter Communications has been executing well and benefiting from the growth in residential broadband, which has been accelerated by COVID-19 and should see further support from the Biden Administration’s infrastructure bill, which earmarks $65 billion for broadband buildout. In addition, we expect the company to continue to grow its wireless business, leveraging its mobile virtual network operator (MVNO) relationship with Verizon. The company continues to generate strong and growing free cash flow and deploys it toward consistent and material share buybacks.”
6. Paramount Global (NASDAQ:PARA)
Number of Hedge Fund Holders: 40
P/E Ratio as of January 24: 4.82
Paramount Global (NASDAQ:PARA) is a New York-based media and entertainment company that operates through TV Media, Direct-to-Consumer, and Filmed Entertainment segments. In early December, Paramount Global (NASDAQ:PARA) announced that its streaming service, Paramount+, is now available in Germany, Switzerland, and Austria, bringing the total to 45 markets.
On January 12, Guggenheim analyst Michael Morris increased the price target on Paramount Global (NASDAQ:PARA) to $22 from $20, while maintaining a Buy rating on the shares, after updating his model to reflect a smaller Q4 loss from direct-to-consumer operations than previously expected. This is driven by a full quarter of the partnership with Walmart+, recent international market launches, and strong content. He has kept his Q4 streaming subscriber outlook unchanged at 75.0 million, including 54.0 million for Paramount+, which he noted is higher than the consensus estimate of 73.3 million.
According to Insider Monkey’s data, 40 hedge funds were bullish on Paramount Global (NASDAQ:PARA) at the end of the third quarter of 2022, compared to 42 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway held the largest stake in the company, comprising 91.2 million shares worth $1.7 billion.
Like Intel Corporation (NASDAQ:INTC), Chesapeake Energy Corporation (NASDAQ:CHK), and Moderna, Inc. (NASDAQ:MRNA), Paramount Global (NASDAQ:PARA) is one of the most undervalued NASDAQ stocks to buy according to hedge funds.
Click to continue reading and see 5 Most Undervalued NASDAQ Stocks To Buy According To Hedge Funds.
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Disclosure: None. 15 Most Undervalued NASDAQ Stocks To Buy According To Hedge Funds is originally published on Insider Monkey.
