In this article, we discuss the 5 best cheap stocks to buy now. If you want to read more on other cheap stocks, the risk/reward, and the methodology of this list, go directly to the 10 Best Cheap Stocks to Buy Now.
5. Chevron Corporation (NYSE:CVX)
Forward P/E Ratio: 9.48
Number of Hedge Fund Holders: 59
Chevron Corporation (NYSE:CVX) operates in the integrated energy and chemical business sector globally.
Although lower oil prices could send the stock lower, Chevron Corporation (NYSE:CVX) could be a cheap stock given its forward P/E ratio of 9.48 if it successfully transitions to renewable energy or if oil prices remain high.
As it stands, Chevron Corporation (NYSE:CVX) is a blue chip given its economies of scale and its balance sheet. The company also has a strong dividend history with Chevron Corporation (NYSE:CVX) having continuously increased its annual dividend for the past 34 years.
Many hedge funds like the stock. At the end of the second quarter of 2022, 59 hedge funds in the database of Insider Monkey held stakes worth $26 billion in Chevron Corporation (NYSE:CVX). When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway is the largest stakeholder in Chevron Corporation (NYSE:CVX) with shares valued at $23.37 billion comprising 7.78% of its 13F portfolio.
4. Intel Corporation (NASDAQ:INTC)
Forward P/E Ratio: 11.67
Number of Hedge Fund Holders: 65
Intel Corporation (NASDAQ:INTC) is a leading semiconductor company that has seen its stock decline substantially this year.
Despite the slowdown in the PC industry and potentially some other industries, semiconductor companies are spending tens of billions in building new factories that could increase supply. If demand doesn’t increase as much as expected, oversupply could be another headwind for Intel Corporation (NASDAQ:INTC). Given that competitors have gained market share and Intel Corporation (NASDAQ:INTC) earnings results have come in worse than expected, the stock is near multi-year lows.
Nevertheless, the long term future could be considerably more attractive for Intel Corporation (NASDAQ:INTC) if demand grows as expected due to various secular trends.
As of the end of Q2 2022, 65 of the hedge funds tracked by Insider Monkey owned stakes in Intel Corporation (NASDAQ:INTC). Those stakes held a collective value of over $2.5 billion.
3. The Goldman Sachs Group, Inc. (NYSE:GS)
Forward P/E Ratio: 8.61
Number of Hedge Fund Holders: 69
The Goldman Sachs Group, Inc. (NYSE:GS) is a financial organization that provides a range of financial services to businesses, financial institutions, governments, and people worldwide.
Since financial organizations are susceptible to economic trends such as future recessions, The Goldman Sachs Group, Inc. (NYSE:GS) stock could decline if economic conditions continue to slow.
Given its strong position in the capital market, however, The Goldman Sachs Group, Inc. (NYSE:GS) stock could rebound if the economy doesn’t slow as much as expected.
In the longer term, The Goldman Sachs Group, Inc. (NYSE:GS) remains a blue chip stock that could continue to grow earnings and dividends.
With a forward P/E ratio of 8.61, The Goldman Sachs Group, Inc. (NYSE:GS) could be considered cheap for long term investors.
As of the end of Q2 2022, 69 of the hedge funds tracked by Insider Monkey owned stakes in The Goldman Sachs Group, Inc. (NYSE:GS). Those stakes held a collective value of over $4.61 billion.
2. Merck & Co. Inc. (NYSE:MRK)
Forward P/E Ratio: 11.57
Number of Hedge Fund Holders: 79
Merck & Co. Inc. (NYSE:MRK) is a healthcare giant with substantial earnings power.
For its fiscal 2022 second quarter results, Merck & Co. Inc. (NYSE:MRK) reported revenue of $14.59 billion, beating estimates by $731.76 million. The company also had adjusted earnings per share of $1.87, exceeding estimates by $0.16.
Longer term, analysts expect the company to grow earnings per share over the next 5 years by 11.07%.
If Merck & Co. Inc. (NYSE:MRK) can achieve those earnings growth estimates or even exceed them, the stock could be considered attractive given the forward P/E ratio of 11.57.
Many hedge funds are bullish on the stock. At the end of the second quarter of 2022, 79 hedge funds were bullish on Merck & Co. Inc. (NYSE:MRK) and held stakes worth $6.11 billion.
Here is what Sound Shore Management, an investment management firm, has to say about Merck & Co., Inc. (NYSE:MRK) in their Q2 2022 investor letter:
On the positive side, a number of our health care names outperformed, including drug maker Merck & Co. (NYSE:MRK). Benefitting from a best-in-class research and development team, Merck’s progress is being fueled by the impressive growth of its immune-oncology cancer drug, Keytruda. The stock remains attractive at less than 12 times 2023 earnings.
1. JPMorgan Chase & Co. (NYSE:JPM)
Forward P/E Ratio: 9.05
Number of Hedge Fund Holders: 104
JPMorgan Chase & Co. (NYSE:JPM) is an American investment bank and financial services holding corporation that operates globally.
With 104 hedge fund holders that we track that held shares in the bank as of Q2, JPMorgan Chase & Co. (NYSE:JPM) is the most widely held blue chip stock on our list with a low forward P/E ratio.
Although banks often have lower forward P/E ratios given the potential for an economic slowdown or recession, JPMorgan Chase & Co. (NYSE:JPM) offers potential upside in the long term given its strong earnings power, which management can use to buy back stock or to pay dividends.
Fisher Asset Management is the largest shareholder in JPMorgan Chase & Co. (NYSE:JPM) with shares worth $899.69 million.
You can also take a look at 10 Best Vanguard ETFs to Invest In and 10 Semiconductor Stocks that Pay Dividends.
