In this article, we will take a look at the 12 most undervalued dow stocks to buy according to hedge funds. To see more such companies, go directly to 12 Most Undervalued Dow Stocks To Buy According To Hedge Funds.
5. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 69
The Goldman Sachs Group, Inc. (NYSE:GS) ranks 5th in our list of the most undervalued Dow stocks to buy according to hedge funds. As of the end of the third quarter of 2022, 69 hedge funds tracked by Insider Monkey reported having stakes in The Goldman Sachs Group, Inc. (NYSE:GS). The total value of these stakes was about $4.6 billion. The biggest stakeholder of The Goldman Sachs Group, Inc. (NYSE:GS) during this period was Ken Fisher’s Fisher Asset Management which owns a $1.4 billion stake in the firm.
4. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 69
Intel Corporation (NASDAQ:INTC) has shed about 5% over the past 30 days as the company posted a quarterly report and posted guidance that surprised many. Intel Corporation (NASDAQ:INTC)’s short-term outlook does not look good and some analysts are questioning the safety of Intel’s dividend. However, Intel Corporation (NASDAQ:INTC) could be a decent option for long-term investors as sooner or later the headwinds faced by the company due to the broader market’s downturn are expected to fade. Intel Corporation (NASDAQ:INTC) is after all one of the market leaders that is set to gain due to its presence in the semiconductor market for AI, gaming and other applications.
A total of 69 hedge funds tracked by Insider Monkey reported having stakes in Intel Corporation (NASDAQ:INTC) at the end of the third quarter of 2022.
ClearBridge Investments made the following comment about Intel Corporation (NASDAQ:INTC) in its Q3 2022 investor letter:
“Also on the detractor side, Intel Corporation (NASDAQ:INTC) delivered a disappointing revenue miss and lowered full-year revenue and earnings guidance as COVID-19-driven demand for PCs abated (where Intel enjoys half its sales) and a delay in its flagship Sapphire Rapids CPU hurt its data center business. Despite these issues, we still believe Intel is an economically sensitive turnaround story with substantial upside.”
3. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 82
Merck & Co., Inc. (NYSE:MRK) is not only a strong pharma stock with long-term growth potential, it is also a solid dividend payer, with over a decade of consistent dividend increases. Recently, Merck & Co., Inc. (NYSE:MRK) said its famous drug Keytruda, with chemotherapy, met the primary goal of progression free survival (PFS) in patients with a type of cancer of the uterus in a phase 3 trial.
Of the 920 hedge funds tracked by Insider Monkey at the end of the third quarter of 2022, 82 funds reported owning stakes in Merck & Co., Inc. (NYSE:MRK). The biggest stakeholder of Merck & Co., Inc. (NYSE:MRK) during the period was Ken Fisher’s Fisher Asset Management which owns a $1 billion stake in the firm.
Baron Funds made the following comment about Merck & Co., Inc. (NYSE:MRK) in its Q4 2022 investor letter:
“Merck & Co., Inc. (NYSE:MRK) is a large-cap pharmaceutical company with a deep heritage in drug discovery. Share gains were led by the continued growth of key asset Keytruda, the leading immune oncology agent used to treat a variety of cancers. Shares also benefited from increased investor interest as Merck proves its ability to scale its Gardasil vaccine that had previously been constrained by supply issues. We retain long-term conviction, as we expect Keytruda to solidify its position as the best-selling biopharmaceutical drug of all time.”
2. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 89
The Home Depot, Inc. (NYSE:HD) ranks second in our list of the most undervalued Dow stocks to buy according to hedge funds. The Home Depot, Inc. (NYSE:HD) shares gained on January 18 after a December 2022 NAHB Housing Market Index showed a jump. The Home Depot, Inc. (NYSE:HD) shares are poised to gain even when the housing market is slow. When people aren’t buying new homes, they spend renovating their existing homes. This home improvement trend brings more sales for home improvement companies like The Home Depot, Inc. (NYSE:HD).
Matrix Asset Advisors made the following comment about The Home Depot, Inc. (NYSE:HD) in its Q3 2022 investor letter:
“During the quarter, we re-established a position in The Home Depot, Inc. (NYSE:HD) sold earlier this year, after the shares declined sharply on big picture concerns about a softer housing market and lower consumer spending. We believe that HD is a very well-managed company, positioned to continue showing good profits even as the economy decelerates. The products it carries in inventory are in year-round demand from contractors and homeowners wanting to maintain and improve their homes. The company has historically been shareholder friendly, repurchasing shares and increasing the dividend, most recently by 15% earlier this year. On September 30, HD’s current dividend yield was 2.8%.”
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM) is one of the biggest banks in the world. JPMorgan Chase & Co. (NYSE:JPM) is a hedge fund favorite, as Insider Monkey’s database of 920 hedge funds shows that 110 hedge funds had stakes in the company as of the end of the third quarter of 2022. The total value of these stakes was $6.4 billion. The biggest stakeholder of the bank during this period was Ken Fisher’s Fisher Asset Management which owns an $821 million stake in JPMorgan Chase & Co. (NYSE:JPM).
JPMorgan Chase & Co. (NYSE:JPM)’s Q4 results were better than expected, though the stock fell after the company said it plans to spend more in 2023 than it did in 2022. For fiscal 2023, total net interest income is expected to come in at about $73 billion.
Here is what Vltava Fund has to say about JPMorgan Chase & Co. (NYSE:JPM) in its Q3 2022 investor letter:
“We regard JPM to be the strongest and best- managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term.
JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big US bank that did not require government assistance and it was highly profitable even in the difficult year of 2008.
A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability.”
You can also take a peek at 10 Cheap Hot Stocks To Buy and 15 Best Growth Stocks To Buy.
