5 Most Undervalued Foreign Stocks To Buy According To Hedge Funds

In this article, we discuss 5 most undervalued foreign stocks to buy according to hedge funds. If you want to see more stocks in this selection, check out 11 Most Undervalued Foreign Stocks To Buy According To Hedge Funds. 

5. Canadian Natural Resources Limited (NYSE:CNQ)

Number of Hedge Fund Holders: 41

P/E Ratio as of January 23: 7.99

Canadian Natural Resources Limited (NYSE:CNQ) was incorporated in 1973 and is headquartered in Calgary, Canada. The company acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids. It is one of the most undervalued foreign stocks to invest in according to smart investors. On November 30, Canadian Natural Resources Limited (NYSE:CNQ) reported that it foresees increased production and higher planned capital spending for 2023. Targeted 2023 production mix consists of 44% of high value light and synthetic crude oil, 29% bitumen and heavy crude oil, and 27% natural gas. The budget C$5.2 billion for the year comprises C$4.2 billion in base capital and C$1 billion in strategic growth capital. 

According to Insider Monkey’s Q3 data, 41 hedge funds were long Canadian Natural Resources Limited (NYSE:CNQ), compared to 33 funds in the prior quarter. Donald Yacktman’s Yacktman Asset Management is the biggest stakeholder of the company, with 15.80 million shares worth over $736 million. 

4. Suncor Energy Inc. (NYSE:SU)

Number of Hedge Fund Holders: 45

P/E Ratio as of January 23: 8.15

Suncor Energy Inc. (NYSE:SU) is a Canadian integrated energy company that acquires, develops, produces, transports, refines, and markets crude oil, petroleum, and petrochemical products in Canada and internationally. On December 7, Suncor Energy Inc. (NYSE:SU) said it will aim for an early 2023 resumption of production in the Terra Nova oilfield off the coast of Newfoundland, as work on revamped Terra Nova floating production, storage, and offloading vessels has taken longer than planned. It is one of the most undervalued foreign stocks to buy according to hedge funds. 

On January 17, Scotiabank analyst Jason Bouvier maintained an Outperform rating on Suncor Energy Inc. (NYSE:SU) but lowered the firm’s price target on the shares to C$50 from C$53.

According to Insider Monkey’s third quarter database, 45 hedge funds were long Suncor Energy Inc. (NYSE:SU), compared to 47 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the leading stakeholder of the company, with approximately 20 million shares worth $556.5 million. 

Here is what ClearBridge Investments International Growth ADR Strategy has to say about Suncor Energy Inc. (NYSE:SU) in its Q1 2022 investor letter: 

“Also within the structural bucket, we added to our commodity exposure with the purchase of Suncor Energy (NYSE:SU). Suncor, a past holding, is a Canadian integrated oil company where we capitalized on attractive valuation due to a COVID-19-induced slowdown. We expect recovery in oil demand and strong pricing will result in faster than expected free cash flow growth and financial deleveraging.

The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out.”

3. Cenovus Energy Inc. (NYSE:CVE)

Number of Hedge Fund Holders: 47

P/E Ratio as of January 23: 9.80

Cenovus Energy Inc. (NYSE:CVE) is headquartered in Calgary, Canada, and the company develops, produces, and markets crude oil, natural gas liquids, and natural gas in Canada, the United States, and the Asia Pacific region. Cenovus Energy Inc. (NYSE:CVE) operates through Oil Sands, Conventional, Offshore, Canadian Manufacturing, U.S. Manufacturing, and Retail segments. It is one of the most undervalued foreign stocks to monitor. On January 17, Scotiabank analyst Jason Bouvier reiterated an Outperform rating on Cenovus Energy Inc. (NYSE:CVE) but trimmed the firm’s price target on the shares to C$31 from C$33. 

According to Insider Monkey’s third quarter database, Cenovus Energy Inc. (NYSE:CVE) was part of 47 hedge fund portfolios, compared to 42 in the prior quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the largest stakeholder of the company, with nearly 52 million shares worth $798.5 million. 

Here is what L1 Capital Long Short Fund has to say about Cenovus Energy Inc. (NYSE:CVE) in its Q3 2022 investor letter:

“Cenovus Energy (Long -13%) shares declined over the quarter due to an ~18% decline in oil prices on increasing fears of a U.S recession and a slowdown in global growth. Given the long-life nature of its oil sand assets and its low cost of production, we estimate Cenovus is free cash flow break-even at an oil price of ~US$40/bbl. Despite the recent fall, oil prices remain more than double this break-even point, implying considerable free cash flow generation potential for the company at current levels, with Cenovus currently trading on a consensus FY22 free cash flow yield of around 20%. There are also additional value realization catalysts with the company continuing to progress the de-gearing of its balance sheet via organic cash generation and asset sales.”

2. Teck Resources Limited (NYSE:TECK)

Number of Hedge Fund Holders: 47

P/E Ratio as of January 23: 6.74

Teck Resources Limited (NYSE:TECK) was founded in 1913 and is headquartered in Vancouver, Canada. The company engages in exploring, acquiring, developing, and producing natural resources in Asia, Europe, and North America. It operates through Steelmaking Coal, Copper, Zinc, and Energy segments. On December 19, Teck Resources Limited (NYSE:TECK) sold the Quintette steelmaking coal mine in north-eastern British Columbia to a unit of Conuma Resources for $120 million in cash. The transaction is expected to close in Q1 2023. Conuma has agreed to make payments to Teck Resources Limited (NYSE:TECK) over a period of 36 months, and will also pay a 25% royalty based on net profits to Teck, starting after Conuma has recouped its investment in the Quintette project. 

According to Insider Monkey’s data, 47 hedge funds were bullish on Teck Resources Limited (NYSE:TECK) at the end of September 2022, compared to 46 funds in the last quarter. John Armitage’s Egerton Capital Limited is a prominent stakeholder of the company, with nearly 12 million shares worth $364.40 million. Teck Resources Limited (NYSE:TECK) is one of the most undervalued foreign stocks according to elite investors. 

1. Nutrien Ltd. (NYSE:NTR)

Number of Hedge Fund Holders: 52

P/E Ratio as of January 23: 5.59

Nutrien Ltd. (NYSE:NTR) was founded in 2017 and is headquartered in Saskatoon, Canada. The company offers potash, nitrogen, phosphate, and sulfate products. Nutrien Ltd. (NYSE:NTR) paid a $0.48 per share quarterly dividend to shareholders on January 13. It is one of the most undervalued foreign stocks to buy according to smart investors. 

On January 20, Citi analyst P.J. Juvekar maintained a “Buy” rating on Nutrien Ltd. (NYSE:NTR) but lowered the price target on the stock from $87 to $86. He believes that the risk-reward ratio for the sector is less favorable now than it was a year ago, but does not anticipate a decline in the agricultural industry as farmers continue to be in good financial standing. He also stated that he prefers companies in the seed and agricultural chemicals sub-sectors over those in fertilizers, specifically in the North American market.

According to Insider Monkey’s data, 52 hedge funds were long Nutrien Ltd. (NYSE:NTR) at the end of Q3 2022, compared to 48 funds in the last quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with 8.4 million shares worth $701.8 million. 

ClearBridge Investments made the following comment about Nutrien Ltd. (NYSE:NTR) in its Q3 2022 investor letter:

“However, we believe this is exactly the kind of environment that separates the highest-quality companies from their peers and allows them to strengthen their competitive positioning. For example, Nutrien Ltd. (NYSE:NTR), a Canadian fertilizer company, was a top contributor during the quarter. While the war in Ukraine and economic sanctions on Russia have significantly reduced the output of two of the world’s largest agricultural producers, Nutrien has benefited from a strong global agricultural cycle and from farmers seeking to increase their output and capitalize on higher agricultural prices.”

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