5 Most Undervalued Quality Stocks To Buy According To Hedge Funds

1. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 75

P/E Ratio as of January 25: 9.18

Exxon Mobil Corporation (NYSE:XOM) is an American multinational producer of crude oil and natural gas in the United States and internationally. It is one of the most undervalued quality stocks to buy according to smart investors. On January 13, Exxon Mobil Corporation (NYSE:XOM) announced that it will soon largely increase gasoline and diesel production at its Beaumont refinery, completing the $1.2 billion expansion first considered nine years ago. 

On January 9, Mizuho analyst Nitin Kumar upgraded Exxon Mobil Corporation (NYSE:XOM) to Buy from Neutral with a price target of $140, up from $90. Despite having a more cautious outlook for earnings and cash flows than both the management and industry consensus, the analyst believes it is difficult to imagine a situation where the company will not be a leader in generating cash in the next 3-5 years. He also identified Exxon Mobil Corporation (NYSE:XOM) as a Top Pick in the sector for 2023.

According to Insider Monkey’s data, 75 hedge funds were long Exxon Mobil Corporation (NYSE:XOM) at the end of Q3 2022, compared to 72 funds in the last quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 33.8 million shares worth $3 billion. 

In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:

“Integrated oil and gas giant Exxon Mobil Corporation (NYSE:XOM) performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industry wide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”

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