In this article, we discuss the 5 most undervalued retail stocks to buy now. To read the detailed analysis of the retail industry, go to the 13 Most Undervalued Retail Stocks To Buy Now.
5. Albertsons Companies, Inc. (NYSE:ACI)
PE as of March 26: 9.07
Number of Hedge Fund Holders: 57
Albertsons Companies, Inc. (NYSE:ACI) operates food and drug retail stores and provides its products under various brands, including Albertsons, Safeway, Vons, Pavilions, and more. The stock has a PE of 9.07 as of March 26.
In the fourth quarter of 2023, 57 hedge funds had stakes in Albertsons Companies, Inc. (NYSE:ACI), with total positions worth $4.8 billion. As of Q4 2023, Cerberus Capital Management is the top shareholder in the company and has a position worth $3.49 billion.
As reported by Reuters, on March 25, a hearing was held in Denver for the Colorado lawsuit regarding blocking Albertsons Companies, Inc.’s (NYSE:ACI) sale to The Kroger Co. (NYSE:KR) for nearly $25 billion. The District Court Judge Andrew Luxen said that the court would hear the state’s statements about blocking the sale starting August 12 and would hold a permanent injunction hearing on September 30.
Based on 3 Wall Street analysts’ ratings over the past three months, Albertsons Companies, Inc. (NYSE:ACI) has a consensus rating of Moderate Buy. The average price target of $24.36 has an upside of 14.21% to the stock’s current price as of March 26.
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4. Target Corporation (NYSE:TGT)
PE as of March 26: 19.32
Number of Hedge Fund Holders: 58
Target Corporation (NYSE:TGT) is one of the biggest retail companies in the US, with 1,956 stores, 59 supply chain facilities, 8 additional offices, and 2 corporate campuses in the country. As of March 26, the stock has a PE ratio of 19.32 and a market cap of $79.568 billion.
On March 13, Target Corporation (NYSE:TGT) announced a quarterly dividend of $1.10, payable by June 10 to the shareholders of record on May 15. As of March 26, the stock has a dividend yield of 2.55%.
According to our database, 58 hedge funds held stakes in Target Corporation (NYSE:TGT) in the fourth quarter of 2023, with positions worth $1.503 billion. With 2.816 million shares of the company, valued at $401.116 million, Diamond Hill Capital is the largest shareholder of the company as of December 31, 2023.
Diamond Hill Capital stated the following regarding Target Corporation (NYSE:TGT) in its fourth quarter 2023 investor letter:
“Other top contributors in Q4 included Allstate, American International Group (AIG) and Target Corporation (NYSE:TGT). US-based mass retailer Target is capitalizing on cleaner inventory, lower freight costs and improved efficiency to improve profitability — and investors rewarded shares accordingly in Q4.”
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3. CVS Health Corporation (NYSE:CVS)
PE as of March 26: 12.24
Number of Hedge Fund Holders: 67
CVS Health Corporation (NYSE:CVS) offers healthcare and pharmacy retail services through its various segments, including Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness. A few of its retail businesses include CVS Pharmacy, Inc., MinuteClinic, and more. As of March 26, the stock has a PE ratio of 12.24. CVS Health Corporation (NYSE:CVS) is the third most undervalued retail stock to buy.
Hedge fund sentiment was positive toward CVS Health Corporation (NYSE:CVS) in Q4 of 2023 as hedge funds with investments in the stock were 67 in the quarter, with positions worth $2.36 billion. This is compared to 64 funds with positions worth $1.85 billion in the preceding quarter. Marshall Wace LLP is the top investor in the company as of Q4 of 2023. In the quarter, the firm increased its stake by 84% to 4.8 million shares worth $382.673 million, representing 0.64% of the investment portfolio.
On March 15, Piper Sandler raised the price target on CVS Health Corporation (NYSE:CVS) to $94 from $93 and kept an Overweight rating on the shares. The analyst mentioned that the firm has hope in the company’s CY24 medical loss ratio guidance.
ClearBridge Investments stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q3 2023 investor letter:
“Other health care holdings such as managed care company UnitedHealth Group and health care services company CVS Health Corporation (NYSE:CVS) were also rewarded in the third quarter. CVS, though a marginal contributor, has been weighed down in 2023 by an acquisition deal for Oak Street Health, an increase in medical benefits costs and a decline in the company’s overall Medicare Advantage star rating, but recent operational improvements suggest progress in its transition from a retailer to a diversified health care services company. Oak Street Health is a potential foundational asset for CVS’s retail primary care strategy, and we are positive on the company’s long-term prospects.”
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2. Lowe’s Companies, Inc. (NYSE:LOW)
PE as of March 26: 19.16
Number of Hedge Fund Holders: 68
Lowe’s Companies, Inc. (NYSE:LOW) is a home improvement retailer with more than 1,700 home improvement stores and carries out 17 million customer transactions per week in the US. The company provides home improvement products, installation services, and products for construction, remodeling, etc.
Lowe’s Companies, Inc. (NYSE:LOW) has a PE ratio of 19.16 as of March 26. In Q4 of 2023, 68 hedge funds held positions in the stock, and their total stakes amounted to $3.7 billion. As of the fourth quarter of 2023, Eric W. Mandelblatt’s Soroban Capital Partners is the biggest shareholder in the company. In the quarter, the firm increased its stake in the company by 19% to over 2 million shares worth $450.884 million.
On March 22, Lowe’s Companies, Inc. (NYSE:LOW) declared a quarterly dividend of $1.10, payable by May 8 to the shareholders of record on April 24. The stock’s dividend yield is 1.74% as of March 26.
Madison Investments made the following comment about Lowe’s Companies, Inc. (NYSE:LOW) in its Q3 2023 investor letter:
“The bottom five individual contributors were Dollar Tree, Fiserv, Analog Devices, Lowe’s Companies, Inc. (NYSE:LOW), and Alcon. Both Analog Devices and Lowe’s Companies saw end-market demand moderate (in semiconductors and home improvement products, respectively) relative to the strong levels over the last couple of years. Despite these near-term trends, we remain very confident in the long-term trends within both markets.”
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1. Alibaba Group Holding Limited (NYSE:BABA)
PE as of March 26: 13.35
Number of Hedge Fund Holders: 116
Among its many businesses, Alibaba Group Holding Limited (NYSE:BABA) has several retail businesses, including Taobao (a digital retail platform), Freshippo (a retail platform for groceries), AliExpress (a retail marketplace), Intime Retail (department stores, shopping centers, etc.), and others.
As of March 26, Alibaba Group Holding Limited (NYSE:BABA) has a PE ratio of 13.35. 18 Wall Street analysts have covered the stock over the past three months, and 15 analysts keep a Buy-equivalent rating on the stock. As of March 26, the average price target of $105.69 represents an upside of 47.57% from the last price of $71.62.
In the fourth quarter of 2023, 116 hedge funds had stakes in Alibaba Group Holding Limited (NYSE:BABA), with total positions worth $3.587 billion. This is compared to 110 funds with positions worth $3.36 billion in the previous quarter. As of December 31, 2023, Appaloosa Management LP is the most dominant shareholder in the company and has a position worth $337.168 million. Alibaba Group Holding Limited (NYSE:BABA) takes the top spot on our list of most undervalued retail stocks to buy now.
Baron Funds stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its fourth quarter 2023 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) is the largest retailer and e-commerce company in China. Alibaba operates shopping platforms Taobao and Tmall and owns 33% of Ant Group, which operates Alipay, China’s largest third-party online payment provider. Shares of Alibaba were down in the fourth quarter due largely to the delay of the previously announced spin-off of its cloud division. Quarterly results were roughly in line with Street expectations, with strength in profitability. We retain conviction that Alibaba is well positioned to benefit from the ongoing growth in online commerce and cloud development in China. While the company is seeing early progress in its efforts to re-invigorate customer engagement and retention as well as merchant investment initiatives, we believe this investment will likely take some time to flow through to accelerating earnings growth. As such, we remain investors but have reduced our position as we monitor further progress.”
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Disclosure: None. You can also look at the 30 Tallest Buildings in the US in 2024 and the 13 Best Affordable Tech Stocks To Buy According to Analysts.
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