In this article, we will look at the 5 most undervalued value stocks to buy now. If you want to explore similar stocks, you can read 10 Most Undervalued Value Stocks To Buy Now.
5. Marathon Oil Corporation (NYSE:MRO)
PE Ratio as of October 21 (TTM): 6.86
Number of Hedge Fund Holders: 41
Marathon Oil Corporation (NYSE:MRO) is an American petroleum and natural gas exploration and production company headquartered in Houston, Texas. The company is one of the largest oil and gas producers in the United States. Marathon Oil Corporation (NYSE:MRO) is a well-run company with a strong balance sheet and a disciplined approach to capital expenditure. The company is well-positioned to generate significant cash flow and returns for shareholders in the coming years. Marathon Oil Corporation (NYSE:MRO) has free cash flows of $3.45 billion and a trailing twelve-month operating margin of 39.85%.
Shares of Marathon Oil Corporation (NYSE:MRO) have pulled back and are trading at bargain levels. As of October 20, the stock is trading at a PE multiple of 6x and is awarding shareholders with a forward dividend yield of 1.13%. Marathon Oil Corporation (NYSE:MRO) is ranked high among the best undervalued stocks to buy now.
On October 18, Piper Sandler analyst Mark Lear raised his price target on Marathon Oil Corporation (NYSE:MRO) to $38 from $36 and maintained an Overweight rating on the shares.
At the end of Q2 2022, Marathon Oil Corporation (NYSE:MRO) was spotted on 41 hedge fund portfolios. These funds held collective stakes of $1.26 billion in the company. As of June 30, Fisher Asset Management is the most prominent investor in Marathon Oil Corporation (NYSE:MRO) and has stakes worth over $194 million in the company.
Here is what Carillon Tower Advisers had to say about Marathon Oil Corporation (NYSE:MRO) in its “Carillon Clarivest Capital Appreciation Fund” first-quarter 2022 investor letter:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Marathon Oil (NYSE:MRO) increased its quarterly dividend and executed an impressive share buyback that blew by the target it originally announced.”
4. Moderna, Inc. (NASDAQ:MRNA)
PE Ratio as of October 21 (TTM): 3.95
Number of Hedge Fund Holders: 45
Moderna, Inc (NASDAQ:MRNA) is a clinical-stage biotechnology company that is pioneering messenger RNA (mRNA) therapeutics and vaccines to create a new generation of transformative medicines for patients. The company is well–run, with a market capitalization of over $50 billion, as of October 21, and is ranked high among the best undervalued stocks to buy now. As of October 21, Moderna, Inc. (NASDAQ:MRNA) is trading at a PE multiple of 4x. On October 12, Piper Sandler analyst Edward Tenthoff reiterated his Overweight rating and $214 price target on Moderna, Inc. (NASDAQ:MRNA).
At the close of Q2 2022, 45 hedge funds were long Moderna, Inc. (NASDAQ:MRNA) and held stakes worth $2.63 billion in the company. As of September 30, ARK Investment Management is the largest shareholder in Moderna, Inc. (NASDAQ:MRNA) and has stakes worth $19.34 million in the company.
Here is what Baron Funds had to say about Moderna, Inc. (NASDAQ:MRNA) in its third-quarter 2022 investor letter:
“Within biotechnology, underperformance of Moderna, Inc. (NASDAQ:MRNA) and lower exposure to this better performing sub-industry weighed the most on relative performance. Shares of Moderna, a leader in the emerging field of mRNA-based vaccines and therapeutics, declined due to increasing uncertainty around what a booster market could look like as COVID shifts away from pandemic status and becomes an increasingly commercial market rather than government funded.”
3. Ally Financial Inc. (NYSE:ALLY)
PE Ratio as of October 21 (TTM): 3.77
Number of Hedge Fund Holders: 42
Ally Financial Inc. (NYSE:ALLY) is a leading financial services company that offers a variety of financial products and services to consumers, businesses, and automotive dealers. At the end of Q2 2022, 42 hedge funds disclosed ownership of stakes in Ally Financial Inc. (NYSE:ALLY). The collective stakes of these hedge funds amounted to $2.32 billion.
This October, RBC Capital analyst Jon Arfstrom revised his price target on Ally Financial Inc. (NYSE:ALLY) to $32 from $37 and reiterated an Outperform rating on the shares. On October 20, Citi analyst Arren Cyganovich revised his price target on Ally Financial Inc. (NYSE:ALLY) to $34 from $35 and maintained a Buy rating on the shares.
Ally Financial Inc. (NYSE:ALLY) has a trailing twelve-month operating margin of 34.32% and has free cash flows of $1.99 billion. As of October 21, Ally Financial Inc. (NYSE:ALLY) is trading at a PE multiple of 3x and is offering a forward dividend yield of 4.54%. The stock is one of the best undervalued stocks to buy right now.
As of September 30, Magnolia Capital Fund is the most prominent investor in Ally Financial Inc. (NYSE:ALLY) and has stakes worth $86.6 million in the company.
Here is what Moon Capital Management had to say about Ally Financial Inc. (NYSE:ALLY) in its third-quarter 2022 investor letter:
“We recently purchased shares of Ally Financial Inc. (NYSE:ALLY), the world’s largest digital-only bank. Ally’s legacy dates back more than 100 years when it was originally launched as GMAC, the in-house financing arm of General Motors. The company was spun out from GM and rebranded as Ally more than a decade ago, but has retained an automotive focus on the lending side, where it holds the largest position in prime auto lending.
Since the spinoff, Ally has transformed from an auto loan company into a comprehensive, independent finance provider for borrowers and savers of all types. The company has completely restructured the liability side of its balance sheet and has created a deposit-gathering engine that is now more than 85 percent deposit[1]funded. (Compared to issuing traditional corporate debt, deposits are a significantly less expensive capital source for banks.)
Due to the lower overhead associated with the digital bank’s lack of brick-and-mortar locations, the bank produces one of the best efficiency ratios in the industry. This low-cost position, combined with a relatively high loan portfolio yield of approximately 6.75 percent, has helped the company earn net interest margins well above those of many leading banks. These high margins translate into high returns on equity, which the company targets at 16-18 percent over the medium term. (Actual ROE in 2021 was 24 percent. When the company came public in 2014, its ROE was a paltry four percent.)..” (Click here to read the full text)
2. Eni S.p.A. (NYSE:E)
PE Ratio as of October 21 (TTM): 3.62
Number of Hedge Fund Holders: 8
Eni S.p.A. (NYSE:E) is an integrated energy company with operations in 69 countries. It is Italy’s largest industrial company and is also one of the world’s leading oil and gas companies. Eni S.p.A. (NYSE:E) is committed to sustainable development and to the achievement of the United Nations’ Sustainable Development Goals. The company has a strong track record of delivering shareholder value and is well-positioned to weather the current macroeconomic environment. Eni S.p.A. (NYSE:E) has a trailing twelve-month operating margin of 18.67% and has free cash flows of EUR 10 billion. The stock is ranked high among the best undervalued stocks to buy now and is trading at a PE ratio of 3.62, as of October 21.
Wall Street sees upside to Eni S.p.A. (NYSE:E). This September, JPMorgan analyst Christyan Malek raised his price target on Eni S.p.A. (NYSE:E) to EUR 19 from EUR 18.50 and reiterated an Overweight rating on the shares.
At the close of Q2 2022, 8 hedge funds were bullish on Eni S.p.A. (NYSE:E) and held stakes worth $137 million in the company. This is compared to 8 positions in the previous quarter with stakes worth $128 million. As of June 30, Arrowstreet Capital is the leading investor in Eni S.p.A. (NYSE:E) and has stakes worth over $57 million in the company.
1. Cleveland-Cliffs Inc. (NYSE:CLF)
PE Ratio as of October 21 (TTM): 2.42
Number of Hedge Fund Holders: 29
Cleveland–Cliffs Inc. (NYSE:CLF) is a mining company that produces iron ore pellets, lumps, and fines in the United States. At the end of Q2 2022, 29 hedge funds were bullish on Cleveland-Cliffs Inc. (NYSE:CLF) and held stakes worth roughly $451 million in the company. As of June 30, Fisher Asset Management is the most prominent investor in Cleveland-Cliffs Inc. (NYSE:CLF) and has stakes of approximately $167 million in the company.
Shares of Cleveland-Cliffs Inc. (NYSE:CLF) have pulled back in 2022 and are now presenting an attractive opportunity for investors to buy into weakness. As of October 21, the stock is trading at a PE multiple of 2x and is ranked high among the best undervalued stocks to buy now. Cleveland-Cliffs Inc. (NYSE:CLF) is cash-rich and has a track record for profitability. The company has free cash flows of over $3 billion and has a trailing twelve-month operating margin of 21%.
Wall Street is bullish on Cleveland-Cliffs Inc. (NYSE:CLF). On October 6, Goldman Sachs analyst Emily Chieng revised her price target on Cleveland-Cliffs Inc. (NYSE:CLF) to $19 from $23 and reiterated a Buy rating on the shares.
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