In this article, we discuss the 5 undervalued mid-cap stocks that hedge funds love. If you want to read about some more undervalued mid-cap stocks, go directly to Hedge Funds Love These 10 Undervalued Mid-Cap Stocks.
5. Berry Global Group, Inc. (NYSE:BERY)
Number of Hedge Fund Holders: 43
PE Ratio: 11.23
Berry Global Group, Inc. (NYSE:BERY) operates in the metals and glass industry. Some of the products it markets include pharmaceutical devices, bottles and canisters, containers, and technical components, among others. On February 3, the firm announced a new share buyback program worth $1 billion. The program was announced on the same day that the firm posted earnings for the first quarter of 2022, beating market estimates on revenue by a handsome $140 million but missing on earnings per share.
On March 8, Citi analyst Anthony Pettinari maintained a Buy rating on Berry Global Group, Inc. (NYSE:BERY) stock with a price target of $87. Other analysts like Morgan Stanley, Truist, and Wells Fargo are also bullish on the stock.
At the end of the fourth quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Berry Global Group, Inc. (NYSE:BERY), up from 39 in the previous quarter worth $1.2 billion.
In its Q3 2021 investor letter, Rhizome Partners highlighted a few stocks and Berry Global Group, Inc. (NYSE:BERY) was one of them. Here is what the fund said:
“Berry Global Group, Inc. (NYSE:BERY) does what Berry Global Group, Inc. (NYSE:BERY) does well. It generates a good chunk of cash flow. Building on our Berry Global experience, we built a 3% position in the SPAC warrants of Gores Holdings V. The company purchased the aluminum-packaging business of Ardagh and now trades as Ardagh Metal Packaging. Unlike most SPACs, Gores has a track record of achieving its EBITDA forecast. Ardagh Metal trades at a significant discount to Ball Corporation and has more exposure to higher-margin specialty cans. We believe the SPAC warrants have 3-4x upside and the common stock has the potential to double. The company may force us to exchange the warrants for common shares at a premium. In that case, our upside will be capped at about a triple.”
4. Tronox Holdings plc (NYSE:TROX)
Number of Hedge Fund Holders: 40
PE Ratio: 10.99
Tronox Holdings plc (NYSE:TROX) is a commodity chemicals firm. The company has consistently paid a dividend to shareholders for the last nine years. Over the past three years, these payments have registered steady growth. On February 23, the company declared a quarterly dividend of $0.125 per share, an increase of around 25% from the previous dividend of $0.100 per share. The forward yield was 2.37%. The firm also recently secured an incremental loan to redeem $500 million senior notes.
On February 18, Barclays analyst Duffy Fischer maintained an Overweight rating on Tronox Holdings plc (NYSE:TROX) stock and raised the price target to $27 from $25, backing the firm to generate more than half its market cap in free cash flow over the next four years.
Among the hedge funds being tracked by Insider Monkey, Canada-based investment firm Maple Rock Capital is a leading shareholder in Tronox Holdings plc (NYSE:TROX) with 1.8 million shares worth more than $45 million.
3. Brunswick Corporation (NYSE:BC)
Number of Hedge Fund Holders: 42
PE Ratio: 10.70
Brunswick Corporation (NYSE:BC) makes and sells recreation products. The firm has a stellar dividend history stretching back more than three decades. Over the past decade, the company has consistently increased the dividend payouts. On February 17, it declared a quarterly dividend of $0.365 per share, an increase of around 9% from the previous dividend of $0.335 per share. The forward yield was 1.49%. As interest rates rise, these dividend payments offer investors some relief from increased market volatility.
On March 18, Citi analyst James Hardiman kept a Buy rating on Brunswick Corporation (NYSE:BC) stock and raised the price target to $123 from $118, noting that the boat segment expectations were raised given “the company’s opportunity to grow capacity in conjunction with significant pricing power”.
At the end of the fourth quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Brunswick Corporation (NYSE:BC), up from 39 in the previous quarter worth $1 billion.
2. TEGNA Inc. (NYSE:TGNA)
Number of Hedge Fund Holders: 45
PE Ratio: 10.49
TEGNA Inc. (NYSE:TGNA) operates as a media company. It was founded in 1906 and is based in Virginia. On February 28, the company posted earnings for the fourth quarter of 2021, reporting earnings per share of $0.57, beating market estimates by $0.02. The revenue over the period was $774 million, beating analyst expectations by $4.8 million. On February 22, the company had declared a quarterly dividend of $0.095 per share, in line with previous. The forward yield was 1.69%.
Some of the networks that TEGNA Inc. (NYSE:TGNA) operates include True Crime Network, Quest, and Twist, among others. The firm owns and runs around 64 television stations in 51 markets across the globe.
At the end of the fourth quarter of 2021, 45 hedge funds in the database of Insider Monkey held stakes worth $515 million in TEGNA Inc. (NYSE:TGNA), compared to 37 in the preceding quarter worth $420 million.
1. Vontier Corporation (NYSE:VNT)
Number of Hedge Fund Holders: 37
PE Ratio: 10.32
Vontier Corporation (NYSE:VNT) markets electronic equipment and instruments. On February 22, the company announced that it had entered into an accelerated share repurchase agreement worth $250 million. Mark Morelli, the CEO of the firm, noted the share repurchase reflected strong conviction in business and strength of free cash flows. In earnings for the fourth quarter of 2021, the company reported earnings per share of $0.83, beating estimates by around $0.03.
On April 4, Barclays analyst Julian Mitchell kept an Overweight rating on Vontier Corporation (NYSE:VNT) stock with a price target of $40. Investment advisors like Argus, Citi, and Barclays are also bullish on the stock.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Gates Capital Management is a leading shareholder in Vontier Corporation (NYSE:VNT) with 2.6 million shares worth more than $82 million.
In its Q1 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Vontier Corporation (NYSE:VNT) was one of them. Here is what the fund said:
“We also purchased Vontier Corporation (NYSE:VNT), a spin-out from Fortive, which itself was a spinout from Danaher. Danaher’s unique approach to managing its business and acquiring companies created massive value over the years. Fortive pursued the same path. Vontier uses the same business and acquisition systems and offers similar potential. Vontier’s main businesses are gas station software and hardware and auto repair tooling. The market doesn’t value it similarly to the other two companies due to near-term business headwinds from passing a regulatory-led demand surge for its equipment and concerns about electric vehicle disruption. Management has already made some smart investments in the space and we believe it will deploy the same rational capital allocation policy that drove so much value at its predecessors.”
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