We recently published a list of the 10 Most Undervalued Penny Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Alight, Inc. (NYSE:ALIT) stands against other undervalued penny stocks.
Earlier on March 18, Keith Fitz-Gerald, Fitz-Gerald Group CIO, joined ‘Power Lunch’ on CNBC to talk about how to make sense of the market and the recession versus the growth scare. Keith Fitzgerald has favored some big momentum names in recent years and is still very positive on these stocks, despite feeling frustrated by recent market action. He thinks this volatility partially comes from computers, algorithms, and equity beta. He advised the average investor to focus on fundamentals and pay attention to the insights of leaders like Jensen Huang as a way to move forward. Fitzgerald also revealed that he had been adding to all of his positions over the then-past week and planned to continue doing so, instead of joining the selloff stride. He explained that he invests with a 3, 4, or even 10-year horizon and believes that these companies are dramatically undervalued at present, even if that view is unpopular.
As the conversation turned to how Fitzgerald distinguishes between stocks that have further downside and those that are poised for a turnaround, he suggested slowing down buying rather than trying to perfectly time the bottom. Fitzgerald emphasized that he is more concerned with finding a good entry point than catching the absolute lowest price. He views deeper selloffs as more attractive opportunities, and recognizes that technical factors driven by algorithms are pushing prices. Fitzgerald agreed that the persisting sources of uncertainty remain, such as the ongoing confusion around Trump’s tariff policies and uncertainty in the AI sector. He noted that traders dislike uncertainty above all else because it prevents decisive actions.
However, Fitzgerald remains focused on long-term trends and themes, such as AI, automation, and full-service business models. As he evaluates opportunities, he looks for where this investment will flow, which companies are most likely to benefit, and whose customers are most engaged. For Fitzgerald, the focus remains on companies with high-quality leadership, strong products, and loyal customers.
Our Methodology
We used the Finviz stock screener to compile a list of cheap penny stocks that were trading under $5 and had a forward P/E ratio under 15. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
Note: All data was sourced on April 18.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A person viewing their financial progress on a computer, highlighting the financial health offerings of the company.
Alight, Inc. (NYSE:ALIT)
Share Price as of April 18: $4.99
Forward P/E ratio as of April 18: 8.35
Number of Hedge Fund Holders: 42
Alight, Inc. (NYSE:ALIT) is a technology-enabled services company that provides Alight Worklife, which is an intuitive, cloud-based employee engagement platform. Its platform services include integrated benefits administration, healthcare navigation, financial wellbeing, leave of absence management, and retiree healthcare.
The company’s Recurring Revenue made up 91% of its Q4 2024 revenue. Alight, Inc. (NYSE:ALIT) saw recurring revenue grow sequentially in Q4 and aims for a 4% to 6% long-term revenue increase, which is fueled by ARR Bookings. Alight achieved $114 million in total ARR bookings in 2024, which is an 18% increase from 2023. It expects $130 to $145 million in ARR bookings for 2025, with a sales pipeline up 54%. The company also saw an 8% increase in client retention rates in its last renewal cycle.
For 2025, Alight, Inc. (NYSE:ALIT) expects recurring revenue to grow about 1% overall. Alight’s long-term TAM is projected at a substantial $50 billion. With that opportunity, the company aims for a total annual revenue growth of 4% to 6% by 2027. Needham analyst Kyle Peterson reaffirmed a Buy rating on the stock with a $9 price target in March.
Overall, ALIT ranks 1st on our list of the most undervalued penny stocks to buy according to hedge funds. While we acknowledge the potential of ALIT as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ALIT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
