We recently published a list of 10 Most Undervalued S&P 500 Stocks to Buy Now. In this article, we are going to take a look at where Wells Fargo & Company (NYSE:WFC) stands against other undervalued S&P 500 stocks to buy now.
Earlier on March 13, Michael Cuggino, President and Portfolio Manager of the Permanent Portfolio Family of Funds, appeared on CNBC’s ‘The Exchange’ and began discussing his fund’s performance. Despite a challenging market environment, his fund achieved a 4% return this year, which he attributed to diversification rather than reliance on a single asset class like gold. The portfolio includes gold, silver, diversified equities, and bonds. When asked about market reactions to tariff-related headlines, Cuggino emphasized the importance of not overreacting to daily news fluctuations. He described the market’s behavior as herky-jerky and advised investors to focus on long-term opportunities rather than reacting impulsively. His base case anticipated some turbulence due to the transition under the new administration’s economic policies. His strategy involves identifying opportunities during volatile periods rather than making significant portfolio changes.
The discussion also featured David Zervos, Chief Market Strategist at Jefferies, who provided insights on Washington’s role in market volatility. Zervos acknowledged that while policies such as tariffs, immigration reforms, and drug policies were largely unfolding as expected, the speed of changes under the current administration was surprising investors. He pointed out rapid spending cuts and layoffs in the public sector as key contributors to market unease. For instance, courts recently ordered the federal government to rehire probationary employees who had been dismissed. Zervos likened this abrupt shift to transitioning from a public-sector-reliant economy to one driven by the private sector, which is a process that has introduced significant uncertainty. Regarding tariffs specifically, Zervos downplayed their overall impact on the US economy, which he described as domestically driven. While tariffs could affect specific industries like wine or automobiles with high overseas components, he argued that broader economic trends would be shaped by deregulation, reduced business costs, and a shift toward private-sector efficiency. He warned that the speed of these transitions could lead to short-term volatility but maintained optimism about long-term productivity gains.
Methodology
We used the Finviz stock screener to compile a list of the top S&P 500 stocks that 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.
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 using a mobile device to access their bank account information.
Wells Fargo & Company (NYSE:WFC)
Forward P/E Ratio as of March 14: 11.81
Number of Hedge Fund Holders: 96
Wells Fargo & Company (NYSE:WFC) is a financial services company that offers banking, investment, mortgage, and finance products and services across four segments. These include the Consumer Banking & Lending, Commercial Banking, Corporate & Investment Banking, and Wealth & Investment Management segments.
The company’s credit card division grew in 2024 and added over 2.4 million new accounts. It experienced a $17 billion increase in spending. The launch of 11 new card products since 2021 has contributed to a 3% revenue rise. This is driven by higher loan balances and increased spending. Despite overall loan declines within the bank, credit card balances grew, which reflected strong credit standards.
On January 20, analyst Glenn Thum of Phillip Securities maintained a Buy rating on Wells Fargo & Co. (NYSE:WFC) with an $85 price target due to its strong Q4 2024 earnings and a positive 2025 outlook for net interest income growth.
Oakmark Fund favors this company because of its strong earnings, efficient cost management, share repurchases, and positive market sentiment. It stated the following regarding Wells Fargo & Co. (NYSE:WFC) in its Q4 2024 investor letter:
“Wells Fargo & Company (NYSE:WFC) was the top contributor during the quarter. The U.S.-headquartered diversified bank’s stock price rose after reporting what we see as solid third-quarter earnings where the company’s efficiency ratio continued to improve as expenses were well controlled. The fee income segment also performed well, growing 12%. In addition, Wells Fargo had the opportunity to repurchase $3.5 billion in shares during the period, bringing the full-year repurchase to roughly $16 billion. In November, the stock price continued its upward trend following the U.S. presidential election as investors are optimistic that the financials sector will benefit from looser regulations and lower corporate taxes, thus stimulating a better environment for dealmaking. We continue to believe that Wells Fargo is a competitively advantaged bank that can use its superior business mix and return potential to unlock further value.”
Overall, WFC ranks 5th on our list of the most undervalued S&P 500 stocks to buy now. While we acknowledge the growth potential of WFC 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. If you are looking for an AI stock that is more promising than WFC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.