The US stock market defied all pessimistic expectations this year and showed resilience in the face of a sticky inflation, geopolitical tensions and macro pressures. While the AI boom lifted stock valuations of a handful of companies to new highs, some notable analysts believe the market has a lot of room to run next year. Jordan Jackson, JP Morgan Asset Management global market strategist, recently said while talking to Bloomberg that there’s a lot of money locked in money market funds that could be injected in equities next year after investors gain confidence. Jackson said that earnings this year have been stronger than expected. The analyst said that the “buying spree” will continue next year.
Answering a question about his thoughts on calls from some analysts expecting the market to hit new highs next year, Jackson said that the market could indeed hit new highs in 2024, especially if big names continue to gain value.
The questioner was asking Jackson specifically about Deutsche Bank’s analyst Binky Chadha, who is now one of Wall Street’s biggest bulls as he expects the S&P 500 to hit 5,100 points by the end of 2024.
Given this backdrop of optimism, it’s high time for investors to find stocks that are truly undervalued. For this article we surveyed at least 10 credible financial websites and analyst reports and picked 15 stocks that came up more frequently during our research labeled as undervalued stocks.
With a PE ratio of 6 and a dividend yield of over 9%, British American Tobacco Plc (NYSE:BTI) ranks 15th in our list of the best undervalued stocks to buy according to the media. British American Tobacco Plc (NYSE:BTI) shares fell sharply earlier this month after British American Tobacco Plc (NYSE:BTI) cut the value of some U.S. cigarette brands. British American Tobacco Plc (NYSE:BTI) took a whopping $31.5 billion non-cash adjusting impairment charge to account for the new brand values.
After the latest sell-off, many analysts issued bullish commentary on the stock, calling the recent dip a buying opportunity. Jefferies analyst Owen Bennett said the stock has potential upside from U.S. business next year, with British American Tobacco Plc (NYSE:BTI) still expecting approval of its Pre-Market Tobacco Product Application (PMTA) submissions.
As of the end of the third quarter of 2023, 17 hedge funds tracked by Insider Monkey had stakes in British American Tobacco Plc (NYSE:BTI).
Broyhill Asset Management made the following comment about British American Tobacco p.l.c. (NYSE:BTI) in its second quarter 2023 investor letter:
“In our year-end letter to investors, we explained why we had reduced our investment in Altria and reinvested the proceeds to increase our position in Philip Morris. This quarter, we exited the position completely, swapping our exposure for British American Tobacco p.l.c. (NYSE:BTI), as the valuation gap became too hard to ignore. Investors are rightly frustrated with the stock. In addition to the menthol ban, leadership change, and North Korea kerfuffle. BTI has mountains of debt piled on its balance sheet following the acquisition of Reynolds, which will limit options for capital allocation, namely more buybacks. While we’d love to see new management aggressively repurchasing stock at these prices – shares trade below 7x earnings – we don’t think buybacks are necessary for the investment to work from here.”
14. U.S. Bancorp (NYSE:USB)
Number. Of Hedge Fund Investors: 29
With a PE ratio of 11.84 and a dividend yield of 4.84%, U.S. Bancorp (NYSE:USB) ranks 14th in our list of the best undervalued stocks to buy now according to the media. Last month, Jim Cramer said in his program that U.S. Bancorp (NYSE:USB) is “incredibly undervalued” since he believes the Fed might be “done” with interest rate hikes. Cramer also praised the U.S. Bancorp’s (NYSE:USB) dividend yield.
Here is what Davis New York Venture Fund has to say about U.S. Bancorp (NYSE:USB) in its Q3 2023 investor letter:
“In spring 2023, a number of high-profile regional banks, none of which we owned, collapsed over the course of a few weeks. In contrast, the select, large banks we own, including U.S. Bancorp, actually saw deposit inflows and increasing profits, reinforcing our thesis that high-quality financial services companies remain among the most misunderstood and attractive sectors of the market. This stress test models a dramatic recession—one meaningfully worse than the great financial crisis of 2008-2009. It includes a 3.5% decline in gross domestic product, a 10% unemployment rate, a 37% decline in residential real estate, a 40% decline in commercial real estate and a 55% decline in the stock market. The resilience and strength required to weather such an economic storm combined with proven economies of scale in branding and technology should drive DNYVF market share gains and growth for years to come. Trading at some of the lowest valuations in the market, our financial sector holdings—such as U.S. Bancorp, deserve to be revalued upwards over time. In the meantime, increasing dividends and a shrinking share base create value while we wait.”
13. Viatris Inc. (NASDAQ:VTRS)
Number Of Hedge Fund Investors: 43
Viatris Inc. (NASDAQ:VTRS) is one of the best undervalued stocks to buy now according to the media. The pharmaceutical stock has lost about 14% year to date through December 8. One-year average analyst price estimate on the stock is $14.11, while the stock’s current price is $9.76.
As of the end of the third quarter of 2023, 43 hedge funds out of the 910 funds tracked by Insider Monkey reported having stakes in Viatris Inc. (NASDAQ:VTRS). The biggest stake in Viatris Inc. (NASDAQ:VTRS) is owned by James E. Flynn’s Deerfield Management which owns a $196 million stake in Viatris Inc. (NASDAQ:VTRS).
Here is what Davis New York Venture Fund has to say about Viatris Inc. (NASDAQ:VTRS) in its Q3 2023 investor letter:
“In the attractive healthcare sector, we look beyond the obvious to identify businesses that simultaneously have exposure to this growth industry and also trade at low prices. We’re especially drawn to companies like Viatris, whose products or services play a part in helping to mitigate healthcare’s constantly rising costs. The healthcare industry has been a growing part of the U.S. economy for decades. As a result, many companies in this sector trade at high valuations reflecting their robust but well-known reputation for growth. For value-conscious investors like us, investing in healthcare requires looking beyond the obvious to identify businesses that have exposure to this growth industry but which trade at low prices. Furthermore, recognizing that the constantly rising cost of healthcare cannot go on forever, we have been particularly drawn to companies whose products or services play some role in managing or reducing the cost of care. As a result, we have positions in Viatris, a leading manufacturer of low-cost branded generic drugs.
12. The Estee Lauder Companies Inc (NYSE:EL)
Number Of Hedge Fund Investors: 45
Cosmetics giant The Estee Lauder Companies Inc (NYSE:EL) shares have lost about 46% year to date through December 8. Many of the financial websites and analyst reports we surveyed believe the stock is undervalued. Earlier this year Jim Cramer said in a program that The Estee Lauder Companies Inc (NYSE:EL) was expected to post weak results amid travel restrictions. But Cramer recommended people to ignore the panic around the stock and buy The Estee Lauder Companies Inc (NYSE:EL) shares.
A total of 45 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in The Estee Lauder Companies Inc (NYSE:EL).
Madison Sustainable Equity Fund made the following comment about The Estée Lauder Companies Inc. (NYSE:EL) in its Q3 2023 investor letter:
“NextEra, The Estée Lauder Companies Inc. (NYSE:EL), Target, Oracle, and TE Connectivity were the largest detractors. Estee Lauder has seen a steep decline in its travel retail business in both China and Korea. We expect the travel retail business to begin to recover as we move into 2024.”
11. Draftkings Inc (NASDAQ:DKNG)
Number Of Hedge Fund Investors: 51
DraftKings Inc (NASDAQ:DKNG) ranks 11th in our list of the best undervalued stocks to buy now according to the media. The stock has gained about 220% year to date. Yet many believe the stock has more room to run. In September, JPMorgan said that DraftKings Inc (NASDAQ:DKNG) was undervalued as it upgraded the stock from Neutral to Overweight and increased its price target on the stock to $37 from $26.
In November, DraftKings Inc (NASDAQ:DKNG) held its investor day event which was praised by analysts. Morgan Stanley said the presentation spelled out the reasons to have a bullish outlook on the stock.
10. Qualcomm Inc (NASDAQ:QCOM)
Number Of Hedge Fund Investors: 67
Some analysts believe the age of AI and the demand for chips for generative AI software will bode well for Qualcomm Inc (NASDAQ:QCOM), which is already up by about 24% year to date through December 8. Praising the Qualcomm Inc’s (NASDAQ:QCOM) quarterly results, Angelo Zino of CFRA said in a program on Yahoo Finance that it seems Qualcomm Inc (NASDAQ:QCOM) is experiencing the bottoming of its revenue trajectory and that Qualcomm Inc (NASDAQ:QCOM) has a big opportunity in the PC market.
9. McDonald’s Corp (NYSE:MCD)
Number Of Hedge Fund Investors: 70
Many credible financial websites and analysts believe McDonald’s Corp (NYSE:MCD) stock is undervalued. According to Yahoo Finance, one-year average analyst price estimate for McDonald’s Corp (NYSE:MCD) is $310, while the stock’s current price is $286. McDonald’s Corp (NYSE:MCD) recently announced a partnership with Google Cloud and said McDonald’s Corp (NYSE:MCD) plans to use generative AI to optimize its business.
As of the end of the third quarter of 2023, 70 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported owning stake in McDonald’s Corp (NYSE:MCD). The biggest stake in McDonald’s Corp (NYSE:MCD) is owned by Ray Dalio’s Bridgewater Associates which owns a $390 million stake in the company.
Carillon Eagle Mid Cap Growth Fund made the following comment about McDonald’s Corporation (NYSE:MCD) in its Q3 2023 investor letter:
“McDonald’s Corporation (NYSE:MCD) stock paused its upwards share price movement after its strong gain in the second quarter. The company’s same-store comparable sales performed better than expected in the second quarter, which relieved investors by suggesting that global consumer’s purchasing strength remains healthy.”
8. Pfizer Inc (NYSE:PFE)
Number Of Hedge Fund Investors: 73
Pfizer Inc (NYSE:PFE) is an undervalued stock, according to many credible websites and analyst reports surveyed by Insider Monkey. Pfizer Inc (NYSE:PFE) stock has lost about 44% in value year to date through December 8. Goldman Sachs recently issued a list of out-of-favor stocks that have been laggards this year. But the firm believes these stocks can rebound and become “leaders” in the first quarter of 2024. Pfizer Inc (NYSE:PFE) was one of these stocks.
As of the end of the third quarter of 2023, 73 hedge funds out of the 910 funds tracked by Insider Monkey reported having stakes in Pfizer Inc (NYSE:PFE). The most significant stakeholder of Pfizer Inc (NYSE:PFE) was D. E. Shaw which owns a $436 million stake in Pfizer Inc (NYSE:PFE).
Diamond Hill Large Cap Strategy made the following comment about Pfizer Inc. (NYSE:PFE) in its Q2 2023 investor letter:
“Our bottom contributors in Q2 included health insurance company Humana, biopharmaceutical company Pfizer Inc. (NYSE:PFE) and global entertainment company Disney. Pharmaceutical giant Pfizer has been dealing with a decline in sales due to lower COVID vaccination levels. Additionally, in 2023, management is increasing spend as the company invests in new product launches. That said, we remain positive about the long-term company fundamentals.”
7. Exxon Mobil Corporation (NYSE:XOM)
Number Of Hedge Fund Investors: 79
Exxon Mobil Corporation (NYSE:XOM shares have lost about 7% year to date through December 8. But Exxon Mobil Corporation’s (NYSE:XOM) huge business and strong dividend history makes it a tempting buy for the long term.
In October, Truist Securities upgraded the stock to Buy from Hold. Exxon Mobil Corporation (NYSE:XOM) recently said it will target project spending of between $22 billion and $27 billion through 2027.
6. TESLA, Inc. (NASDAQ:TSLA)
Number Of Hedge Fund Investors: 81
Some analysts believe the market is not appreciating the true value of EV giant Tesla. In July this year, when TESLA, Inc. (NASDAQ:TSLA) was trading at around $282, George Gianarikas, Managing Director and Senior Analyst at Canaccord Genuity, said in a program on CNBC that he believes TESLA, Inc. (NASDAQ:TSLA) is an AI and sustainability behemoth. The analyst talked in detail about the investments TESLA, Inc. (NASDAQ:TSLA) is making in AI, battery technology and products that can bear fruit in the future. At the time the analyst said that he believed TESLA, Inc. (NASDAQ:TSLA) was relatively undervalued when compared to other stocks.
Cathie Wood of ARK Invest believes TESLA, Inc. (NASDAQ:TSLA) stock could touch $2000 by 2027. In June, Jim Cramer also gave bullish comments on TESLA, Inc. (NASDAQ:TSLA) while talking about Ford. Cramer said:
“I think there’s real value here in Ford, more value than is captured by its $14 share price even with that 4.25% yield. Don’t get me wrong, you’ve got my blessing to own Tesla. Yeah, you can do that too, because it’s got incredible growth potential.”
Here is what Claret Asset Management has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q3 2023 investor letter:
“We have mentioned in the last letter that the “magnificent seven”, including Tesla, Inc., dominated the performance of the S&P 500. We might have left you with the feeling that we are bearish because we don’t find the Magnificent 7 attractive. Let us make it clear: we are just not so pessimistic as to believe there are only 7 growth opportunities in the entire global equity market. In fact, we are optimists and think opportunity is abundant. Just not in everyone’s current 7 favorite stocks.”
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Disclosure. None. 15 Best Undervalued Stocks To Buy Now According To The Media was initially published on Insider Monkey.