The AI trade is carrying on strong as ever, showing no signs of slowing down. For the last three years, a handful of stocks have driven the S&P 500 forward, with almost all of them gaining on the back of AI progress. Consequently, many stocks are facing a severe lack of interest and even outflows, resulting in them losing value.
When Jonathan Krinsky, the Chief Market Technician at BTIG, appeared on CNBC to discuss the AI trade, he mentioned exactly the above and backed it with numbers.
The S&P 500 hit a 52-week high on Friday… and 8% of the actual S&P names are at their 52-week low and that ties the all-time record of late 1999. It’s not just that names aren’t participating at the moment, they’re actually moving lower at this point.
There is clearly a disconnect in the market at the moment, and quite often, the value lies in the areas that are being ignored. One way to unearth this value is to look at the most ignored or worst-performing stocks and see whether professionals are still backing them. If they are, chances are these are strong businesses that will eventually continue their long-term trend. This is why we decided to compile our list of the 10 best 52-week low stocks to buy according to hedge funds.
Our Methodology
To come up with our list of 10 best 52-week low stocks to buy according to hedge funds, we only considered companies that had a market cap of at least $2 billion. These companies are trading between 0% and 5% of their 52-week lows. We also considered how many hedge funds held these companies in their portfolios and ranked them in ascending order of the number of funds holding them.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Note: All share price data in the article is as per market close on May 13.
10. Rollins Inc. (NYSE:ROL)
Number of Hedge Fund Holders: 57
Rollins Inc. (NYSE:ROL) reports its Q1 2026 earnings report on April 23. The company reported revenue of $906.42 million, comfortably beating the Wall Street consensus of $894.58 million. The earnings per share came in at $0.24, which met analyst expectations. Overall performance in Q1 was healthy. Moreover, residential services saw the greatest improvement, but commercial, termite, and other services also did well.
On April 27, Rothschild & Co Redburn upgraded Rollins Inc. (NYSE:ROL) to Buy from a previous rating of Neutral. The firm also raised its target price from $51.90 to $66. With the stock price dropping, investors believe the company’s slow growth over the past two quarters will continue for longer, but the firm thinks otherwise. The company’s steady stream of long-term contracts underpins its fiscal 2026 organic growth, the analyst tells investors in a research note. In the short term, however, the stock has already lost a quarter of its value over the last three months.
Rollins Inc. (NYSE:ROL) is an international service company that provides pest and termite control services to both residential and commercial customers. The company is based in Atlanta, Georgia, and was founded in 1948 by John W. Rollins Jr. and O. Wayne Rollins Sr.
9. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Holders: 62
On May 5, RBC Capital analyst Ashish Sabadra reaffirmed a Buy rating on Ecolab Inc. (NYSE:ECL) and assigned a price target of $337 on the stock. This reflects an upside of 35% from current levels. This positive sentiment followed the company’s earnings report on April 28.
On April 28, Ecolab Inc. (NYSE:ECL) posted its first-quarter fiscal 2026 earnings. The company reported a revenue of $4.07 billion for Q1 2026, beating the Wall Street consensus of $4.03 billion. The adjusted Earnings per share came in at $1.7, which met analysts’ estimates.
Going forward, the company expects earnings per share of $2.02 to $2.12 in the second quarter. The growth is expected to strengthen in Q3 and Q4. For the full year 2026, commodity costs are expected to increase in the high single digits. This will impact second-quarter earnings per share growth by a few points.
Ecolab Inc. (NYSE:ECL) provides water, hygiene, and infection prevention solutions and services that protect people and critical resources. Its Global Industrial segment offers water treatment and process applications, along with cleaning and sanitizing solutions, primarily for large industrial customers.
8. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 63
On May 7, BMO Capital analyst Keith Bachman maintained his Hold rating on the International Business Machines Corporation (NYSE:IBM) stock. He also set a price target of $270, representing an upside of 21% from here.
From May 4 to May 7, the company held its IBM Think 2026 event, which was centered around agenctic AI, automation, and revamping businesses with AI. Though this has generated significant investor and analyst activity, no analyst has come out with an upward target price revision. Reacting to the event, Morgan Stanley pointed out that IBM was on course to become a full-stack operator of enterprise AI rather than just an AI enabler. In the long run, this impacts both its revenue mix and margins. Erik Woodring of Morgan Stanley said:
While execution and competitive dynamics bear watching, Think 2026 increases our conviction that IBM is carving out a more defensible role in enterprise AI by leaning into its strengths in hybrid infrastructure, data gravity, and trusted deployment,
The firm has an Equal-weight rating on the stock, with a price target of $225. It also pointed out that the company faces tough competition among AI platforms, though it enjoys a healthy standing against hyperscalers thanks to its offerings like Sovereign Core, which is a platform that enables government organizations and those in highly regulated niches to deploy and operate AI sovereign cloud environments.
International Business Machines Corporation (NYSE:IBM) operates as an integrated solutions and services provider across Asia-Pacific, the Americas, the Middle East, Europe, and Africa. The company operates in the Infrastructure, Software, Financing, and Consulting segments.
7. Toast, Inc. (NYSE:TOST)
Number of Hedge Fund Holders: 68
Toast, Inc. (NYSE:TOST) announced its Q1 2026 earnings report on May 8. The company reported a revenue of $1.63 billion, matching the Wall Street consensus. Management believes the company is off to a good start, with gross profit streams up 27%, driven by 7,000 new net location additions. The company not only raised its outlook but also saw positive analyst sentiment after earnings.
On May 12, Jason Kupferberg, an analyst at Wells Fargo, reiterated a Buy rating on Toast, Inc. (NYSE:TOST) and assigned a price target of $36. The price target suggests a further 61% upside from the current levels. Going forward, the company expects total subscription and fintech gross profits to grow 22% to 24% year over year. For the full year 2026, the company has raised its revenue guidance to 21%-23%. On a positive note, the company is making plans to improve and grow over the next 5 to 10 years. The software company believes it can maintain its 40% EBITDA margin.
Toast, Inc. (NYSE:TOST) is an American company that offers financial technology solutions and restaurant management software. It provides a cloud-based, all-in-one digital technology platform designed for the restaurant industry, offering software and financial technology solutions that help restaurants across the point of sale, payments, operations, digital ordering and delivery, marketing and loyalty, and team management.
6. Aon plc (NYSE:AON)
Number of Hedge Fund Holders: 70
On May 11, Keefe Bruyette raised its price target on Aon plc (NYSE:AON) to $404 from $401 and reaffirmed an Outperform rating on the stock. The firm’s adjusted price target suggests a further 29% upside from the current levels. Apart from Keefe Bruyette, Morgan Stanley analyst Bob Huang cut his price target on Aon plc (NYSE:AON) from $390 to $380 while keeping an Overweight rating on the shares.
On May 01, the company announced its Q1 2026 earnings report. It reported revenue of $5 billion, beating the Wall Street consensus of $4.98 billion. This represents 6% increase in revenue year over year. The earnings per share came in at $6.48, which comfortably beat estimates of $6.36. Despite the Middle East conflict, sales in that region are growing but remain a small share of the overall business. However, if the conflict persists, it could have some impact on the financial performance.
Aon plc (NYSE:AON) is a professional services company operating across the United States, the United Kingdom, the Middle East, the rest of the Americas, the rest of Europe, Asia-Pacific, Ireland, and Africa. The company operates in the Human Capital and Risk Capital segments.
While we acknowledge the potential of AON to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AON and that has 100x upside potential, check out our report about the cheapest AI stock.
Click to continue reading and see the 5 Best 52-Week Low Stocks to Buy According to Hedge Funds.
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