In this article, we will look at the 10 Best Low Cost Stocks to Buy According to Hedge Funds.
On June 1, Tom Lee, Fundstrat’s managing partner and head of research, appeared on CNBC Television to discuss the latest market trends. Lee told CNBC that while the market has been tough for investors, there are still very strong tailwinds for the American stock market. One of the tailwinds that Lee mentioned is the AI story, and the second, and most important, is America’s newly discovered energy independence. Lee noted that the US-Iran conflict has proved that the US can deal with high oil prices and can also cope with global oil crises without any alarming shortages.
While elaborating on the AI story, Lee noted that he sees further tailwinds stemming from AI, which is helping American businesses. He noted that these tailwinds led the first quarter S&P earnings $10 higher, translating to $40 higher a year, and when considered with a 20 multiple, it adds 800 points to the index. Lee highlighted that this is one of the key contributing factors that has led to the speedy recovery of stocks. However, Lee cautioned regarding some potential challenges between June and December 2026 and hence advises investors to be vigilant while remaining overall bullish on the market health.
With that, let’s take a look at the 10 Best Low Cost Stocks to Buy According to Hedge Funds.
Our Methodology
To curate the list of 10 Best Low Cost Stocks to Buy According to Hedge Funds, we used the Finviz Stock Screener, Seeking Alpha, and Insider Monkey’s Hedge Funds database. Using the screener, we aggregated a list of stocks trading below the forward price-to-earnings ratio of 15, using this as a measure of relatively low valuation. Next, we cross-checked the ratios from Seeking Alpha and ranked the stocks in descending order of the number of hedge fund holders. We have limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment.
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).
10 Best Low Cost Stocks to Buy According to Hedge Funds
10. Toyota Motor Corporation (NYSE:TM)
Forward P/E Ratio: 10.83
Number of Hedge Fund Holders: 20
Toyota Motor Corporation (NYSE:TM) is one of the Best Low Cost Stocks to Buy According to Hedge Funds. The Street is bullish on Toyota Motor Corporation (NYSE:TM) as 79% of the 19 analysts covering the stock have a Buy rating on the stock. Moreover, the average 12-month price target on the stock suggests more than 31% upside from the current level.
Recently, on May 27, Bernstein analyst Masahiro Akita maintained a Buy rating on the stock with a price target of Yen4,200. Earlier on May 14, Freedom Broker upgraded Toyota Motors to Buy from Hold and raised the price target from $221 to $230. Analyst Dmitriy Pozdnyakov from Freedom Broker acknowledged that Toyota provided weak guidance for fiscal year 2027. However, he noted this doesn’t tell the full story.
The analyst noted that despite the cautious near-term outlook, the company is showing signs of adapting to the current operating environment, which the analyst sees as a meaningful shift. The firm believes this adaptation could set the stage for a recovery in financial performance by fiscal year 2028, making the stock an attractive opportunity at current levels.
That said, according to a Reuters report published on May 28, Toyota Motor Corporation (NYSE:TM) reported a 3.1% drop in global vehicle sales for April, falling to 849,306 units. This marked the third consecutive month of declining sales. According to the report, the steepest regional declines came from the Middle East, reflecting a 33.7% drop, and China, where sales fell 25.4%. The sales in the US also dropped by 4.6%, which is the company’s largest market. Management attributed the decline in sales figures to difficult market conditions.
Toyota Motor Corporation (NYSE:TM) is a global leader in the automotive industry, designing, manufacturing, and selling a wide range of passenger cars, trucks, and commercial vehicles under the Toyota, Lexus, and Daihatsu brands.
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