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.
9. TotalEnergies SE (NYSE:TTE)
Forward P/E Ratio: 7.63
Number of Hedge Fund Holders: 30
TotalEnergies SE (NYSE:TTE) is one of the Best Low Cost Stocks to Buy According to Hedge Funds. On May 28, TotalEnergies SE (NYSE:TTE) reported that the company has officially filed for authorization to build a 1.5 GW offshore wind farm off the coast of Normandy, France. This update comes eight months after the French State awarded the project to the company’s subsidiary, Centre Manche Énergies.
Management noted that the filing includes technical and environmental surveys, a preliminary design, and an installation program. Moreover, management also highlighted that the environmental impact assessment was shaped by stakeholder consultations and ongoing discussions with government departments. As a result of this submission, the project has now entered a formal review phase, where authorities will examine the submitted dossier.
The company highlighted that once operational, the wind farm is expected to generate around 6 TWh of electricity annually, enough to power over one million French homes. The project is located almost 40 km offshore and is recognized as one of the largest renewables projects ever built in France. Lastly, management noted that the total investment for the project is around €4.5 billion and is expected to employ up to 2,500 workers during the three-year construction phase.
TotalEnergies SE (NYSE:TTE) is a global multi-energy company that produces and markets oil, biofuels, natural gas, renewables, and electricity.
8. Shell plc (NYSE:SHEL)
Forward P/E Ratio: 7.87
Number of Hedge Fund Holders: 45
Shell plc (NYSE:SHEL) is one of the Best Low Cost Stocks to Buy According to Hedge Funds. On May 27, Piper Sandler released a note for its clients mentioning that it expects the Strait of Hormuz to remain closed for several more months. The Strait of Hormuz is a critical pathway through which roughly 20% of the world’s crude oil shipments pass.
Piper Sandler has very little confidence that commercial traffic through the Strait will recover to half of pre-war levels within the next month. This outlook comes despite President Trump’s repeated claims that a peace deal with Iran is close. As a result, the firm expects oil shortages to intensify and crude prices to hit new highs this summer. West Texas Intermediate crude already reached $120 a barrel when the Iran conflict began.
The firm has a Buy rating on Shell plc (NYSE:SHEL) with a price target of $106, while the stock currently trades at around $84. Piper Sandler believes prices could climb beyond $120 a barrel in the coming months. Moreover, the firm’s energy and macroeconomics teams warned that the situation in the Middle East remains far from resolved.
Shell plc (NYSE:SHEL) has benefited from higher global energy prices. During the recently reported first quarter 2026 earnings, the company posted the highest quarterly adjusted earnings in two years of $6.92 billion, ahead of the expectations of $6.36 billion.
Shell PLC (NYSE:SHEL) is a global integrated energy company that operates across the entire oil and gas value chain, from finding and extracting crude oil to refining it into everyday products and distributing them to consumers.
7. Verizon Communications Inc. (NYSE:VZ)
Forward P/E Ratio: 9.62
Number of Hedge Fund Holders: 75
Verizon Communications Inc. (NYSE:VZ) is one of the Best Low Cost Stocks to Buy According to Hedge Funds. On May 21, Verizon Communications Inc. (NYSE:VZ) announced results from the annual 2026 shareholder meeting, which was held in a virtual format.
The company reported that during the meeting, shareholders elected all nine director nominees for a tenure of 1 year. Moreover, three management proposals were also approved, including endorsing executive compensation packages, approving the company’s 2026 long-term incentive plan, and ratifying Ernst & Young as Verizon’s independent auditor.
In addition, two shareholder-led proposals were also put to a vote but were rejected. The first proposal called for a report on the board’s oversight of climate-related issues, while the second sought to establish a mandatory policy requiring an independent board chairperson.
Verizon Communications Inc. (NYSE:VZ) raised its full-year profit forecast after a surprisingly strong first quarter. During the quarter, the company added 55,000 monthly bill-paying wireless subscribers. This was remarkable as it marked the first net gain for a March quarter in over a decade, and analysts were expecting a loss of more than 81,000 subscribers, making the result a significant beat.
According to a Reuters report, the turnaround was driven by aggressive bundled offers and deals that targeted customers of rivals like AT&T and T-Mobile. The company now expects full-year adjusted profit between $4.95 and $4.99 per share, up from its prior range. The company also anticipates postpaid phone net additions to land in the upper half of its 750,000 to one million forecast.
Verizon Communications Inc. (NYSE:VZ) provides communications, information, and entertainment services and products.
6. Wells Fargo & Company (NYSE:WFC)
Forward P/E Ratio: 11.07
Number of Hedge Fund Holders: 82
Wells Fargo & Company (NYSE:WFC) is one of the Best Low Cost Stocks to Buy According to Hedge Funds. The Street is bullish on Wells Fargo & Company (NYSE:WFC) as 69% of the 26 analysts covering the stock have a Buy rating. The average 12-month price target on the stock suggests more than 24.45% upside from the current level.
On May 27, Reuters reported that the company’s CEO, Charlie Scharf, offered a strong outlook at the Bernstein Conference. The CEO forecasts mid-teen percentage growth in investment banking and trading revenue for the second quarter, along with low double-digit revenue growth in the bank’s wealth management division. Scharf noted that client activity across investment banking and markets remained strong in the first quarter. This presents opportunities to deepen relationships by deploying more of the bank’s balance sheet.
The positive outlook follows strong first-quarter results, where investment banking revenue rose 12.7%, and market revenue jumped 19%. The report by Reuters noted that a key tailwind for Wells Fargo is the recent removal of its asset cap by regulators. This lifts years of restrictions and allows the bank to expand more aggressively in deposits and lending.
Wells Fargo & Company (NYSE:WFC) is a leading multinational financial services institution founded in 1852 and headquartered in San Francisco, California. The company provides banking, investment, mortgage, treasury, and consumer/commercial finance services, while serving large corporate and institutional clients in more than 35 countries.
While we acknowledge the potential of WFC 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 WFC and that has 100x upside potential, check out our report about the cheapest AI stock.
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