In this article, we will look at the 10 Cheapest High Quality Stocks to Buy According to Hedge Funds.
On June 4, Jurrien Timmer, director of Global Macro for Fidelity Management & Research Company released his commentary on the stock market outlook. He highlighted the recent calmness in the market to be a good omen for future predictions. Timmer sees some upside combined with limited downside for the next 6 to 12 months.
The upside might be capped due to valuations, noted Timmer. He elaborated that the forward price-earnings ratio of the S&P 500 is near a cycle high of 21 after rebounding from April lows. Moreover, the earnings growth estimates for 2025 have been revised down from 12% to 7%, thereby indicating a moderation but not a severe downturn. This implies that the market is not priced for a negative outcome, which limits further upside potential because expectations are already relatively optimistic. Timmer further highlighted, that earnings growth is expected to stabilize in the mid-single digits, which supports a moderate outlook for corporate profits.
However, there is some downside to the outlook arising from certain risks and challenges, including renewed hawkish tariff rhetoric that could impact stocks and the US dollar. In addition, bond yields are under upward pressure due to a rising term premium, which is the extra yield investors demand for lending over longer periods. This shift from a decade of near-zero or negative term premiums could continue to push yields higher, thereby pressuring stock P/E ratios through the Fed model. Timmer noted that investors should expect a trading range with limited upside and downside, influenced by earnings growth, interest rates, and risk premiums.
With that let’s take a look at the 10 cheapest high-quality stocks to buy according to hedge funds.
A financial analyst on a business call, studying a portfolio of stocks.
Our Methodology
To compile the list of the 10 cheapest high-quality stocks to buy according to hedge funds, we used iShares MSCI USA Quality Factor ETF and Invesco S&P 500 Quality ETF. Using the ETFs, we aggregated a list of high-quality stocks trading below the Forward P/E of the S&P 500, which is 23.37, as per the Wall Street Journal. Next, we ranked these stocks in ascending order of the number of hedge fund holders, sourced from Insider Monkey’s Q1 2025 database. Please note that the data was recorded on June 12, 2025.
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).
10 Cheapest High-Quality Stocks to Buy According to Hedge Funds
10. F5, Inc. (NASDAQ:FFIV)
Forward P/E Ratio: 20.14
Number of Hedge Fund Holders: 36
F5, Inc. (NASDAQ:FFIV) is one of the 10 Cheapest High-Quality Stocks to Buy According to Hedge Funds. On June 11, F5, Inc. (NASDAQ:FFIV) announced new capabilities for F5 BIG-IP Next for Kubernetes in collaboration with NVIDIA Corporation (NASDAQ:NVDA). The F5 BIG-IP Next for Kubernetes will be accelerated with NVIDIA’s BlueField-3 DPUs and the NVIDIA DOCA software framework.
This collaboration centers on enhancing AI-first application delivery running natively on NVIDIA BlueField-3 DPUs. F5, Inc. (NASDAQ:FFIV) highlighted that the collaboration was validated by Sesterce customer validation and deployment. Sesterce is a European company known for its next-generation infrastructures and sovereign AI.
The deployment by Sesterce highlighted enhanced performance, multi-tenancy, and security, with an initial 20% improvement in GPU utilization. Moreover, the integration with NVIDIA Dynamo and KV Cache Manager helped reduce latency and optimize GPU resources for the large language model interface.
Integration between F5 and NVIDIA was enticing even before we conducted any tests, said Youssef El Manssouri, CEO and Co-Founder at Sesterce. Our results underline the benefits of F5’s dynamic load balancing with high-volume Kubernetes ingress and egress in AI environments, added the CEO.
F5, Inc. (NASDAQ:FFIV) is a technology company that provides solutions to secure, deliver, and optimize applications and APIs across any environment. Its key offerings include BIG-IP, F5 NGINX, and F5 Distributed Cloud Services. They help organizations ensure fast operating and secure applications.
9. Sempra (NYSE:SRE)
Forward P/E Ratio: 16.7
Number of Hedge Fund Holders: 48
Sempra (NYSE:SRE) is one of the 10 Cheapest High-Quality Stocks to Buy According to Hedge Funds. On June 11, Sempra (NYSE:SRE) announced signing a non-binding heads of agreement with JERA Co. Inc. JERA Co. Inc. is one of the largest power generation companies in Japan.
The agreement covers a 20-year sale and purchase of 1.5 million tonnes per annum of liquefied natural gas from the Port Arthur LNG development project in Jefferson County, Texas. The Port Arthur LNG Phase 2 is an expansion of the existing Port Arthur LNG facility. Management of Sempra (NYSE:SRE) noted that the Phase 2 project has received all key permits and is expected to include two liquefaction trains capable of producing about 13 Mtpa of LNG. Moreover, the project is competitively positioned and is under active marketing, further enhancing its prospects.
We are pleased to collaborate with JERA, Japan’s largest power generation company and one of the world’s largest LNG buyers, as they continue to work with the United States, said Justin Bird, chief executive officer of Sempra Infrastructure.
Sempra (NYSE:SRE) is a leading North American energy infrastructure company that invests in, develops, and operates energy infrastructure and provides electric and natural gas services. Its operations are organized into three main segments including Sempra California, Sempra Texas Utilities, and Sempra Infrastructure.