In this article, we will look at the 10 Most Undervalued Blue Chip Stocks to Buy According to Hedge Funds.
On July 24, Emily Roland, Manulife John Hancock Investments co-chief investment strategist, appeared on CNBC’s ‘Power Lunch’ to talk about why it is now time to make profits from equity investments, where to invest money, and more.
She stated that the market right now is finding opportunities where there is an intersection of solid technical trends. According to her, momentum has by far been the best-performing factor this year. However, it is essential to combine that with quality, which entails looking for stocks that have a great return on equity, good free cash flows, and the ability to maintain margins in times of pressure.
READ ALSO: 11 Most Oversold Energy Stocks To Buy Right Now and 10 Most Profitable Biotech Stocks to Invest in Now.
That is thus leading her to be overweight in sectors like tech, communication services, healthcare, and utilities. Roland further stated that markets are at an all-time high, and this is an opportune time to take profits in the riskier corners of the market. It is therefore prudent to redeploy assets into high-quality stocks that can ward off margin pressure.
With these market trends in view, let’s look at the most undervalued blue chip stocks to buy according to hedge funds.
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Our Methodology
We reviewed financial media reports and ETFs to compile an initial list of blue chip stocks with a forward P/E below 15 and selected the top 10 stocks with the highest number of hedge fund holders as of Q1 2025, sourcing the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of number of hedge fund holders.
Note: All data was recorded on July 28.
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 Most Undervalued Blue Chip Stocks to Buy According to Hedge Funds
10. Amgen Inc. (NASDAQ:AMGN)
Forward P/E: 14.69
Number of Hedge Fund Holders: 69
Amgen Inc. (NASDAQ:AMGN) is one of the most undervalued blue chip stocks to buy according to hedge funds. On July 21, UBS analyst Trung Huynh raised the firm’s price target on Amgen Inc. (NASDAQ:AMGN) to $326 from $315 while keeping a Neutral rating on the shares.
The firm told investors in a research note that it expects Amgen Inc. (NASDAQ:AMGN) to deliver a small beat in its Q2 results after two consecutive solid quarterly beats. However, it also continues to believe that the rare disease products may be bumpy.
Amgen Inc. (NASDAQ:AMGN) is a biotechnology company that discovers, develops, manufactures, and markets human therapeutics. It delivers new therapies for patients with complex cancers, especially in areas with significant unmet needs.
9. QUALCOMM Incorporated (NASDAQ:QCOM)
Forward P/E: 13.45
Number of Hedge Fund Holders: 82
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the most undervalued blue chip stocks to buy according to hedge funds. On July 21, UBS raised the firm’s price target on QUALCOMM Incorporated (NASDAQ:QCOM) to $165 from $145, keeping a Neutral rating on the shares.
The firm told investors in a research note that it expects a modest upside bias to the company’s Q3 results in a backdrop showing solid signs of tariff-related pull-ins for Android and Apple units in the quarter.
However, it also added that it does not expect this momentum to be sustained into the second half of the year as pull-ins usually wane, primarily because the end consumption for smartphones and PC has failed to get any better.
QUALCOMM Incorporated (NASDAQ:QCOM) develops and commercializes foundational technologies for the wireless industry, including 3G, 4G, and 5G wireless connectivity and high-performance and low-power computing, including on-device AI.
8. AT&T Inc. (NYSE:T)
Forward P/E: 13.61
Number of Hedge Fund Holders: 87
AT&T Inc. (NYSE:T) is one of the most undervalued blue chip stocks to buy according to hedge funds. In a report released on July 24, Frank Louthan from Raymond James maintained a Buy rating on AT&T Inc. (NYSE:T) with a price target of $31.00.
The rating came after AT&T Inc. (NYSE:T) reported its fiscal Q2 2025 results on July 23, with total revenues and adjusted EBITDA both growing 3.5% year-over-year at a consolidated level.
Adjusted EPS for the quarter reached $0.54, up approximately 6% from $0.51 in the prior year. Free cash flow also rose from $4 billion in the prior year to $4.4 billion in Q2 2025.
AT&T Inc. (NYSE:T) expects Q3 2025 capital investment to be in the $5 billion to $5.5 billion range, with free cash flow in the $4.5 billion to $5 billion range.
AT&T Inc. (NYSE:T) provides telecommunications and technology services and operates through the Communications and Latin America segments. Its Communications segment offers wireline telecom, wireless, and broadband services in the US and globally, while the Latin America segment manages services in Mexico.
7. Wells Fargo & Company (NYSE:WFC)
Forward P/E: 14.34
Number of Hedge Fund Holders: 88
Wells Fargo & Company (NYSE:WFC) is one of the most undervalued blue chip stocks to buy according to hedge funds. On July 17, Phillip Securities analyst Glenn Thum downgraded Wells Fargo & Company (NYSE:WFC) to Accumulate from Buy, increasing the price target to $85 from $75.
The rating came after Wells Fargo & Company (NYSE:WFC) reported its Q2 earnings. The firm slashed its provisions estimates, stating that the company is likely to face headwinds from macroeconomic factors. It further told investors in a research note that these factors would negatively affect the bank’s non-interest income growth.
Wells Fargo & Company (NYSE:WFC) is a diversified and community-based financial services company that provides insurance, banking, mortgage, investments, and commercial and consumer finance products and services.
Its operations are divided into the following segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management.
6. Merck & Co., Inc. (NYSE:MRK)
Forward P/E: 9.55
Number of Hedge Fund Holders: 93
Merck & Co., Inc. (NYSE:MRK) is one of the most undervalued blue chip stocks to buy according to hedge funds. On July 21, Oppenheimer analyst Ken Wong noted that Outperform-rated Veeva announced that Merck & Co., Inc. (NYSE:MRK) has committed to Vault CRM. The announcement marks Veeva’s sixth enterprise pharma Vault CRM commitment.
The firm stated that the company is gaining momentum leading up to the September GA of Salesforce’s Life Sciences Cloud for Customer Engagement.
It also considers the announcement to be incrementally positive, but also stated that the commitment to Merck was broadly expected because of the long-term strategic partnership between the two companies.
Oppenheimer added that Merck is the largest pharma company in the world by revenue, and a strong endorsement for Vault CRM.
Merck & Co., Inc. (NYSE:MRK) is a biopharmaceutical company that delivers health solutions to advance the treatment and prevention of diseases in animals and people.
Its Pharmaceutical segment offers vaccines and human health pharmaceutical products, typically therapeutic and preventive agents. Its Animal Health segment develops, discovers, manufactures, and markets a range of vaccines and veterinary pharmaceutical products.
5. Citigroup Inc. (NYSE:C)
Forward P/E: 12.6
Number of Hedge Fund Holders: 96
Citigroup Inc. (NYSE:C) is one of the most undervalued blue chip stocks to buy according to hedge funds. On July 23, Wells Fargo analyst Mike Mayo reiterated a Buy rating on Citigroup Inc. (NYSE:C) and set a price target of $115.00.
Citigroup Inc. (NYSE:C) reported its Q2 2025 earnings on July 15, with net income for the quarter reaching $4.0 billion, or $1.96 per diluted share, on revenues of $21.7 billion.
Revenues rose 8% from the prior-year period, on a reported basis, attributed to growth in each of Citi’s five interconnected businesses. Revenues grew 9% excluding divestiture-related impacts in both periods.
Headquartered in New York, Citigroup Inc. (NYSE:C) provides financial products and services. Its operations are divided into the following segments: Services, Markets, Banking, Wealth, US Personal Banking (USPB), and All Other.
4. Pfizer Inc. (NYSE:PFE)
Forward P/E: 8.24
Number of Hedge Fund Holders: 99
Pfizer Inc. (NYSE:PFE) is one of the most undervalued blue chip stocks to buy according to hedge funds. Analyst Tim Anderson from Bank of America Securities maintained a Hold rating on Pfizer Inc. (NYSE:PFE) on July 25, setting a $27.00 price target.
The analyst based the rating on Pfizer Inc.’s (NYSE:PFE) future outlook and current market position. It reasoned that Pfizer Inc. (NYSE:PFE) is entering into a competitive avenue with its PD1-VEGF bispecific antibody, SSGJ-707, primarily because it faces competition from other major pharmaceutical companies.
The analyst reasoned that while Pfizer Inc. (NYSE:PFE) expressed confidence that its drug would hold differentiation in the market, the outcomes of the clinical trials are uncertain, and the crowded market dynamics warrant a cautious stance.
Anderson also stated concerns about Pfizer Inc.’s (NYSE:PFE) long-term growth prospects due to competitive pressures from other pharmaceutical companies and the upcoming patent expirations.
Pfizer Inc. (NYSE:PFE) is a global biopharmaceutical company that manufactures, develops, markets, and sells biopharmaceutical products worldwide. It advances wellness, prevention, treatment, and cures in developing and emerging markets.
3. Bank of America Corporation (NYSE:BAC)
Forward P/E: 13.22
Number of Hedge Fund Holders: 117
Bank of America Corporation (NYSE:BAC) is one of the most undervalued blue chip stocks to buy according to hedge funds. Phillip Securities downgraded Bank of America Corporation (NYSE:BAC) to Accumulate from Buy on July 25, raising the price target to $50 from $45.
The firm told investors that Bank of America Corporation’s (NYSE:BAC) valuation after the recent share rally was the primary reason behind the downgrade. It anticipates the bank’s investment fees and net interest income to support earnings.
Bank of America Corporation (NYSE:BAC) is a bank and financial holding company that operates in the Consumer Banking, Global Wealth and Investment Management (GWIM), Global Banking, and Global Markets segments.
2. Alibaba Group Holding Limited (NYSE:BABA)
Forward P/E: 13.73
Number of Hedge Fund Holders: 125
Alibaba Group Holding Limited (NYSE:BABA) is one of the most undervalued blue chip stocks to buy according to hedge funds. On July 21, Bernstein analyst Robin Zhu maintained a Buy rating on Alibaba Group Holding Limited (NYSE:BABA) with a price target of HK$141.00.
Alibaba Group Holding Limited (NYSE:BABA) reported notable results for the March quarter 2025, with revenue undergoing a 7% year-over-year increase to RMB 236,454 million ($32,584 million).
Income from operations also underwent a significant 93% year-over-year increase to RMB28,465 million ($3,923 million). Management attributed this growth to a drop in non-cash share-based compensation expenses and an increase in adjusted EBITA.
Alibaba Group Holding Limited (NYSE:BABA) manages and provides technology infrastructure and marketing platforms. It operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others segments.
1. UnitedHealth Group Incorporated (NYSE:UNH)
Forward P/E: 13.38
Number of Hedge Fund Holders: 139
UnitedHealth Group Incorporated (NYSE:UNH) is one of the most undervalued blue chip stocks to buy according to hedge funds. J.P. Morgan analyst Lisa Gill assigned an Overweight rating to UnitedHealth Group Incorporated (NYSE:UNH) with a $418 price target, suggesting that the company could rebound by 48% in the coming 12 months.
She stated that the company’s shift from “unaware” in February to “proactively cooperating” with the Department of Justice isn’t surprising, as she views the company’s engagement as part of a broader defense of its practices. The analyst expressed an optimistic outlook for UnitedHealth Group Incorporated (NYSE:UNH), noting:
“While we are not lawyers, we note that if the court were to view this case similarly to previous ones brought forth by the DOJ regarding the False Claims Act (FCA), we believe that this would place the burden of proof on the DOJ to prove improper coding.”
UnitedHealth Group Incorporated (NYSE:UNH) provides healthcare coverage, data consultancy, and software services. It operates through the OptumRx, OptumInsight, OptumHealth, and UnitedHealthCare segments, which have solid operations.
While we acknowledge the potential of UNH 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 UNH and that has 100x upside potential, check out our report about this cheapest AI stock.
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