On June 24, Paul Hickey, Bespoke Investment Group co-founder, joined ‘Squawk Box’ on CNBC to suggest that periods of widespread fear often present good buying opportunities. He recalls being on air in April when the market was down by about 20%, and despite numerous negative headlines suggesting a cataclysm, the market had already begun to recover. He emphasized that the worst news was already priced in at that point, and the market was starting to look past the bad news. He noted the significant recovery in the current market and addressed the question of whether the market will now trade sideways or give back some gains. He explained that historically, two-month rallies with a 20% gain have more often been the beginning of a rally rather than its end. He acknowledged a slight difference in the current situation, as the market is near 52-week lows, unlike some historical examples where similar rallies occurred while the market was closer to or at 52-week highs, yet continued to climb.

Citing these factors as the reason driving his sentiment, Hickey believes that there are more gains ahead for the second half of the year, particularly in an environment where inflation may not materialize as widely expected. This could potentially create a scenario where the Fed cuts rates for good reasons rather than bad ones. Hickey asserted, therefore, that the market could match old highs. He believes in listening to the signals that the market provides, regardless of how robust economic models might seem.

That being said, we’re here with a list of the 10 undervalued S&P 500 stocks to buy according to hedge funds.

Methodology

We first used the Finviz stock screener to compile a list of undervalued S&P 500 stocks that had a forward P/E ratio under 20. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q1 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 Undervalued S&P 500 Stocks to Buy According to Hedge Funds

10. Fiserv Inc. (NYSE:FI)

Forward P/E Ratio as of June 25: 16.67

Number of Hedge Fund Holders: 72

Fiserv Inc. (NYSE:FI) is one of the undervalued S&P 500 stocks to buy according to hedge funds. On June 24, Mastercard Incorporated (NYSE:MA) and Fiserv announced that the companies are expanding their partnership to integrate Fiserv’s new programmable and blockchain-based stablecoin, called FIUSD, into Mastercard’s global payment network.

The partnership will enable seamless on/off-ramping and allow consumers and businesses to easily transition between fiat currencies and FIUSD. Mastercard will also facilitate FIUSD as a settlement option for its global acquirers, which means that merchants can receive payments in FIUSD regardless of the original payment method used.

A key component of this integration involves the Mastercard Multi-Token Network/MTN. Fiserv’s Digital Asset Platform, which is powered by Finxact, will use MTN to support programmable on-chain commerce for banks. Furthermore, the collaboration will lead to the issuance of stablecoin-linked cards and enable FIUSD transactions at any of the over 150 million Mastercard-accepting locations worldwide.

Fiserv Inc. (NYSE:FI) provides payments and financial services technology solutions internationally. Mastercard Incorporated (NYSE:MA) is a technology company that provides transaction processing and other payment-related products and services.

9. HCA Healthcare Inc. (NYSE:HCA)

Forward P/E Ratio as of June 25: 14.9

Number of Hedge Fund Holders: 74

HCA Healthcare Inc. (NYSE:HCA) is one of the undervalued S&P 500 stocks to buy according to hedge funds. On June 26, HCA Healthcare announced that its HCA Healthcare Foundation, through its Healthier Tomorrow Fund, will provide a new $1 million grant to Educate Texas, which is an initiative of Communities Foundation of Texas. HCA Healthcare Foundation promotes health and well-being across all the communities HCA Healthcare serves

The latest donation expands upon a previous $1.35 million grant made by the Foundation to Educate Texas in 2022. The funding aims to increase student access to programs that prepare them for careers in healthcare, specifically focusing on high schools in Texas that offer Pathways in Technology Early College High School (P-TECH) healthcare career tracks. The initial 2022 grant supported the expansion of healthcare career pathways across P-TECH campuses, growing from 20 to 104 schools and enrolling ~10,000 high school students in these specialized programs.

The new $1 million grant will enable Educate Texas to further enhance the quality of program implementation. The initiative seeks to increase the number of students earning healthcare degrees and credentials and foster greater engagement of hospital employers, including HCA Healthcare-affiliated hospitals, with school districts in North Texas, Austin, San Antonio, and the Houston Gulf Coast region.

HCA Healthcare Inc. (NYSE:HCA) owns and operates hospitals and related healthcare entities in the US.