In this article, we will discuss the 10 Undervalued Stocks with High Upside Potential.
On June 19, Jonathan Lo, Portfolio Manager at Ninepoint Partners, appeared on BNN Bloomberg. As markets head into H2 of the year, Lo discussed the primary catalysts that shaped H1 and what investors can expect moving forward. H1 was defined by two seemingly opposing forces: the energy crisis and the boom in AI. While the energy crisis, which began at the end of February, has been a major factor, there is hope that the market is beginning to move past it. Simultaneously, the AI boom has significantly catalyzed earnings growth, and Lo believes that there is still substantial runway left for this trend.
The AI sector’s momentum is underpinned by massive CapEx from hyperscalers, who have committed ~$720 billion this year, an amount equivalent to ~2.5% of US GDP. This spending is benefiting a wide range of companies, including those in power, cooling, and semiconductor chip production, as well as memory and optical components. Beyond these specific sectors, the opportunity set is broadening into software infrastructure companies. Lo noted that as AI usage grows and more agentic AI is deployed, the creation of more software and code will continue to generate greater opportunities for this segment. The AI trade effectively captured investor attention during the period of conflict because it offered a sense of certainty; companies like Google showed their commitment to this infrastructure by raising equity specifically to increase spending, providing investors with a clear and reliable investment theme.
Our Methodology
We used screeners to identify stocks that are trading below a forward P/E of 15 and have an upside potential of at least 30%. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
Note: All data was sourced on June 29.
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. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10 Undervalued Stocks with High Upside Potential
10. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Average Upside Potential: 38.02%
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is one of the undervalued stocks with high upside potential. On June 11, Petrobras announced an agreement to acquire a 50% stake in the Itaimbezinho exploration block within Brazil’s Campos Basin from Equinor. Equinor will retain the remaining 50% interest and continue to serve as the operator of the block, while Pré-Sal Petróleo S.A. maintains management of the production-sharing contract. The deal is currently pending approval from Brazilian regulatory authorities.
This acquisition reflects Petrobras’ focus on supporting its exploration pipeline to offset production declines in mature fields. By partnering with Equinor (a major investor in Brazil’s upstream sector), Petrobras aims to leverage technical synergies and share capital requirements across adjacent assets. This collaboration builds upon the companies’ existing partnerships in other projects, including the Raia gas development.
The deal aligns with Petróleo Brasileiro S.A. – Petrobras’ (NYSE:PBR) 2026-2030 Business Plan, which prioritizes exploration and strategic joint ventures to access prospective resources. While much industry focus has been on Brazil’s pre-salt fields, this investment highlights the ongoing interest in the Campos Basin, where new technologies and geological models are being utilized to support long-term production growth.
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is involved in exploration, production, and distribution activities involving oil and gas. The company’s operations are divided into the following segments: Exploration and Production; Refining, Transportation, and Marketing; and Gas and Low Carbon Energies.
9. Fox Corporation (NASDAQ:FOX)
Average Upside Potential: 53.88%
Fox Corporation (NASDAQ:FOX) is one of the undervalued stocks with high upside potential. On June 15, Fox Corporation announced a definitive agreement to acquire Roku (NASDAQ:ROKU) in a cash-and-stock transaction valued at approximately $22 billion. The deal values Roku at $160 per share, uniting Fox’s portfolio of live sports, news, and the Tubi streaming service with Roku’s connected TV platform, which currently reaches over 100 million global households.
This merger creates a scaled media and technology entity positioned to capitalize on the shift toward streaming while maintaining the strength of live broadcast content. By combining their respective streaming assets, Tubi and The Roku Channel, the new organization will become one of the largest players in the US television market by share of viewing, operating across broadcast, cable, and streaming environments.
The companies have committed to maintaining Roku as an open, partner-friendly platform and ensuring broad distribution for Fox Corporation’s (NASDAQ:FOX) content. Fox expects the acquisition to enhance its monetization capabilities and reach, while assuring shareholders that its capital return program and investment-grade credit rating will remain uninterrupted throughout the integration.
Fox Corporation (NASDAQ:FOX) operates as a news, sports, and entertainment company in the United States across its Cable Network Programming, Television, Credible, and The FOX Studio Lot segments.
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