In this article, we will take a look at some of the undervalued wide moat stocks to buy now.
Having a trait that sets you apart from others, in a positive way, is a strength. This is particularly true in the case of stocks, and for that, we rely on wide moat stocks. These companies feature a sustainable competitive edge that protects profitability in the long term.
However, the real bargain is when these stocks are trading below their intrinsic value, offering safety with upside potential. Undervalued stocks, as the name suggests, are priced cheaper than what they’re really worth, so they create a buying opportunity for the committed investors.
The term “economic moat” was first coined by Warren Buffett. Later, the Morningstar Wide Moat Focus Index was initiated to identify companies that receive Morningstar Economic Moat Ratings of wide and whose stocks appear cheap in contrast to their valuations. In 2016, the Wide Moat Focus Index surpassed the Morningstar US Market Index benchmark by 10 percentage points.
Our Methodology
We have considered the wide moat stocks that were tracked by the Morningstar Wide Moat Focus Index for 2025. To examine the valuation, we first identified the forward price-to-earnings (P/E) of the stock using Yahoo Finance, and then compared it with the industry average using the Finviz screening tool. Our final selection was based on two metrics: positive upside potential and a lower forward P/E than the industry average. We have ranked these stocks in ascending order of hedge fund holdings, based on Insider Monkey’s database as of Q2 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. Salesforce, Inc. (NYSE:CRM)
Number of Hedge funds holding: 29
Unisphere Establishment lifted its holdings in the shares of Salesforce, Inc. (NYSE:CRM) by 23.6% during the first quarter, making the stock its 25th largest position. Following the purchase of 100,000 shares of the company’s stock, the fund management firm now owns 523,000 shares with a worth of $140,352,000, translating to an ownership of 0.05%
Although Salesforce, Inc. (NYSE:CRM) has underperformed the S&P 500 (^GSPC) by almost 14.38% in the last year, analysts remain positive about the company’s long-term rebound and GARP appeal. From robust fundamentals and surging EBIT margins to strong free cash flow and double-digit cRPO growth, the reasons to believe in the company’s future are many.
Like many smart companies embracing AI, Salesforce, Inc. (NYSE:CRM) is moving in the same direction. With Agentforce, Data Cloud, and other such AI platforms progressing rapidly, the company’s efforts towards new revenue streams, and thus future profitability, are further strengthened.
Salesforce, Inc. (NYSE:CRM), incorporated in 1999, is a provider of customer relationship management (CRM) technology that connects enterprises and customers. The core offerings of this California-based company include Agentforce, Data Cloud, Industries AI, Industries AI, and Slack.
9. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge funds holding: 31
On Tuesday, Thermo Fisher Scientific Inc. (NYSE:TMO) announced the completion of its Solventum Corporation’s purification and filtration business. This $4.0 billion transaction is aimed at expanding the company’s bioprocessing and adjacent market offerings.
While providing growth and synergy opportunities, this acquisition is anticipated to generate $750 million in revenue for 2025. Not only that, Thermo Fisher Scientific Inc. (NYSE:TMO) will see its product offerings enhanced and market position strengthened, all thanks to cutting-edge filtration technologies.
As Marc N. Casper, the CEO, states,
“The addition of innovative filtration technologies is highly complementary and expands our bioprocessing portfolio to better serve the end-to-end needs of our pharma and biotech customers in this rapidly growing market.”
We can expect Thermo Fisher Scientific Inc. (NYSE:TMO) to deliver meaningful returns in the years ahead. So far, capacity expansion and U.S. reshoring trends have positively influenced bioproduction demand, and with the clinical research market now rebounding, the company is well-positioned for long-term growth.
Thermo Fisher Scientific Inc. (NYSE:TMO) is a Massachusetts-based company operating through four segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, Laboratory Products, and Biopharma Services. Incorporated in 1956, the giant is committed to making the world a healthy, clean, and safe space.
8. Huntington Ingalls Industries, Inc. (NYSE:HII)
Number of Hedge funds holding: 36
Northwestern Mutual Wealth Management Co. increased its holdings in Huntington Ingalls Industries, Inc. (NYSE:HII) during the first quarter with the purchase of 1,296 shares. The firm now owns 3,785 shares of the company’s stock, valued at $772,000, as per the latest disclosure with the Securities and Exchange Commission (SEC).
As the U.S. pursues shipbuilding collaborations in Asia to enhance naval capacity, Huntington Ingalls Industries, Inc. (NYSE:HII) has appointed Eric Chewning as the executive vice president of maritime systems and corporate strategy. With solid experience in leading industrial base policy for the U.S. Department of Defense, Chewning is committed to securing national maritime supremacy by strengthening shipbuilding and fielding warfighting capabilities.
As stated by Chris Kastner, HII president and CEO,
“HII is firmly committed to increasing shipbuilding throughput for the U.S. Navy. We are doing that both by improving performance within our shipyards and expanding the industrial base.”
Huntington Ingalls Industries, Inc. (NYSE:HII) is a Virginia-based company that builds and repairs military ships. Incorporated in 1886, the company operates through three segments: Ingalls, Newport News, and Mission Technologies.
7. IDEX Corporation (NYSE:IEX)
Number of Hedge funds holding: 39
Metzler seel. Sohn & Co. AG boosted its position in IDEX Corporation (NYSE:IEX) by 69.2% with the purchase of 2,548 shares during the quarter. With holdings worth $1,127,000, the bank owns 6,228 shares of the company’s stock.
Two things the company is no stranger to are growth and value. With its diversified business model that produces niche yet crucial industrial components, IDEX Corporation (NYSE:IEX) remains a top-notch wide-moat industrial business, delivering growth and cash flow even amid today’s market volatility.
For a client to walk away from IDEX Corporation (NYSE:IEX), it takes more than a sudden change of mind. The substitution process would demand significant capital and time, which may not be entirely realistic, as IDEX offers what very few do. Additionally, the company has adopted an impressive M&A strategy that enables it to integrate skills and knowledge into its processes.
IDEX Corporation (NYSE:IEX) is an Illinois-based provider of applied solutions operating through three segments: Fluid & Metering Technologies (FMT), Health & Science Technologies (HST), and Fire & Safety/Diversified Products (FSDP). Incorporated in 1987, the company is committed to offering trusted solutions.
6. Zimmer Biomet Holdings, Inc. (NYSE:ZBH)
Number of Hedge funds holding: 40
As disclosed with the SEC, Comerica Bank has expanded its position in Zimmer Biomet Holdings, Inc. (NYSE:ZBH) by 36.3% during the first quarter. Following the purchase of 12,311 shares, the bank now owns 46,206 shares of the company’s stock, which is worth approximately $5,230,000.
What’s exciting about Zimmer Biomet Holdings, Inc. (NYSE:ZBH) is its strong business acceleration initiatives. Just recently, the company acquired Monogram Technologies in an attempt to enhance its total knee robotics technology. This autonomous technology would not only help the giant to compete more fiercely but also become a pioneer in offering fully automated total knee surgeries, if it successfully achieves autonomous robotics by 2027-28.
Earlier in April, Zimmer Biomet Holdings, Inc. (NYSE:ZBH) announced the completion of its Paragon 28 acquisition, valued at $1.2 billion. This strategy enabled the company to position itself in the foot and ankle orthopedic market, which is anticipated to capture a market of $5 billion.
Zimmer Biomet Holdings, Inc. (NYSE:ZBH), based in Warsaw, Indiana, is a medical technology company that was incorporated in 1927. With a mission to improve the quality of life, the company provides orthopedic reconstructive products, S.E.T. products, craniomaxillofacial and thoracic products, and bone cement.
5. International Flavors & Fragrances Inc. (NYSE:IFF)
Number of Hedge funds holding: 45
According to the latest Form 13F filing with the SEC, FORA Capital LLC has raised its stake in International Flavors & Fragrances Inc. (NYSE:IFF) by 526.4% in the first quarter. With the purchase of 18,445 shares, the firm now owns 21,949 shares of the company’s stock, which is worth $1,703,000.
Although International Flavors & Fragrances Inc. (NYSE:IFF) faces consistent balance sheet issues, the company’s core business is quite strong, given the improving operational metrics. The management views 2025 as the transition year, with meaningful results expected by 2026, a year that could be the real game-changer.
Management remains focused on strengthening commercial and R&D pipelines in addition to expanding profit margins. As stated by Jon Erik Fyrwald, the CEO and Director,
“We are clear on our strategy, are getting stronger at commercial innovation, production, and productivity execution, and we’ll get through this as we build strength for 2026 and beyond.”
International Flavors & Fragrances Inc. (NYSE:IFF), headquartered in New York, is a manufacturer and marketer of food and beverage, scent, pharma solutions, and complementary adjacent products. Incorporated in 1909, the company operates through four segments: Nourish, Health & Biosciences, Scent, and Pharma Solutions.
4. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge funds holding: 67
Flputnam Investment Management Co. has raised its position in Bristol-Myers Squibb Company (NYSE:BMY) by 52.4% in the first quarter, according to the recent disclosure with the Securities and Exchange Commission (SEC). After acquiring 76,321 shares, the financial services firm now owns 222,079 shares of the company’s stock, valued at $13,545,000.
From an attractive 5.23% forward annual dividend yield to strong cash flow, Bristol-Myers Squibb Company (NYSE:BMY) offers what few companies do. By now, everyone is aware of how remarkably the company’s recent Q2 results surpassed expectations. Building on this, management highlighted its focus on growth initiatives, particularly new collaborations and a licensing deal with Bain Capital.
While earnings are expected to decline in the days ahead, the prospects for real growth are what draw the investors to Bristol-Myers Squibb Company (NYSE:BMY). The company is powering AI to accelerate drug discovery, improve clinical trials, and enhance cost-efficiency, the impact of which is certainly not priced into the stock.
Bristol-Myers Squibb Company (NYSE:BMY) is a New Jersey-based company that provides biopharmaceutical products globally. Founded in 1887, the company is committed to developing innovative solutions for deadly diseases.
3. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge funds holding: 76
As disclosed in the latest Form 13F filing with the SEC, Canada Pension Plan Investment Board has increased its stake in Workday, Inc. (NASDAQ:WDAY) by 83.9% in the first quarter. Following the acquisition of 76,004 shares, the firm now owns 0.06% of Workday, translating to 166,636 shares worth $38,915,000.
Many analysts believe Workday, Inc. (NASDAQ:WDAY) is all in on AI, and that’s what makes it so interesting. This stance is backed by the management’s emphasis on developing several AI agents, particularly in the human resources team area. Back in June, the company launched its AI agents that extract numbers and create lists, and in August, the acquisitions of Flowise and AI startup Paradox, Inc. were completed.
So far, Workday, Inc. (NASDAQ:WDAY) seems appealing to the patient investors who have faith in the company’s sticky platform, robust retention, and AI-powered initiatives. As expressed by Carl Eschenbach, the CEO of Workday,
“Customers are choosing Workday because we help them unlock value today and prepare for what’s next.”
Workday, Inc. (NASDAQ:WDAY) is a California-based provider of enterprise cloud applications. From government institutions and the healthcare industry to the education sector and financial services, the company serves a wide clientele.
2. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge funds holding: 81
According to the recent disclosure with the SEC, First Manhattan CO. LLC. has lifted its stake in Applied Materials, Inc. (NASDAQ:AMAT) by 7.8%. After the acquisition of 224,743 shares, the wealth management firm owns 0.38% of the company, translating to an investment of $448,221,000.
Applied Materials, Inc. (NASDAQ:AMAT) is believed to benefit from the rising demand for advanced chips and DRAM, and NAND memory structures. With the company’s impressive precision in detecting defects at the nanoscale, thanks to its Sym3 Magnum etch system and eBeam technologies, gaining a competitive edge is within reach as it expands into WFE and foundry.
While being a supplier to leading chipmakers building complex 3D systems and AI infrastructure, Applied Materials, Inc. (NASDAQ:AMAT) is definitely on the right track to sustain long-term growth. Thus, we can safely conclude that the company is in great shape, given the growth drivers AI, advanced manufacturing, and electrification.
Applied Materials, Inc. (NASDAQ:AMAT), based in California, is a provider of manufacturing equipment, services, and software to industries such as semiconductor and display. With three segments: Semiconductor Systems, Applied Global Services, and Display, the company is dedicated to creating the world’s best chips and advanced displays.
1. Pfizer Inc. (NYSE:PFE)
Number of Hedge funds holding: 83
Olema Pharmaceuticals has announced its collaboration and supply agreement with Pfizer Inc. (NYSE: PFE) in the treatment of metastatic breast cancer. Under the clinical trial partnership, both companies will examine the palazestrant-atirmociclib combination in approximately 35 patients, anticipated to begin in H2 2025.
With Olema leading the study, Pfizer Inc. (NYSE:PFE) will serve as the supplier of atirmociclib for use in the Phase 1b/2. As stated by Sean P. Bohen, the President and Chief Executive Officer of Olema Oncology,
“We are excited to assess this combination in the clinic as we seek to establish palazestrant as a potential backbone endocrine therapy for metastatic breast cancer.”
Known to everyone since the COVID days, Pfizer Inc. (NYSE:PFE) has demonstrated a performance that is nothing short of excellence. From richer profit margins and expanding cash flows to an overall improved balance sheet, the company has showcased financial resilience. With that being said, new acquisitions and partnerships are just the cherry on top, supporting the giant’s 2030 growth outlook.
Pfizer Inc. (NYSE:PFE) is a New York-based biopharmaceutical company that develops and sells medicines and vaccines in several therapeutic areas. Founded in 1849, the company is committed to breakthroughs that transform people’s lives.
While we acknowledge the potential of PFE 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 PFE and that has 100x upside potential, check out our report about this cheapest AI stock.
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