In this article, we explore the 11 Best Very Cheap Stocks to Buy According to Hedge Funds.
US equity markets are hovering near record highs, with valuations stretched well above long-term norms. As of August 22, 2025, the S&P 500 closed at 6,467, marking a 28% rebound from its April low. The Dow Jones Industrial Average climbed past 45,700 for the first time, while the Nasdaq Composite ended at a record 21,713. Experts warn that this surge is fueled by exuberant pricing: the S&P 500’s forward P/E ratio recently touched 23.11, a five-month high, while Bank of America notes that its (S&P 500’s) price-to-book ratio has risen to 5.3, surpassing the 2000 dot-com bubble peak of 5.1.
Hedge funds have already swung into action, scaling back exposure to overvalued names in sectors such as tech and rotating into defensives. Still, some on Wall Street believe opportunities are there. In Goldman Sachs’ July 31, 2025, episode of The Markets, Anshul Sehgal, Global Co-Head of Fixed Income, Currency and Commodities, argued that “stocks are still very undervalued.” Sehgal pointed to “blockbuster” earnings and accelerating AI-driven capital spending as key supports.
This clash of signals sets the stage for hedge funds to fish for bargains. In this article, we surface 11 of the most undervalued US-listed stocks that hedge funds continue to favor.
Our Methodology
We used the Finviz stock screener to identify US-listed stocks with a forward P/E ratio under 15, as of August 27, 2025. Based on the results, we selected the 11 stocks that were the most widely held by elite hedge funds. Hedge fund sentiment was measured using Q2 2025 13F filings data from Insider Monkey’s database, which tracks the portfolios of more than 900 hedge funds. The final list is ranked in ascending order based on the number of hedge funds that reported stakes in each stock.
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).
Best Very Cheap Stocks to Buy According to Hedge Funds
11. Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA)
Number of Hedge Fund Holders: 10
Forward P/E Ratio: 9.25
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) is one of the best very cheap stocks to buy according to hedge funds. On August 22, the company’s Colombian branch granted a long-term credit facility to Grupo Energía Bogotá (GEB) for 500 billion Colombian pesos (COP) (about $125.2 million). The loan will finance key GEB projects, including large-scale energy transmission initiatives like “Chivor II Norte 230 kilovoltios,” “Sogamoso,” and “Colectora y segundo circuito.”
This transaction consolidates the bank’s role as a key financial partner in the development of infrastructure projects that contribute to the country’s energy transformation and progress. In 2023, BBVA Colombia granted 3.8 billion COP in sustainable lending. A total of 1.4 billion COP was allocated to climate action pursuits, and 873 billion COP went to government entities. BBVA Colombia and the International Finance Corporation (IFC) issued a “biodiversity bond” in 2024 to finance projects that address biodiversity loss. The bank also partnered with energy firm Isagen to convert long-term finance of 368 billion COP to sustainable loans linked to compliance with an environmental indicator.
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) is a global financial services company. It provides retail banking, corporate banking, wealth management, and asset management services across Europe, Latin America, and the United States.
10. Toyota Motor Corporation (NYSE:TM)
Number of Hedge Fund Holders: 18
Forward P/E Ratio: 12.84
Toyota Motor Corporation (NYSE:TM) is one of the best very cheap stocks to buy according to hedge funds. On August 21, Toyota and Mazda Motor Corporation began field tests of an energy storage system that uses batteries from electrified vehicles. The companies jointly launched the field tests at Mazda’s Hiroshima Plant in Japan.
The test centers on Toyota’s Sweep Energy Storage System. This system integrates batteries from electrified vehicles, even those with varying capacities or degrees of degradation, to regulate electricity supply and demand.
This feature enables the system to utilize a range of battery types, chemistries, and states of health simultaneously without requiring new, expensive control units. The system can also reuse the original inverters from the donor vehicles.
Toyota Motor Corporation (NYSE:TM) is a Japanese multinational automotive manufacturer. It designs, manufactures, and sells passenger cars, trucks, buses, and hybrid and electric vehicles under the brands Toyota, Lexus, Daihatsu, and Hino. The company operates a global production and distribution network, maintaining a strong market share across Asia, Europe, and North America.
9. Equinor ASA (NYSE:EQNR)
Number of Hedge Fund Holders: 19
Forward P/E Ratio: 8.01
Equinor ASA (NYSE:EQNR) is one of the best very cheap stocks to buy according to hedge funds. On August 25, the company awarded SLB OneSubsea an engineering, procurement, and construction (EPC) contract for a major subsea production system in the Fram Sør field, located in offshore Norway. The decision follows a year-long joint engineering phase that culminated in its development plan and final investment decision (FID).
The project includes the delivery of four subsea templates and 12 all-electric subsea trees. The all-electric system is expected to minimize topside modifications, reduce complexity, and free up space on the host platform, Troll C. This makes the project more cost-effective and allows for potential future expansion. The Fram Sør field will be tied back to the existing Troll C platform, which is powered from the Norwegian mainland.
The project is a one-of-a-kind initiative in the history of the energy industry. However, commencement will wait for regulatory approval of the Plan for Development and Operations (PDO), which has been submitted to the authorities.
Equinor ASA (NYSE:EQNR) is an integrated energy company headquartered in Norway. It engages in the exploration, production, transportation, refining, and marketing of oil and natural gas. The company operates across more than 30 countries and is a major supplier of natural gas to Europe.
8. NatWest Group PLC (NYSE:NWG)
Number of Hedge Fund Holders: 21
Forward P/E Ratio: 9.43
NatWest Group PLC (NYSE:NWG) is one of the best very cheap stocks to buy according to hedge funds. On August 22, the company joined a syndicate of financial institutions to provide funding for the Haweswater Aqueduct Resilience Program (HARP). HARP is a major water infrastructure project in the United Kingdom. It involves the refurbishment of the Haweswater Aqueduct. This aqueduct, originally built in the 1950s, requires essential upgrades and tunnel replacements.
NatWest now becomes a member of the debt financing syndicate, where it will act as a Mandated Lead Arranger and contribute £140 million (about $189.32 million) in lending. The total project cost is an estimated £3 billion ($4.06 billion). A consortium that includes UK infrastructure sponsors GLIL and Equitix, as well as the Strabag Group, will manage the financing.
The project is one of the largest water infrastructure initiatives in the UK. Construction is scheduled to begin in 2026 and will involve replacing six tunnel sections using advanced tunneling techniques. The program is expected to create up to 1,200 jobs at its peak. United Utilities, the owner and operator of the aqueduct, will oversee the project, with Strabag UK handling the design and construction of the new tunnels.
NatWest Group PLC (NYSE:NWG) is a British banking and financial services company. It provides retail banking, commercial banking, private banking, and wealth management services across the United Kingdom and internationally. The company operates through a network of branches and digital platforms.
7. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 31
Forward P/E Ratio: 10.74
Rio Tinto Group (NYSE:RIO) is one of the best very cheap stocks to buy according to hedge funds. On August 25, Morgan Stanley increased its price target for Rio Tinto’s stock to AUD 121 ($78.44) from AUD 118 ($76.50). The investment bank maintained an Equalweight rating on the shares.
This change came after the bank updated its financial model for the first half of 2025. The update resulted in a 2.7% reduction in the bank’s estimate for Rio Tinto’s earnings per share for fiscal year 2025. However, estimates for fiscal year 2026 rose by 0.1%, and for fiscal year 2027 by 2.3%, due to changes in forecasts for depreciation and aluminum.
Morgan Stanley’s base case value for Rio Tinto went up by 1% to AUD119.50 per share. Meanwhile, the bull case value increased by 3% to AUD 242.50 per share, and the bear case by 13% to AUD 52.50 per share. The higher price target is 3% higher than the previous one, primarily due to the increased base value and higher current commodity prices.
The analysts pointed out that Rio Tinto’s stock may benefit from better future earnings outlooks from aluminum and depreciation tweaks. They also noted that the company’s market position is solid.
Rio Tinto Group (NYSE:RIO) is a British-Australian metals and mining company. It explores, mines, and processes mineral resources including iron ore, copper, aluminum, and lithium across operations in over 30 countries. The company owns and operates open-pit and underground mines, refineries, smelters, and shipping facilities.
6. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 33
Forward P/E Ratio: 11.64
Baidu, Inc. (NASDAQ:BIDU) is one of the best very cheap stocks to buy according to hedge funds. On August 22, Kunlunxin, a Chinese semiconductor firm majority-owned by Baidu (59%), announced it had secured over 1 billion yuan ($139 million) in AI chip orders for China Mobile. The chips, compatible with Nvidia’s CUDA platform, will be supplied to top-tier vendors like H3C Technologies and ZTE, as China intensifies efforts to build domestic alternatives to Nvidia’s GPU dominance.
China Mobile also awarded contracts to a Huawei-linked firm using its CANN architecture, a CUDA equivalent. While developers still rely heavily on Nvidia’s ecosystem, Kunlunxin’s chips offer strong CUDA compatibility, making them more cost-effective for developers transitioning away from foreign tech.
Earlier this year, Baidu revealed it had deployed 30,000 third-generation P800 Kunlun chips to support large-scale AI model training. Alongside Huawei’s Ascend, Baidu’s Kunlun chips are part of a growing wave of Chinese-made GPUs aiming to challenge Nvidia’s market share and bolster national tech self-sufficiency.
Baidu, Inc. (NASDAQ:BIDU) is a major technology company in China, best known for operating the country’s most popular search engine. It’s also a leader in artificial intelligence, investing significant effort and resources in developing smart technologies that power everything from online services to self-driving cars.
5. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Number of Hedge Fund Holders: 39
Forward P/E Ratio: 4.30
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is one of the best very cheap stocks to buy according to hedge funds. The company announced on August 18 that a field it operates surpassed 900,000 barrels of oil per day (bpd), a new production record. The Búzios Field, located in Brazil’s Santos Basin, achieved the milestone thanks to the activation of the fifth well on the Floating Production, Storage and Offloading (FPSO) Almirante Tamandaré unit.
The Búzios Field is situated approximately 180 kilometers off the coast of Rio de Janeiro. Its productive area is described as being “more than double the size of Guanabara Bay.” The field currently has six production units in operation: the platforms P-74, P-75, P-76, and P-77, as well as the FPSOs Almirante Barroso and Almirante Tamandaré. A new unit, the P-78, is en route to Brazil to further increase production. Petrobras operates the field together with a consortium of partners, including PPSA, CNPC, and CNOOC. This new record brings the Búzios Field closer to surpassing the Tupi Field, which is currently the largest oil producer in Brazil.
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is an integrated energy company based in Brazil. It explores, produces, refines, and distributes oil and natural gas. The company also engages in petrochemicals, power generation, and logistics.
4. JD.com, Inc. (NASDAQ:JD)
Number of Hedge Fund Holders: 54
Forward P/E Ratio: 12.80
JD.com, Inc. (NASDAQ:JD) is one of the best very cheap stocks to buy according to hedge funds. The company officially opened a new warehouse in Dubai on August 18. The warehouse is a 10,000-square-meter facility situated in Dubai’s Jebel Ali Free Zone (JAFZA). This particular location was chosen for its status as a tax-free zone and its position at the crossroads of Asia, Africa, and Europe.
The facility is a direct investment made through JINGDONG Property, JD.com’s infrastructure platform, and is operated by JINGDONG Logistics. Its opening brings JINGDONG Logistics’ total number of warehouses in the UAE to six. The warehouse uses a digital operations model with real-time inventory management. It is powered by JD.com’s self-developed SaaS platform for supply chain emissions management, a tool designed to facilitate decarbonization. The system has already demonstrated high performance, achieving an outbound in-time rate of over 99.9%. The facility is currently providing storage for “nearly 1 million items” for a major electronics manufacturer.
JD.com, Inc. (NASDAQ:JD) is a Chinese e-commerce company. It operates one of the largest online retail platforms in China. The company also provides logistics, cloud computing, and supply chain services.
3. The Allstate Corporation (NYSE:ALL)
Number of Hedge Fund Holders: 62
Forward P/E Ratio: 10.67
The Allstate Corporation (NYSE:ALL) is one of the best very cheap stocks to buy according to hedge funds. On August 21, the company provided the July 2025 monthly release, where it reported catastrophe losses totaling $184 million (pre-tax) or $145 million (after-tax) for the month. The losses resulted from 19 separate wind and hail events across the United States.
Compared to the same month last year, catastrophe losses have decreased significantly (July 2024 losses reached $587 million). For the current annual aggregate period, beginning April 1, 2025, pre-tax catastrophe losses total $2.174 billion, including the July figure. Alongside the catastrophe loss report, Allstate provided an update on its policies in force as of July 31, 2025. Homeowners policies increased by 2.2% year-over-year to 7.6 million. Auto policies saw a slight year-over-year increase of 0.6%, reaching 25.2 million. While Commercial lines policies continued a downward trend, decreasing by 32% compared to the prior year.
The Allstate Corporation (NYSE:ALL) is an insurance company. It provides auto, home, life, and commercial insurance products to approximately 16 million households across the United States and Canada. The company operates through a network of exclusive agents, independent agencies, call centers, and digital platforms.
2. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 71
Forward P/E Ratio: 6.24
General Motors Company (NYSE:GM) is one of the best very cheap stocks to buy according to hedge funds. On August 21, the National Highway Traffic Safety Administration (NHTSA) revealed that General Motors is recalling 23,656 Chevrolet Corvette vehicles in the US. The safety recall report cited a fuel leak issue that poses a potential fire risk. The affected vehicles are models from 2023 to 2025, which include the 2026 Convertible and Coupe variants equipped with a left-side radiator and fan assembly.
General Motors’ investigation identified four alleged fires potentially linked to this fuel leak defect. Two of those incidents involved malfunctioning gas station pumps contributing to the fuel spill. To remedy this problem, dealers will install a shield insert to divert spilled fuel away from the surfaces behind the quarter panel. This fix will be provided at no cost to vehicle owners.
A company spokesperson said, “This is a rare occurrence, and malfunctioning filling station pumps appear to be a contributing factor. The safety of our customers is the highest priority for the entire GM team, and we’re working to remedy this matter as quickly as possible.”
General Motors Company (NYSE:GM) is an automotive company. It designs, manufactures, and sells passenger cars, trucks, and electric vehicles under the brands Chevrolet, GMC, Cadillac, and Buick. The company operates globally through its GM North America, GM International, Cruise, and GM Financial segments.
1. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 115
Forward P/E Ratio: 13.74
Bank of America Corporation (NYSE:BAC) is one of the best very cheap stocks to buy according to hedge funds. On August 20, the company announced that Erica, its AI-driven virtual financial assistant, had surpassed 3 billion client interactions since its launch in 2018. Erica serves nearly 50 million users and averages more than 58 million interactions per month.
Clients have spent over 18.7 million hours interacting with Erica; more than 98% of users find the information they need. The virtual assistant has delivered over 1.7 billion proactive, personalized insights, including: highlighting BankAmeriDeals cash back deals based on spending; alerting clients to balance trends for the next 7 days; notifying clients of eligibility for Preferred Rewards; providing guidance on nearly 50 investment-related topics for Merrill clients; and scheduling appointments with seamless handoff to high-touch service channels.
Erica is trained to recognize millions of client questions using a library of over 700 responses; it has undergone over 75,000 updates since launch to improve performance. “Our data science team has made more than 50,000 updates to Erica’s performance since launch – adjusting, expanding and fine-tuning natural language understanding capabilities,” said Nikki Katz, head of digital at Bank of America.
Bank of America Corporation (NYSE:BAC) is one of the largest financial institutions in the world. It offers consumer banking, wealth management, corporate lending, and investment banking services to individuals, businesses, and governments. The company operates through a network of financial centers, ATMs, and digital platforms.
While we acknowledge the potential of Bank of America Corporation (NYSE:BAC) as an investment, 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 BAC and that has 100x upside potential, check out our report about this cheapest AI stock.
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