11 Most Undervalued Blue Chip Stocks To Buy According To Hedge Funds

Published January 31, 2023 at 7:55 am EST Updated August 19, 2026 at 9:18 am EDT

In this article, we will take a look at the top 11 most undervalued blue chip stocks to buy according to hedge funds.

The stock market crash of 2022 plunged US equities to new lows. While it has ushered in a chaos in the markets, long-term investors are seeing it as an opportunity to pile into undervalued stocks with strong upside potential. In October last year, Finance Professor at the University of Pennsylvania Jeremy Siegel said that stocks were “undervalued greatly” in the long run. He said at the time that rising interest rates were keeping a lid on the stocks but said the rates were not expected to remain elevated for a long time.

“I’m staying put, I certainly wouldn’t be surprised if a year, year and half from now we’re 20-30% higher. I think stocks are undervalued greatly in the long-run.”

Siegel also noted that sooner or later inflation will be tamed and the Federal Reserve will not continue its strong rates hikes. In 2023, many analysts are expecting the Federal Reserve to slow and eventually halt rate hikes.

However, the overall outlook for the economy is not too optimistic. According to Morgan Stanley’s Michael Wilson corporate profit estimates are still too high. The analyst said in a note to investors earlier in January that the equity risk premium is at its lowest since the run-up to 2008. That’s why Wilson believes the S&P 500 could fall much lower than the 3,500 to 3,600 points the market is currently estimating in the event of a mild recession.

Despite the short-term headwinds and recession warnings, wise investors know that sooner or later the markets will turn around. When they do, only those investors will turn out to be the winners who’d invested when everyone was selling. Financial analysts at Morningstar said in a report published in September 2022 that the market was offering a huge discount as it had plunged to record lows seen only in rare instances.

“While near-term conditions may pressure earnings in the short term, at current valuations we think the market has fallen more than enough to incorporate those headwinds. In our view, we think the market is overly pessimistic regarding the long-term prospects for equity valuations .”

While these optimistic comments don’t look much prescient in hindsight, they’ll hold weight when seen with a long-term outlook.

Photo by Chris Liverani on Unsplash

Our Methodology

For this article, we scanned Insider Monkey’s database of 920 elite hedge funds’ holdings and picked the top 11 blue chip stocks with PE ratios less than 15. The list is ranked in ascending order of the number of hedge funds having stakes in these companies.

Most Undervalued Blue Chip Stocks To Buy According To Hedge Funds

11. Toyota Motor Corporation (NYSE:TM)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 12

PE Ratio as of January 25: 10.45

Toyota Motor Corporation (NYSE:TM) is one of the most notable auto stocks in the world. Toyota Motor Corporation’s strategy of focusing on both EV and hybrid markets is working. While Toyota Motor Corporation’s management is extremely bullish on EV cars and the company is working on several electric models, Toyota Motor Corporation is not letting go of its hybrid investments. This has diversified Toyota Motor Corporation’s position. Its hybrid cars have a huge demand in the world. On the EV front, Toyota Motor Corporation has a goal to produce 3.5 million electric vehicles by 2030.

As of the end of the third quarter, 12 hedge funds tracked by Insider Monkey reported having stakes in Toyota Motor Corporation. The total value of these stakes was $742 million.

10. Novartis AG (NYSE:NVS)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 26

PE Ratio as of January 25: 9.52

Swiss pharma company Novartis AG (NYSE:NVS) is one of the most undervalued stocks to buy according to elite hedge funds. As of the end of the third quarter of 2022, 26 hedges tracked by Insider Monkey reported having stakes in Novartis AG, compared to 22 funds in the previous quarter. The total value of these shares was about $783 million. The biggest stakeholder of Novartis AG was Jim Simons’ Renaissance Technologies, which has a $242 million stake in Novartis AG.

In December, The European Commission (EC) approved Novartis AG’s drug Pluvicto to treat certain patients with advanced prostate cancer.

Here is what Madison Investors Fund has to say about Novartis AG in its Q3 2022 investor letter:

“We sold our position in Novartis. We like the company’s track record of innovation, and its diversified portfolio of drugs. However, we’ve become increasingly concerned about the outlook for some of its recently launched therapeutics, as well as some generic competition in a few of its mature drugs. If pressed, we still like the odds that Novartis will do well, but the outlook is a little cloudier than it’s been in a while. As noted above, we’ve been big fans of its Alcon unit for many years, and now that Alcon is independent, we decided to concentrate our investment there.”

9. Shell plc (NYSE:SHEL)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 39

PE Ratio as of January 25: 5.04

Shell plc (NYSE:SHEL) ranks 9th in our list of the most undervalued blue chip stocks to buy according to hedge funds. Earlier in January, Shell plc (NYSE:SHEL) said its profits from the gas-trading unit for the fourth quarter will be “significantly higher” when compared to the previous quarter despite outages and product declines. Shell plc (NYSE:SHEL) said for the fourth quarter it expects production from its Upstream segment of 1.825 million – 1.925 million boe/day, compared with its previous estimate of 1.75 million to 1.95 million boe/day.

As of the end of the third quarter, 39 hedge funds tracked by Insider Monkey reported having stakes in Shell plc (NYSE:SHEL). The total value of these stakes was $3.1 billion. The biggest stakeholder in Shell plc (NYSE:SHEL) during this period was Ken Fisher’s hedge fund with a stake over $1 billion.

8. Chevron Corporation (NYSE:CVX)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 66

PE Ratio as of January 25: 10.14

Oil giant Chevron Corporation (NYSE:CVX) had a remarkable year in 2022, as its stock gained about 55% in the period. However, Chevron Corporation’s PE ratio is still attractive.

A total of 66 hedge funds tracked by Insider Monkey reported having stakes in Chevron Corporation as of the end of the third quarter. The total value of these stakes was $27.1 billion. The biggest stakeholder of Chevron Corporation was Warren Buffett’s Berkshire Hathaway, with a $24 billion stake.

Madison Funds made the following comment about Chevron Corporation in its fourth quarter 2022 investor letter:

“This quarter we are highlighting Chevron Corporation (NYSE:CVX) as a relative yield example in the Energy sector. CVX is a leading integrated oil company with exploration, production, and refining operations. It is the second largest oil company in the United States with more than 70% of production volumes from oil and liquid-linked natural gas. We believe it has a sustainable competitive advantage due to its scale and low-cost position. It has a large acreage position in the Permian Basin, which is a high-quality oil field. CVX was an early mover in the Permian and did not overpay to enter the oilfield; 75% of its position has a no or low royalty rate, which gives it a cost advantage over competitors.

Our thesis is that free cash flow growth per share is expected to accelerate due to disciplined capital spending, rising Permian production volumes, and stock repurchases. The company has also made important investments in low-carbon areas like greenhouse gas reduction, carbon capture, hydrogen, and renewable fuels which we believe will pay off later in the decade as the world transitions more to renewable energy sources…” (Click here to read the full text)

7. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 75

PE Ratio as of January 25: 9.19

Oil giant Exxon Mobil Corporation (NYSE:XOM) is a dividend aristocrat. Exxon Mobil Corporation has gained about 50% over the past 12 months. Still Exxon Mobil Corporation’s PE ratio as of January 25 stands at 9.19. It is one of the best undervalued blue chip stocks to buy according to hedge funds. Of the 920 elite funds in Insider Monkey’s database, 75 funds had stakes in Exxon Mobil Corporation. The biggest stakeholder of Exxon Mobil Corporation was Rajiv Jain’s GQG Partners, which had a $3 billion stake in Exxon Mobil Corporation.

6. Pfizer Inc. (NYSE:PFE)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 77

PE Ratio as of January 25: 8.64

Pfizer Inc. (NYSE:PFE) is one of the best stock picks for recession, according to hedge funds and Wall Street analyst. Pfizer Inc. has been increasing its dividends consistently for the past 12 years. Pfizer Inc. has several products that do not face a decrease in demand even during market downturns. Pfizer Inc. recently said that its non-COVID revenue could reach about $70 billion to $84 billion in 2030. This will offset $17 billion revenue impact from upcoming “patent cliffs” for leading revenue generators in 2025 – 2030.

Pfizer Inc.’s CEO Albert Bourla also said that Pfizer Inc. has its “best days” ahead amid several product launches.

Of the 920 elite hedge funds tracked by Insider Monkey, 77 funds had stakes in Pfizer Inc., compared to 70 funds in the previous quarter. The total value of these stakes was about $2.4 billion.

5. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 77

PE Ratio as of January 25: 14.16

Wells Fargo & Company is a sought-after stock these days as investors keep piling into financial stocks for interest rate hikes. Wells Fargo & Company is also a solid dividend-paying company. On January 24, Wells Fargo & Company announced a $0.30/share quarterly dividend, in line with previous. Forward dividend yield of Wells Fargo & Company came in at about 2.68%. However, Wells Fargo & Company stock could face short-term headwinds amid recession worries. In the fourth quarter, Wells Fargo & Company’s revenue totaled $19.7 billion, missing the consensus estimate of $20.04 billion. EPS in the fourth quarter on a GAAP basis came in at $0.67, beating estimates of $0.61.

The biggest hedge fund stakeholder of Wells Fargo & Company at the end of September was Boykin Curry’s Eagle Capital Management $928 million.

4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 87

PE Ratio as of January 25: 14.27

With a PE ratio of 14.7 as of January 25, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the most undervalued blue chip stocks to buy according to hedge funds. Taiwan Semiconductor Manufacturing Company Limited has a strong edge over its competitors in chips manufacturing, which is expected to keep Taiwan Semiconductor Manufacturing Company Limited at a vantage point even during market downturns and recessions. Taiwan Semiconductor Manufacturing Company Limited recently gained after it posted Q4 results and said it plans to cut expenses in 2023 as semiconductor demand weakens.

In the fourth quarter, Taiwan Semiconductor Manufacturing Company Limited’s EPS came in at $1.82, while revenue in the period totaled $19.93 billion. Estimates for these two figures were $1.77 and $20.92 billion, respectively.

3. Bank of America Corporation (NYSE:BAC)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 97

PE Ratio as of January 25: 10.80

Bank of America Corporation (NYSE:BAC) ranks 3rd in our list of the most undervalued blue chip stocks to buy according to hedge funds. Bank of America Corporation has gained about 2.4% over the past six months. Earlier this month, after Bank of America Corporation posted its Q4 results, Piper Sandler’s analyst R. Scott Siefers downgraded Bank of America Corporation. The analyst said that the “big emerging pressure” for the bank and other peers in the group is the net interest income “degradation.”

Bank of America Corporation is one of the most popular bank stocks among the elite hedge funds tracked by Insider Monkey. As of the end of the third quarter of 2022, 97 hedge funds had stakes in Bank of America Corporation, compared to 99 funds in the previous quarter. The total value of these stakes was about $37 billion.

2. JPMorgan Chase & Co. (NYSE:JPM)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 110

PE Ratio as of January 25: 11.41

JPMorgan Chase & Co. is one of the most popular bank stocks among smart money. Insider Monkey’s database of 920 funds shows that 110 hedge funds had stakes in JPMorgan Chase & Co., compared to 104 funds in the previous quarter. The total value of these stakes was about $6.4 billion.

JPMorgan Chase & Co. stock recently fell after JPMorgan Chase & Co. posted Q4 earnings and said that its spending in 2023 will rise when compared to 2022. In fiscal 2023, JPMorgan Chase & Co.’s adjusted noninterest expense is expected to come in at about ~$81 billion compared with FY2022 actual noninterest expense of $76.1 billion.

JPMorgan Chase & Co.’s credit card delinquency rate ticked up in December when compared to November.

As of the end of the September quarter of 2022, Ken Fisher’s hedge fund was the biggest stakeholder in JPMorgan Chase & Co., with an $821 million stake.

1. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Funds Having Stakes in the Company as of Q3 2022: 177

PE Ratio as of January 25: 13.61

Meta Platforms, Inc. (NASDAQ:META) shares have lost about 52% in value over the past year. This has depressed Meta Platforms, Inc.’s valuation. While short-term outlook for Meta Platforms, Inc. doesn’t look strong amid growing competition and recession fears, some analysts still believe Meta Platforms, Inc. presents a strong buying opportunity for long-term investors.

Recently, Michael Nathanson, Senior Research Analyst at MoffettNathanson, said Meta Platforms, Inc. is attractive since he believes the market is taking the problems of 2022 and extrapolating them as fundamental problems while the analyst believes these problems were cyclical, especially the decline in ads revenue.

As of the end of the third quarter of 2022, 177 hedge funds tracked by Insider Monkey reported having stakes in Meta Platforms, Inc.. The total value of these stakes was about $14 billion. The biggest stakeholder of Meta Platforms, Inc. was Ken Fisher’s hedge fund which had owned a $1.6 billion stake in Meta Platforms, Inc..

Here is what Wedgewood Partners has to say about Meta Platforms, Inc. in its Q3 2022 investor letter:

“Meta Platforms detracted from performance during the quarter and for most of the year. Meta’s advertising revenue grew slightly (currency-adjusted) over 2021 but was up over +60% compared to 2019 (pre-Pandemic). The Company reported 2.9 billion “daily active users (DAUs)” of its Family of Apps (as of September 2022), up nearly +30% from December 2019. Despite these impressive gains, the stock now trades at absolute levels well below where it traded before the Pandemic. Much of the market’s concern revolves around slowing revenue growth and aggressive reinvestment. It is now quite evident that there was a tremendous pull-forward of demand for many businesses and services over the past couple of years. The normalization of revenue growth from that pull-forward is hardly an existential crisis. Further, while Meta’s profit margins have fallen below pre-Pandemic levels, the business likely hired well in excess of what it needed because it assumed the Pandemic induced growth would continue. Meta has plenty of room to moderate its expense base and drive significant value by repurchasing shares at today’s historically depressed multiples.”

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