In this article, we will look at the 11 Most Undervalued Growth Stocks to Buy According to Hedge Funds.
On September 25, Stephen Parker, JPMorgan Private Bank’s co-head of global investment strategy, joined CNBC for an interview to discuss the driving factors of the market. He noted that the investors need to understand that, despite the valuations, the market is of higher quality as compared to the past. This market has stronger growth momentum and is also less cyclical, which justifies its higher valuation compared to historical averages.
Parker believes that over the next 6 to 12 months, earnings are expected to be the key driver for the market. He noted that he does not expect valuation multiples to expand further and even expects a slight contraction. However, he expects strong earnings growth, forecasting a third consecutive year of double-digit earnings growth for the S&P 500. Parker noted that this earnings momentum is expected to keep markets moving higher.
While talking about the risks, he noted that tariffs and their impact on the profit margins pose some risk to the market. However, the companies have so far been able to absorb tariff impact, and the profit margins have remained robust. Looking forward to 2026, Parker highlighted positive tailwinds, including easier financial conditions due to the Federal Reserve’s actions.
With that, let’s take a look at the 11 most undervalued growth stocks to buy according to hedge funds.
Our Methodology
To curate the list of most undervalued growth stocks to buy according to hedge funds. We used the Finviz Stock Screener, Seeking Alpha, and Insider Monkey’s Q2 2025 database. Using the screener, we aggregated a list of undervalued growth stocks trading below the forward P/E of 15. Next, we checked the P/E ratios from Seeking Alpha and ranked the stocks in ascending order of the number of hedge fund holders sourced from Insider Monkey’s database.
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).
11 Most Undervalued Growth Stocks to Buy According to Hedge Funds
11. Novartis AG (NYSE:NVS)
Forward P/E Ratio: 13.72
Number of Hedge Fund Holders: 34
Novartis AG (NYSE:NVS) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 24, Novartis AG (NYSE:NVS) announced that new data on Kesimpta for relapsing multiple sclerosis will be presented at ECTRIMS 2025 in Barcelona from September 24 to September 26.
This data comes from two studies. Firstly, the ARTIOS study evaluated patients who switched to Kesimpta after their disease worsened on oral therapies like fingolimod or fumarate. The results showed a major drop in disease activity with the annualized relapse rate falling to 0.06 over 96 weeks. Moreover, MRI scans showed near-complete suppression of lesions, with over 90% patients having no evidence of disease activity, called NEDA-3.
Secondly, the ALITHIOS study looked at newly diagnosed, treatment-naive patients on first-line continuous Kesimpta for up to seven years. The results show that more than 90% achieved NEDA-3 in seven years. The long-term benefits included sustained low relapse rates, strong MRI lesion control, and a favorable safety profile with no new concerns.
Novartis AG (NYSE:NVS) is a Swiss multinational pharmaceutical company. It develops, manufactures, and markets branded and generic prescription drugs, biosimilars, and active pharmaceutical ingredients.
10. Cognizant Technology Solutions Corporation (NASDAQ:CTSH)
Forward P/E Ratio: 13.2
Number of Hedge Fund Holders: 47
Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 17, Cognizant Technology Solutions Corporation (NASDAQ:CTSH) and Venbrook Group announced a new strategic partnership to improve the insurance claims process for property and casualty carriers.
Management noted that the collaboration focuses on creating a more efficient and cost-effective claims lifecycle environment. Venbrook is a fast-growing P&C claims third-party administrator with a nationwide network of licensed adjusters, whereas Cognizant Technology Solutions Corporation (NASDAQ:CTSH) brings advanced AI technology to the table.
Together, the companies are developing an innovative, AI-powered TPA claims solution. This solution uses agentic AI to handle complex tasks and orchestrate workflows. Moreover, it also uses generative AI to assist with customer communications and compliance. The goal is to digitize key parts of the claims process to meet growing market demands. The TPA market is projected to reach $795 billion by 2032, thereby highlighting the significance of this collaboration.
Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is a global company that helps businesses modernize through technology and consulting services.
9. Zoom Communications Inc. (NASDAQ:ZM)
Forward P/E Ratio: 14.23
Number of Hedge Fund Holders: 48
Zoom Communications Inc. (NASDAQ:ZM) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 18, Robert W. Baird analyst William Power maintained a Buy rating on Zoom Communications Inc. (NASDAQ:ZM) with a price target of $95.
The analyst noted that the company recently unveiled its AI Companion 3.0 at the Zoomtopia conference, emphasizing the integration of advanced AI throughout its platform. He noted that this move aims to improve user experience and generate positive returns, particularly among small and medium-sized businesses that quickly adopt AI.
Moreover, the analyst also noted that Zoom Communications Inc. (NASDAQ:ZM)’s strategic partnerships strengthen its market position. Notably, its collaboration with SharkNinja highlights its unique offerings in the Contact Center as a Service sector. The company is also experiencing strong growth in its Phone business, which contributes to its overall revenue momentum. Lastly, the analyst believes that the company’s valuation makes it an attractive long-term investment.
Zoom Communications Inc. (NASDAQ:ZM) offers an AI-powered work platform called Zoom Workplace that enhances communication and collaboration for modern workplaces.
8. Fidelity National Information Services, Inc. (NYSE:FIS)
Forward P/E Ratio: 11.24
Number of Hedge Fund Holders: 49
Fidelity National Information Services, Inc. (NYSE:FIS) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 9, Fidelity National Information Services, Inc. (NYSE:FIS) presented its key strategies at the Goldman Sachs conference.
Management emphasized its core strengths and effective capital allocation, including plans to increase share buybacks. The company also remains optimistic about the macroeconomic environment, supported by favorable regulatory conditions.
Moreover, the company has also boosted its digital capabilities through acquisitions of Dragonfly, Everlink, and Amount. Looking ahead, the company targets a 90% free cash flow conversion next year, driven by lower capital intensity. Fidelity National Information Services, Inc. (NYSE:FIS) expects banking revenue growth of 4% to 4.5% this year. The third quarter growth is forecasted at 3% to 3.5%, impacted by the partial sale of its EBT business, while fourth quarter growth is expected to improve to 6.5%.
Fidelity National Information Services, Inc. (NYSE:FIS) provides technology solutions to financial institutions, businesses, and developers.
7. Dell Technologies Inc. (NYSE:DELL)
Forward P/E Ratio: 14.23
Number of Hedge Fund Holders: 54
Dell Technologies Inc. (NYSE:DELL) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 17, Tim Long from Barclays raised the price target from $131 to $133, while keeping a Hold rating on the stock.
The analyst noted that they updated their server model based on the company’s recent results and industry feedback. Dell Technologies Inc. (NYSE:DELL) during its FQ2 2026 posted a revenue of $29.78 billion, up 18.98% year-over-year and ahead of consensus by $583.63 million. The EPS of $2.32 also topped the consensus by $0.03.
The analyst noted that the enterprise server recovery is slower than they expected, which has caused a downward revision in the 2025 earnings estimates. However, the outlook for 2026 has improved, and Barclays expects stronger performance due to continued growth in artificial intelligence demand. The AI strength offsets some of the near-term challenges in the server market.
Dell Technologies Inc. (NYSE:DELL) is a technology company that designs and sells a wide range of technology products and services. It operates through the Infrastructure Solutions Group and Client Solutions Group.
6. Hewlett Packard Enterprise Company (NYSE:HPE)
Forward P/E Ratio: 13.26
Number of Hedge Fund Holders: 60
Hewlett Packard Enterprise Company (NYSE:HPE) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. Wall Street has been bullish on Hewlett Packard Enterprise Company (NYSE:HPE) since the company released results from its fiscal third quarter for 2025.
The company delivered $9.14 billion, up 18.50% year-over-year and ahead of expectations by $310.07 million. Moreover, the EPS of $0.44 also topped estimates by $0.02. Management noted that the revenue growth was driven by the acquisition of Juniper Networks. The company saw broad customer demand, with robust performance in the Server and Networking segments.
Several analysts have reiterated their bullish sentiment. On September 5, Asiya Merchant from Citi raised the price target on Hewlett Packard Enterprise Company (NYSE:HPE) from $25 to $26, while reiterating a Buy rating on the stock. More recently, on September 9, Simon Leopold from Raymond James also reiterated a Buy rating on the stock with a price target of $30.
Hewlett Packard Enterprise Company (NYSE:HPE) is a global edge-to-cloud technology company providing open and intelligent solutions as a service.
5. Amgen Inc. (NASDAQ:AMGN)
Forward P/E Ratio: 13.57
Number of Hedge Fund Holders: 62
Amgen Inc. (NASDAQ:AMGN) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 22, Amgen Inc.’s (NASDAQ:AMGN) and AstraZeneca’s Tezspire received a positive recommendation from the European Medicines Agency Committee for Medicinal Products for Human Use.
The approval is for treating adults with chronic rhinosinusitis with nasal polyps in the European Union. The recommendation is based on the results from the Phase III WAYPOINT trial, which showed that Tezspire significantly reduced nasal polyp size and nasal congestion compared to placebo after one year. Moreover, patients experienced a nasal polyp score reduction of -2.08 and a nasal congestion score drop of -1.04, both statistically significant.
Notably, Tezspire helped nearly eliminate the need for surgery and greatly reduced systemic corticosteroid use by 89%. These findings address key challenges for CRSwNP patients who often suffer from repeated surgeries and long-term steroid side effects.
Amgen Inc. (NASDAQ:AMGN) is a biotechnology company that discovers, develops, and manufactures medicines for serious diseases.
4. Gilead Sciences, Inc. (NASDAQ:GILD)
Forward P/E Ratio: 13.89
Number of Hedge Fund Holders: 71
Gilead Sciences, Inc. (NASDAQ:GILD) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 21, Terence Flynn from Morgan Stanley maintained a Buy rating on Gilead Sciences, Inc. (NASDAQ:GILD) with a price target of $143.
The analyst noted that the US CDC recently recommended the company’s Yeztugo for HIV pre-exposure prophylaxis. Flyn believes that this is a strong endorsement of the drug’s efficacy and safety. Moreover, the analyst also noted that the recommendation could lead to better patient adherence and stronger HIV prevention, thereby boosting the demand for Yeztugo.
In addition, Gilead Sciences, Inc. (NASDAQ:GILD) is also working to secure commercial insurance coverage for Yeztugo and expects to have substantial coverage in place by the end of 2025.
Gilead Sciences, Inc. (NASDAQ:GILD) is a biopharmaceutical company that develops medicines to treat serious diseases like HIV, viral hepatitis, COVID-19, and cancer.
3. QUALCOMM Incorporated (NASDAQ:QCOM)
Forward P/E Ratio: 14.27
Number of Hedge Fund Holders: 76
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 24, Reuters reported that QUALCOMM Incorporated (NASDAQ:QCOM) had announced new chips for PCs and phones, including a laptop chip with a unique security feature.
The report highlights that the key new product is the Snapdragon X2 Elite chip, set to ship next year. The chip targets businesses with a feature called Guardian that lets IT departments securely access laptops or desktops even when they are turned off. This allows easy updates and tech support remotely.
Moreover, QUALCOMM Incorporated (NASDAQ:QCOM) is also expanding in the PC Market and is competing with Apple by making energy-efficient chips for Windows laptops and desktops. The company’s strategic advantage is pairing the Guardian security feature with its 5G modem chips.
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells key technologies for wireless communication, including 3G, 4G, and 5G networks.
2. Pfizer Inc. (NYSE:PFE)
Forward P/E Ratio: 7.78
Number of Hedge Fund Holders: 83
Pfizer Inc. (NYSE:PFE) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 22, Evan Seigerman from BMO Capital maintained a Buy rating on Pfizer Inc. (NYSE:PFE) with a price target of $30.
The analyst pointed to the company’s recent acquisition of Metsera. He noted that the deal allows Pfizer Inc. (NYSE:PFE) to re-enter the obesity treatment market and brings promising long-acting GLP-1 and amylin agents. These drugs could compete well against current leaders like Lilly and Novo.
Moreover, the acquisition includes contingent value rights. This structure reduces the company’s risk while enhancing its market position. Seigerman also likes the valuation of Pfizer Inc. (NYSE:PFE) compared to other companies in the sector. He sees potential for the company to grow revenue and improve margins. These growth prospects are not yet fully recognized by the market.
Pfizer Inc. (NYSE:PFE) is a global biopharmaceutical company focused on discovering, developing, manufacturing, and marketing medicines.
1. Merck & Co., Inc. (NYSE:MRK)
Forward P/E Ratio: 9.01
Number of Hedge Fund Holders: 92
Merck & Co., Inc. (NYSE:MRK) is one of the Most Undervalued Growth Stocks to Buy According to Hedge Funds. On September 19, Merck & Co., Inc. (NYSE:MRK) announced that its ENFLONSIA has received a positive recommendation from the European Medicines Agency’s Committee for Medicinal Products for Human Use.
The approval is for preventing respiratory syncytial virus lower respiratory tract disease in newborns and infants during their first RSV season. Management noted that they now await review by the European Commission for marketing authorization in the EU, Iceland, Liechtenstein, and Norway, with a final decision expected by the end of 2025.
The endorsement is based on results from two clinical trials, CLEVER and SMART, which showed ENFLONSIA significantly reduced RSV infections and hospitalizations compared to placebo.
Merck & Co., Inc. (NYSE:MRK) is a global healthcare company that develops and sells prescription medicines, vaccines, and biologic therapies for human health.
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