On July 31, Nadia Lovell, UBS senior equity strategist, joined ‘The Exchange’ on CNBC to discuss why she believes this rally has staying power, and to suggest that investors stay up in quality on secular growth stories. In discussing what would give staying power to the current market levels, especially as the S&P was approaching Lovell’s firm’s upside scenario of 6700, she responded by stating that the continued pickup in the tech sector is the key factor. She emphasized a selective approach to investing, with a focus on secular growth stories within tech. She explained that tech is where the growth momentum is, with CapEx spending continuing to increase. She also highlighted the AI and electrification trends in utilities and industrials, as well as the financials sector, as other areas where investors should focus. She also noted that the IPO market is beginning to open up again.
On asking to differentiate between overheating in the market and healthy, warranted excitement, pointing to the re-emergence of meme stocks and the recent performance of crypto, Lovell responded by saying that these signs indicate an increase in investors’ risk appetite. She clarified that while there is some pickup in the meme stock trade, it is not at the same levels as a few years ago, which could present both upside and downside risk. She reiterated that investors should remain focused on where the growth is, which is in companies like the MAG7 that are delivering strong earnings growth and increasing CapEx spending.
That being said, we’re here with a list of the 12 most undervalued quality stocks to buy according to hedge funds.
A financial adviser looking over a portfolio of securities and stocks.
Our Methodology
We sifted through the Vanguard U.S. Quality Factor ETF holdings to compile a list of the top stocks that had a forward P/E ratio under 15 as of August 7. We then selected the 12 undervalued stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q1 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).
12 Most Undervalued Quality Stocks to Buy According to Hedge Funds
12. Exelixis Inc. (NASDAQ:EXEL)
Forward P/E Ratio as of August 7: 17.06
Number of Hedge Fund Holders: 38
Exelixis Inc. (NASDAQ:EXEL) is one of the most undervalued quality stocks to buy according to hedge funds. On July 24, Exelixis announced that its partner Ipsen received approval from the European Commission/EC for CABOMETYX (cabozantinib) to treat adults with unresectable or metastatic, well-differentiated pancreatic/pNET and extra-pancreatic/epNET neuroendocrine tumors.
The approval applies to patients who have progressed after at least one prior systemic therapy, excluding somatostatin analogues. This decision allows for the marketing of CABOMETYX in all 27 member states of the European Union, as well as Norway, Liechtenstein, and Iceland. The approval follows a positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use in June this year.
The EC’s approval is based on the results of the phase 3 CABINET pivotal trial. The trial evaluated CABOMETYX against a placebo in 2 groups of patients with previously treated neuroendocrine tumors: advanced pNET and advanced epNET. The trial demonstrated a statistically significant and clinically meaningful improvement in progression-free survival for patients treated with CABOMETYX.
Exelixis Inc. (NASDAQ:EXEL) is an oncology company that discovers, develops, and commercializes new medicines for difficult-to-treat cancers in the US.
11. Ameriprise Financial Inc. (NYSE:AMP)
Forward P/E Ratio as of August 7: 13.51
Number of Hedge Fund Holders: 40
Ameriprise Financial Inc. (NYSE:AMP) is one of the most undervalued quality stocks to buy according to hedge funds. On August 7, Ameriprise Financial announced that financial advisor Vince Abio joined S&T Financial Services, which is a financial advisory practice within the Ameriprise Financial Institutions Group/AFIG. Abio is an industry veteran with 28 years of experience and was previously with Merrill Lynch, where he managed over $120 million in client assets.
Abio chose to join Ameriprise and S&T Financial Services, which serves S&T Bank clients in Pennsylvania and Ohio. He cited the combination of Ameriprise’s financial planning capabilities and a trading platform with the scale to provide sophisticated solutions, along with S&T Bank’s community focus and clear vision for its retirement plan business as the perfect fit.
S&T Financial Services is the investment program of S&T Bank and is comprised of 15 financial advisors and 4 support staff members. The team manages a combined brokerage asset total of more than $1.4 billion. S&T Bank’s parent company, S&T Bancorp Inc. (NASDAQ:STBA), is a $9.8 billion bank holding company headquartered in Indiana, Pennsylvania.
Ameriprise Financial Inc. (NYSE:AMP) is a diversified financial services company in the US and internationally. The company operates through Advice & Wealth Management, Asset Management, and Retirement & Protection Solutions segments.
10. Globe Life Inc. (NYSE:GL)
Forward P/E Ratio as of August 7: 10.44
Number of Hedge Fund Holders: 4o
Globe Life Inc. (NYSE:GL) is one of the most undervalued quality stocks to buy according to hedge funds. On July 24, Globe Life released its Q2 2025 earnings. BMO Capital analyst Jack Matten subsequently raised the firm’s price target on Globe Life to $149 from $114 on July 30, while maintaining a Market Perform rating. The adjustment was made due to positive underlying trends in the company’s D2C division, which uses leads and analytics to support exclusive agency sales.
Globe Life reported a net income of $253 million, or $3.05 per share, in Q2, which is a slight decrease from the $258 million, or $2.83 per share, reported a year ago. However, net operating income increased by 10% to $271 million, or $3.27 per share, up from $2.97 per share the previous year.
The company’s Life Insurance premium revenue grew by 3% to $840 million, while the Life underwriting margin increased by 6% to $340 million. However, Health Insurance premium revenue grew by 8% to $378 million, but the Health underwriting margin dropped by 2% to $98 million.
Globe Life Inc. (NYSE:GL) provides various life and supplemental health insurance products, and annuities to lower-middle- and middle-income families in the US.
9. Abercrombie & Fitch Co. (NYSE:ANF)
Forward P/E Ratio as of August 7: 9.62
Number of Hedge Fund Holders: 42
Abercrombie & Fitch Co. (NYSE:ANF) is one of the most undervalued quality stocks to buy according to hedge funds. On July 28, JPMorgan analyst Matthew Boss raised his price target on Abercrombie & Fitch’s stock to $151 from $141 and maintained an Overweight rating on the shares. The adjustment was made in anticipation of Q2 reports.
Prior to this, Abercrombie & Fitch Co. announced its results for Q1 2025 with record first-quarter net sales of $1.1 billion, which is an increase of 8% year-over-year. Net sales grew across all regions, with the Americas up 7%, EMEA up 12%, and APAC up 5%.
The company’s performance was led by the Hollister brands, which saw a 22% growth and achieved its best-ever first-quarter net sales. In contrast, the Abercrombie brands saw a 4% decrease in net sales, but this was measured against a strong 31% sales growth in the first quarter of 2024.
Abercrombie & Fitch Co. (NYSE:ANF) is an omnichannel retailer in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific.
8. First Citizens BancShares Inc. (NASDAQ:FCNCA)
Forward P/E Ratio as of August 7: 11.12
Number of Hedge Fund Holders: 42
First Citizens BancShares Inc. (NASDAQ:FCNCA) is one of the most undervalued quality stocks to buy according to hedge funds. On July 28, Goldman Sachs raised the firm’s price target on First Citizens BancShares to $2,250 from $2,150, while keeping a Buy rating on the shares, to reflect its view on excess capital and rates. This sentiment followed the release of the company’s Q2 2025 earnings.
First Citizens BancShares’ adjusted earnings per share were $44.78, with an adjusted net income of $607 million in Q2. Net interest income grew by 2% sequentially, while the adjusted non-interest income increased by $34 million, or 7.2%.
On the balance sheet, loans saw a slight sequential decline of $89 million, or 0.1%, mainly due to a decrease in the Tech & Healthcare portfolio. In contrast, deposits grew by $610 million, or 4.4% sequentially. Net charge-offs declined by 0.08% sequentially, reaching their lowest level since Q2 2024, but management noted they could be lumpy in the future.
First Citizens BancShares Inc. (NASDAQ:FCNCA) is the holding company for First-Citizens Bank & Trust Company, which provides retail and commercial banking services to individuals, businesses, and professionals in the US and internationally.
7. The Hartford Insurance Group Inc. (NYSE:HIG)
Forward P/E Ratio as of August 7: 11.00
Number of Hedge Fund Holders: 44
The Hartford Insurance Group Inc. (NYSE:HIG) is one of the most undervalued quality stocks to buy according to hedge funds. On August 4, UBS raised the firm’s price target on Hartford Financial to $150 from $145, while keeping a Buy rating on the shares. This sentiment followed the firm’s decision to update its overall model for Property & Casualty and Brokers, and also came after the release of Hartford Insurance Group’s Q2 2025 earnings report.
The company reported an increase in its overall performance, with net income available to common stockholders rising by 35% to $990 million, or $3.44 per diluted share, compared to $733 million, or $2.44 per diluted share, in Q2 2024. Core earnings also saw an increase of 31% to $981 million, or $3.41 per diluted share, up from $750 million, or $2.50 per diluted share.
Consolidated net investment income for The Hartford increased by 10% to $664 million, primarily from a higher level of invested assets and reinvesting at higher interest rates. The company also returned a total of $549 million to stockholders in Q2, comprising $400 million in share repurchases and $149 million in common stockholder dividends.
The Hartford Insurance Group Inc. (NYSE:HIG) provides insurance and financial services to individual and business customers in the US, the UK, and internationally.
6. DICK’S Sporting Goods Inc. (NYSE:DKS)
Forward P/E Ratio as of August 7: 15.06
Number of Hedge Fund Holders: 44
DICK’S Sporting Goods Inc. (NYSE:DKS) is one of the most undervalued quality stocks to buy according to hedge funds. On August 7, DICK’S Sporting Goods announced the official launch of Cookie Jar & A Dream Studios, which is an in-house content and production studio. The new studio is dedicated to creating original sports content that tells human-centered stories.
The name of the studio is a tribute to the founding of DICK’S Sporting Goods in 1948, when an 18-year-old Dick Stack borrowed $300 from his grandmother’s savings, which she kept in a cookie jar, to open his first shop. Although the studio was just recently established, DICK’S Sporting Goods has been involved in sports storytelling for over a decade.
The launch of Cookie Jar & A Dream Studios coincides with the premiere of its new documentary, “Big Dreams: The Little League World Series 2024.” This film explores the Little League World Series in Williamsport, Pennsylvania, and was produced in partnership with Imagine Entertainment and MLB Studios. It is scheduled to premiere on ESPN on August 12.
DICK’S Sporting Goods Inc. (NYSE:DKS) is an omni-channel sporting goods retailer primarily in the US. The company provides hardlines, which include sporting goods equipment, fitness equipment, golf equipment, fishing gear products, and apparel.
5. Expedia Group Inc. (NASDAQ:EXPE)
Forward P/E Ratio as of August 7: 13.00
Number of Hedge Fund Holders: 54
Expedia Group Inc. (NASDAQ:EXPE) is one of the most undervalued quality stocks to buy according to hedge funds. On July 28, UBS analyst Matthew Boss raised the firm’s price target on Expedia to $182 from $166, while maintaining a Neutral rating on the shares. Boss noted that the consumer appetite for international travel remains strong.
Following this sentiment, the company also announced its Q2 2025 earnings. Expedia Group reported growth in its gross bookings, which increased by 5% this quarter to reach $30.4 billion. Revenue for the company also grew by 6% year-over-year to $3.8 billion.
Expedia’s B2B bookings rose by 17%, which marked the 16th consecutive quarter of double-digit growth due to international performance. Advertising revenue also increased by 19%. The company’s largest consumer brand, called Brand Expedia, was also its fastest-growing, with multi-item attachment rates at their highest level since the pandemic.
Expedia Group Inc. (NASDAQ:EXPE) is an online travel company in the US and internationally. The company operates through B2C, B2B, and trivago segments.
4. Deckers Outdoor Corporation (NYSE:DECK)
Forward P/E Ratio as of August 7: 16.47
Number of Hedge Fund Holders: 63
Deckers Outdoor Corporation (NYSE:DECK) is one of the most undervalued quality stocks to buy according to hedge funds. On August 1, HOKA, which is a division of Deckers Brands, launched the Mafate 5, the latest version of its trail running shoe. The shoe is designed to provide durability, adaptability, and comfort for long-distance trail runners. It is available for purchase on HOKA.com and through authorized dealers worldwide, with a manufacturer’s suggested retail price of $185.
A key new feature of the Mafate 5 is the Rocker Integrity Technology. This is a curved, light, and pliable TPU plate placed between two layers of foam: a firmer SCF EVA foam directly underfoot and a softer CMEVA foam beneath it. The design allows the shoe to absorb the impact of uneven terrain while maintaining a responsive and efficient foot strike.
The upper part of the shoe is built for 360-degree protection with a new flow molded TPU cage. Etched into the design of the cage is a map of the HOKA UTMB Mont-Blanc course. The Mafate 5 is also the first HOKA shoe to feature an ankle gaiter integration system, with the gaiter sold separately. To celebrate the launch, HOKA is hosting a nationwide Strava challenge from August 8 to September 12.
Deckers Outdoor Corporation (NYSE:DECK) designs, markets, and distributes footwear, apparel, and accessories for casual lifestyle use and high-performance activities in the US and internationally.
3. EOG Resources Inc. (NYSE:EOG)
Forward P/E Ratio as of August 7: 11.57
Number of Hedge Fund Holders: 64
EOG Resources Inc. (NYSE:EOG) is one of the most undervalued quality stocks to buy according to hedge funds. Earlier on July 22, Raymond James raised the price target on EOG Resources to $161 from $158, while maintaining a Strong Buy rating on the shares. The analyst noted that oil prices have recovered despite macroeconomic uncertainty and that EOG’s management is not expected to make significant changes to its activity levels.
Following this sentiment, EOG Resources reported a Q2 2025 net income of $1.345 billion, or $2.46 per share, and an adjusted net income of $1.268 billion, or $2.32 per share. EOG generated $1.0 billion in free cash flow, contributing to the return of $1.1 billion to shareholders during the quarter, which included $528 million in regular dividends and $600 million in share repurchases.
EOG’s production volumes exceeded the midpoints of its guidance. Crude oil and condensate production reached 504,200 barrels of oil per day/Bopd, while natural gas liquids/NGLs production was 258,400 thousand barrels per day/MBbld, and natural gas production was 2.229 billion cubic feet per day/MMcfd. Total crude oil equivalent production averaged 1,134,100 thousand barrels of oil equivalent per day/MBoed.
EOG Resources Inc. (NYSE:EOG) explores for, develops, produces, and markets crude oil, natural gas liquids, and natural gas in producing basins in the US, the Republic of Trinidad and Tobago, and internationally.
2. Gilead Sciences Inc. (NASDAQ:GILD)
Forward P/E Ratio as of August 7: 13.89
Number of Hedge Fund Holders: 79
Gilead Sciences Inc. (NASDAQ:GILD) is one of the most undervalued quality stocks to buy according to hedge funds. On July 25, the European Medicines Agency’s Committee for Medicinal Products for Human Use/CHM recommended the approval of Gilead Sciences’ lenacapavir, which is a twice-yearly injection for preventing HIV infection.
The recommendation, if followed by the European Commission/EC, would make lenacapavir the first HIV prevention medicine in the EU not administered on a daily, weekly, or monthly basis. In Europe, the drug is marketed under the brand name Yeytuo. It is intended to be used as a pre-exposure prophylaxis/PrEP in conjunction with safer sex practices to lower the risk of HIV-1 infection in adults and adolescents at high risk.
The CHMP’s positive opinion was based on data from two Phase III trials, PURPOSE 1 and PURPOSE 2. The medication works by inhibiting HIV-1 viral replication. A similar twice-yearly injectable version of lenacapavir, known as Yeztugo, was approved in the US by the FDA in June this year. According to the WHO, an estimated 1.3 million people were newly infected with HIV in 2024.
Gilead Sciences Inc. (NASDAQ:GILD) is a biopharmaceutical company that discovers, develops, and commercializes medicines in the areas of unmet medical need in the US, Europe, and internationally.
1. AbbVie Inc. (NYSE: ABBV)
Forward P/E Ratio as of August 7: 16.42
Number of Hedge Fund Holders: 86
AbbVie Inc. (NYSE:ABBV) is one of the most undervalued quality stocks to buy according to hedge funds. On July 30, AbbVie announced positive topline results from Study 2 of its pivotal Phase 3 UP-AA clinical program, which is evaluating the safety and efficacy of upadacitinib (RINVOQ) for treating severe alopecia areata/AA in adults and adolescents.
In this study, both daily doses of upadacitinib, 15 mg and 30 mg, met the primary endpoint. Key secondary endpoints were also successfully met. The safety profile observed in the study was consistent with what has been seen in the approved indications for RINVOQ. The most common side effects were acne, nasopharyngitis, and upper respiratory tract infections.
Treatment-emergent serious adverse events occurred in 1.4% of patients on the 15 mg dose and 2.8% on the 30 mg dose, with no serious adverse events in the placebo group. No adjudicated major cardiovascular events/MACE, malignancies, or deaths were reported. One adjudicated venous thromboembolism was reported in a patient on the 15 mg dose who had multiple risk factors. The results from the parallel replicate study/Study 1 of the Phase 3 UP-AA program are also expected in Q3 2025.
AbbVie Inc. (NYSE:ABBV) is a research-based biopharmaceutical company that researches, develops, manufactures, commercializes, and sells medicines and therapies worldwide.
While we acknowledge the potential of ABBV 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 ABBV and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
