In this article, we will take a look at the 13 Best Fundamental Stocks to Buy According to Hedge Funds.
On June 27, U.S. stock index futures jumped, setting the S&P 500 and the Nasdaq on course to reach all-time highs as investors braced for a significant inflation report amid indications of a dovish Federal Reserve. This week’s barrage of economic data, which included a first-quarter GDP report that was weaker than anticipated and a multi-year high in unemployment claims, has bolstered the argument that the central bank should lower borrowing costs this year.
The Federal Reserve has been under pressure from President Trump to cut interest rates to reduce the cost of funding the country’s soaring national debt. However, during its recent meeting, the Federal Open Market Committee decided to maintain its target key interest rate between 4.25% and 4.5%.
Conversely, Fed Governor Michelle Bowman stated on June 23 that, provided inflation pressures remain low, she would support a rate drop at the next policy meeting in July.
“Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market.”
Trump’s tariffs had raised concerns among economists that they might increase inflation, but thus far, the measures have had little effect. Simultaneously, the president has calmed down and allowed for negotiations with important trading partners.
With that in mind, we will now take a look at the 15 best fundamental stocks to buy according to hedge funds.
Our Methodology
For our list of the best fundamental stocks, we noted down equities that are known for their stable businesses, recognized product lines, and have a proven history of performing well during economic swings. These companies recorded reliable revenue growth rates of more than over the past 5 years. We also used the number of hedge fund investors as a secondary metric to rank the stocks, 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).
15. UBS Group AG (NYSE:UBS)
5-Year Revenue Growth Rate: 13.42%
Number of Hedge Fund Holders: 33
UBS Group AG (NYSE:UBS) ranks among the best fundamental stocks to buy according to hedge funds. RBC Capital retained its Outperform rating on UBS Group AG (NYSE:UBS), but reduced its price target for the Swiss banking behemoth from CHF31.50 to CHF29 on June 19. The move appears as a response to the current “Too Big To Fail” (TBTF) regulatory plan in Switzerland, which RBC Capital believes to be a “worst case” situation for the bank.
RBC Capital cites the proposal’s longer implementation period as a mitigating factor, indicating that UBS might absorb the regulatory changes without further reducing shareholder payouts. Although the new price target is still higher than UBS’s current share price, the firm’s valuation methodology was modified to account for what it refers to as a “harsher outcome” on deferred tax assets and software.
While acknowledging that it will “take time to have full visibility” on the situation, RBC Capital believes there is potential for a better result for UBS Group AG (NYSE:UBS) despite immediate regulatory challenges.
Global financial services company UBS Group AG (NYSE:UBS) offers a range of services, including investment banking and wealth management, to individuals, businesses, and institutions.
14. DexCom Inc. (NASDAQ:DXCM)
5-Year Revenue Growth Rate: 22.27%
Number of Hedge Fund Holders: 60
DexCom, Inc. (NASDAQ:DXCM) ranks among the best fundamental stocks to buy according to hedge funds. Oppenheimer reaffirmed its $95 price target and Outperform rating for DexCom, Inc. (NASDAQ:DXCM) on June 24 in response to remarks made by Health and Human Services Secretary RFK Jr. regarding a significant wearables campaign.
At a June 24 hearing of the House Energy and Commerce Health Subcommittee, Secretary Kennedy declared that HHS would soon begin “one of the biggest advertising campaigns in HHS history” to promote wearables among Americans, emphasizing the advantages of glucose monitors.
The possibility of a major government marketing campaign is encouraging for companies that provide continuous glucose monitoring (CGM), as noted by Oppenheimer, who also observed that the Secretary’s remarks may indicate interest in future coverage of over-the-counter CGMs.
Oppenheimer also noted recent advancements in CGM coverage for non-insulin Type 2 diabetes, pointing to a DexCom-led randomized controlled trial that is expected to wrap up in late 2025 or early 2026 for Medicare patients with non-insulin Type 2 diabetes.
DexCom, Inc. (NASDAQ:DXCM) is a medical device company that manufactures continuous glucose monitoring (CGM) systems to allow real-time health management control.
13. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
5-Year Revenue Growth Rate: 21.61%
Number of Hedge Fund Holders: 60
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) ranks among the best fundamental stocks to buy according to hedge funds. With a price target of $550, H.C. Wainwright reaffirmed its Buy rating on Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) on June 23. The update comes after the American Diabetes Association (ADA) conference featured updated data from Vertex’s zimislecel program.
According to the clinical findings, 10 out of 12 patients, or 83% of the total, became insulin independent. Furthermore, as evidence of the treatment’s potential efficacy, H.C. Wainwright reported that all research participants achieved primary composite endpoints with sustained C-peptide restoration.
Notably, as Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) seeks to expand its therapeutic areas, the zimislecel program represents a component of the company’s pipeline beyond its primary cystic fibrosis therapies.
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a global biotechnology company that is involved in the discovery and development of small-molecule medications for the treatment of severe illnesses, including cystic fibrosis.
12. HEICO Corporation (NYSE:HEI.A)
5-Year Revenue Growth Rate: 13.42%
Number of Hedge Fund Holders: 65
HEICO Corporation (NYSE:HEI.A) ranks among the best fundamental stocks to buy according to hedge funds. On June 23, Stifel initiated coverage of the electronics and aerospace company HEICO Corporation (NYSE:HEI.A) with a $352 price target and a Buy rating. The research firm’s optimistic assessment of HEICO’s shares was bolstered by “continued solid operations and ongoing momentum” throughout the company’s portfolio.
However, a downturn in the commercial aerospace cycle, adjustments to government expenditure trends, and difficulties with acquisition sourcing and integration are some of the possible negative risks that the firm highlighted as part of its investment thesis.
Stifel also identified potential failures to enhance product offerings through HEICO Corporation (NYSE:HEI.A)’s internal development programs and contract costs that surpass projections.
HEICO Corporation (NYSE:HEI.A) is a leader in electronics and aerospace that manufactures products for use in spacecraft, airplanes, defense systems, medical devices, and telecommunications equipment.
11. Accenture plc (NYSE:ACN)
5-Year Revenue Growth Rate: 8.47%
Number of Hedge Fund Holders: 69
Accenture plc (NYSE:ACN) ranks among the best fundamental stocks to buy according to hedge funds. On June 23, Stifel reaffirmed its $355 price target and Buy rating for Accenture plc (NYSE:ACN) in response to the company’s fiscal third-quarter results.
Accenture’s fiscal third-quarter results exceeded expectations, with earnings per share growing 13% against the consensus forecast of 6%, and year-over-year organic growth coming in at 4% against the 2% projection. With consulting up 6% and outsourcing seeing high single-digit growth, both the consulting and outsourcing industries exhibited consistency.
While management’s hesitancy to explain the impact of DOGE (Department of Government Efficiency) into fiscal year 2026 possibly contributed to the stock’s performance decline on June 20, Stifel pointed out that some data points, like bookings and headcount, could be interpreted negatively without further examination.
Given the continued macroeconomic uncertainty, the company’s fiscal fourth-quarter revenue guidance of 0-4% organic growth remained mostly unchanged.
Accenture plc (NYSE:ACN), based in Dublin, Ireland, is a multinational professional services firm specializing in IT consulting, digital transformation, and management solutions.
10. Fiserv, Inc. (NYSE:FI)
5-Year Revenue Growth Rate: 14.96%
Number of Hedge Fund Holders: 72
Fiserv, Inc. (NYSE:FI) ranks among the best fundamental stocks to buy according to hedge funds. Following Fiserv, Inc. (NYSE:FI)’s stablecoin announcements, William Blair kept its Outperform rating on the company on June 23.
As investors carefully weigh the ramifications of the stablecoin operations, including the introduction of FIUSD, the company’s own stablecoin, the firm anticipates that the immediate surge in Fiserv, Inc. (NYSE:FI) shares will subside. According to William Blair, Fiserv is acting swiftly to mitigate the risks that stablecoins can pose to the deposit bases of its financial institution customers, which could impact growth.
Although William Blair believes it will take time for the stablecoin ecosystem to mature and that early players like Fiserv, Inc. (NYSE:FI) would probably need to modify their plans as the market changes, the firm views the company’s stablecoin debut as a step to preserve flexibility rather than an adverse development.
Fiserv, Inc. (NYSE:FI) is an American multinational financial technology company that primarily serves banking and fintech clients through its payment solutions and technologies, including digital banking platforms, card issuance and processing, merchant acquisition, and point-of-sale systems.
9. Elevance Health, Inc. (NYSE:ELV)
5-Year Revenue Growth Rate: 11.15%
Number of Hedge Fund Holders: 75
Elevance Health, Inc. (NYSE:ELV) ranks among the best fundamental stocks to buy according to hedge funds. On June 17, UBS reaffirmed its Buy rating and $555 price target for Elevance Health, Inc. (NYSE:ELV), even after the company modified its 2025 earnings distribution. Elevance Health, Inc. (NYSE:ELV) originally predicted that first-half earnings would account for 62–63% of full-year results. However, the company now expects them to account for 60%.
In order of significance, Elevance Health, Inc. (NYSE:ELV) identified three factors that impacted second-quarter earnings expectations: higher underlying clarity in Affordable Care Act (ACA) populations after membership erosion, out-of-network billing difficulties in behavioral health services centered on exchanges, and Medicaid cost trends not slowing down as quickly as expected.
To address these second-quarter trends, Elevance Health, Inc. (NYSE:ELV) is looking into ways to minimize expenses in order to boost performance in the second half of the year.
Elevance Health, Inc. (NYSE:ELV), previously Anthem, Inc., is a leading health-benefits provider in the United States. The company offers medical, pharmaceutical, dental, long-term care, disability, and behavioral health insurance under numerous brands, including Anthem Blue Cross, Blue Shield, Wellpoint, and Carelon.
8. ASML Holding N.V. (NASDAQ:ASML)
5-Year Revenue Growth Rate: 18.24%
Number of Hedge Fund Holders: 80
ASML Holding N.V. (NASDAQ:ASML) ranks among the best fundamental stocks to buy according to hedge funds. Bernstein SocGen Group began coverage of ASML Holding N.V. (NASDAQ:ASML) on June 17 with a Market Perform rating and a EUR700 price target, citing issues with the company’s extreme ultraviolet (EUV) lithography division.
While acknowledging ASML’s “undisputed” superiority in EUV lithography, the company voiced concerns about the declining returns on top-of-the-line logic capital expenditures incurred by EUV lithography. In that regard, Bernstein anticipates a decline in the intensity of EUV capital expenditure.
Instead of lithography, the firm predicts that new transistor architectures and advanced packaging would propel further transistor miniaturization. The firm’s estimate of EUV revenue for 2030 falls 24% below ASML Holding N.V. (NASDAQ:ASML)’s own guidance.
According to Bernstein, ASML’s growth will be in line with that of Wafer Fabrication Equipment (WFE) at a compound annual growth rate of 7% from 2024 and 2030. The firm’s revenue prediction for 2030 is 18% below the consensus and at the low end of the company’s guidance range.
A key player in the semiconductor sector, ASML Holding N.V. (NASDAQ:ASML) specializes in lithographic systems, which employ light to etch intricate designs on silicon wafers, a crucial stage in the production of chips.
7. The Progressive Corporation (NYSE:PGR)
5-Year Revenue Growth Rate: 14.08%
Number of Hedge Fund Holders: 91
The Progressive Corporation (NYSE:PGR) ranks among the best fundamental stocks to buy according to hedge funds. On June 20, Keefe, Bruyette & Woods reaffirmed its Market Perform rating for The Progressive Corporation (NYSE:PGR), citing a $288 price target.
The research firm boosted its earnings per share estimates for 2025 and 2026 from $15.25 and $14.65 to $16.20 and $14.85, respectively. Additionally, KBW presented an estimated $15.85 in EPS for The Progressive Corporation (NYSE:PGR) in 2027.
The upward revision comes after Progressive’s May 2025 earnings report. According to Keefe, Bruyette & Woods, the enhanced outlook was primarily driven by reduced expense ratios, larger reserve releases, and faster growth in investment income.
That said, the firm voiced concerns regarding near-term pressure on Progressive’s core loss ratio, citing limited earned rate increases and normalizing frequency benefits.
One of the leading insurance holding companies in the United States, The Progressive Corporation (NYSE:PGR) offers residential property insurance in addition to commercial and personal auto insurance.
6. PayPal Holdings, Inc. (NASDAQ:PYPL)
5-Year Revenue Growth Rate: 68.78%
Number of Hedge Fund Holders: 92
PayPal Holdings, Inc. (NASDAQ:PYPL) ranks among the best fundamental stocks to buy according to hedge funds. On June 23, UBS maintained its $75 price target and Neutral rating for PayPal Holdings, Inc. (NASDAQ:PYPL). Considering their varied contributions to gross profit, the firm noted the importance of understanding the different Total Payment Volume (TPV) categories that make up PayPal’s operations.
In order to better identify its business divisions, PayPal Holdings, Inc. (NASDAQ:PYPL) unveiled three newly defined Total Payment Volume (TPV) categories at its 2025 Investor Day. These include P2P & Other Consumer, which covers peer-to-peer payments and debit card activity; Branded Checkout (Online), which now includes Pay with Venmo and eBay transactions; and PSP, which includes Braintree and the majority of services previously included under “Other Merchant Services.”
UBS pointed out that, according to its prior definition, Branded Checkout accounts for roughly 30% of volume but generates roughly two-thirds of transaction gross profit.
PayPal Holdings, Inc. (NASDAQ:PYPL), based in San Jose, California, operates a technology platform that enables digital payments for merchants and customers worldwide. The company provides payment services under several brands, including PayPal, Credit, Braintree, Venmo, Xoom, and Zettle.
5. Snowflake Inc. (NYSE:SNOW)
5-Year Revenue Growth Rate: 68.78%
Number of Hedge Fund Holders: 94
Snowflake Inc. (NYSE:SNOW) ranks among the best fundamental stocks to buy according to hedge funds. On June 18, Truist Securities restated its Buy rating and $235 price target for Snowflake Inc. (NYSE:SNOW) following encouraging results from the firm’s mid-year IT spending survey.
The survey revealed that Snowflake’s data cloud offerings remained prevalent and suggested that growing momentum would continue. Notably, Truist appeared somewhat surprised by the positive survey results around new product adoption.
Truist also noted advancements during Snowflake’s recent investor session and user conference, highlighting the company’s notable advancements in artificial intelligence over the previous two years. As investments in the AI vertical continue to rise, the research firm believes Snowflake Inc. (NYSE:SNOW) is in an ideal spot to take on additional workloads.
Snowflake Inc. (NYSE:SNOW) is an American cloud-based data storage company that operates a platform built on Amazon Web Services, Microsoft Azure, and Google Cloud. It also provides Snowflake Cortex with a set of AI capabilities that employ large language models to analyze unstructured data.
4. The Charles Schwab Corporation (NYSE:SCHW)
5-Year Revenue Growth Rate: 17.15%
Number of Hedge Fund Holders: 102
The Charles Schwab Corporation (NYSE:SCHW) ranks among the best fundamental stocks to buy according to hedge funds. Truist Securities maintained its Buy rating on The Charles Schwab Corporation (NYSE:SCHW) and increased its price target from $97 to $100 on June 16. The adjustment followed the release of Charles Schwab’s May data, which indicated some deceleration following impressive performance in the first four months of 2025.
In comparison to April, The Charles Schwab Corporation (NYSE:SCHW) reported lower trading volumes, slower seasonally adjusted net new assets, and a lower cash mix. That said, Truist noted that the company’s fundamentals held up well in spite of these slowdowns, with daily average trades surpassing 7 million and net new asset growth still hovering around 5%.
Following the data release, The Charles Schwab Corporation (NYSE:SCHW) shares dropped around 2% on the morning of June 16. Truist stated that this was only the second monthly report this year where the company’s stock followed the broader market.
The Charles Schwab Corporation (NYSE:SCHW) is a financial services corporation that provides commercial banking, asset management, and wealth management solutions in the United States and internationally.
3. Tesla, Inc. (NASDAQ:TSLA)
5-Year Revenue Growth Rate: 31.78%
Number of Hedge Fund Holders: 104
Tesla, Inc. (NASDAQ:TSLA) ranks among the best fundamental stocks to buy according to hedge funds. Following the company’s robotaxi service launch in Austin on June 23, TD Cowen reaffirmed its Buy rating and $330 price target for Tesla, Inc. (NASDAQ:TSLA). According to TD Cowen, the electric car manufacturer’s eagerly awaited robotaxi service was launched in Austin on June 22. The first day seemed to go well, with several aspects surpassing expectations, especially in terms of the operational design domain and pickup/drop-off capabilities.
TD Cowen commended the well-designed user interface for an early-stage ridesharing deployment and noted that Tesla’s initial operational area in Austin was larger than anticipated, albeit smaller than rival Waymo’s service area. The first day of operations saw no significant safety or vehicle performance difficulties, which TD Cowen described as “pretty impressive” for an initial launch.
Based in Austin, Texas, Tesla, Inc. (NASDAQ:TSLA) is a well-known clean energy company that is best known for its electric vehicles (EVs). In addition to designing, producing, and marketing EVs, Tesla also offers solar panels, solar shingles, and energy storage devices.
2. Salesforce, Inc. (NYSE:CRM)
5-Year Revenue Growth Rate: 17.25%
Number of Hedge Fund Holders: 140
Salesforce, Inc. (NYSE:CRM) ranks among the best fundamental stocks to buy according to hedge funds. Goldman Sachs maintained its $385 price target and Buy rating on Salesforce, Inc. (NYSE:CRM) on June 24 in response to the company’s Agentforce 3.0 launch.
The investment bank claims that transparency, compatibility, and time-to-value are all significantly improved by the new platform. One significant feature is the Command Center, which represents Salesforce’s first native observability layer for AI agents. Notably, it can integrate with tools like Datadog to offer real-time information.
According to Goldman, Salesforce, Inc. (NYSE:CRM) is also expanding its adoption paths by introducing roughly 100 prebuilt actions with usage-based cost at $0.10 per action and an unlimited-use license for internal agents.
Salesforce, Inc. (NYSE:CRM) is a cloud-based software company focused on customer relationship management. The company offers custom software and solutions for various applications, such as analytics, marketing automation, and sales.
1. Alphabet Inc. (NASDAQ:GOOGL)
5-Year Revenue Growth Rate: 16.73%
Number of Hedge Fund Holders: 227
Alphabet Inc. (NASDAQ:GOOGL) ranks among the best fundamental stocks to buy according to hedge funds. Citing favorable channel checks for both Search and YouTube, Citi upheld its Buy rating on Alphabet Inc. (NASDAQ:GOOGL) on June 24 and raised its price target from $200 to $203.
While YouTube and Search continue to be at the core of most media buying strategies, the research firm pointed out that advertisers are becoming more conscious of how users’ search habits are evolving, with ChatGPT reaching almost 603 million monthly active users in May as opposed to Gemini’s 77 million.
Nonetheless, YouTube remains strong, with over 1 billion hours of TV viewing every day and a 12.5% share of all viewing time in the US. Compared to the roughly 70 billion views recorded in September 2023, YouTube Shorts currently receives over 200 billion views a day, an aspect Citi found impressive.
Alphabet Inc. (NASDAQ:GOOGL) is a leading tech giant with a diverse portfolio, offering products such as Google ads, Google Chrome, Search, and YouTube, holding a dominant position in each of these markets.
While we acknowledge the potential of GOOGL 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 GOOGL and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
