5 Best Undervalued Stocks to Buy Now

2. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 93

PE Ratio as of June 24: 8.41

On June 24, Raymond James analyst David Long slashed his price target on Wells Fargo & Company (NYSE:WFC) to $50 from $60 but reiterated an Outperform rating on the shares. The analyst is bullish on the stock and sees near-term tailwinds fueling the profitability of Wells Fargo & Company (NYSE:WFC) which include accelerated loan growth, initiatives in multiyear expense rationalization, and increased asset sensitivity, among others.

As of June 24, Wells Fargo & Company (NYSE:WFC) has a PE ratio of 8.41 and is trading at $40.76 a share, which makes it rank high among the top undervalued stocks to buy now.

At the end of Q1 2022, 93 hedge funds were long Wells Fargo & Company (NYSE:WFC) with stakes worth $6.86 billion. This is compared to 94 positions in the previous quarter with stakes worth $6.11 billion.

As of March 31, Theleme Partners is the most prominent shareholder in Wells Fargo & Company (NYSE:WFC) with stakes of $884.71 million.

Here is what Davis Funds said about Wells Fargo & Company (NYSE:WFC) in its fourth-quarter 2021 investor letter:

“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.

Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund includes Wells Fargo.”