5 Cheap Beginner Stocks to Buy

3. Wells Fargo & Company (NYSE:WFC)

PE Ratio (TTM) as of March 28: 11.84

Number of Hedge Fund Holders: 87

On January 17, Citi analyst Keith Horowitz raised his price target on Wells Fargo & Company (NYSE:WFC) to $52 from $48 and maintained a Buy rating on the shares.

As of March 28, Wells Fargo & Company (NYSE:WFC) has a TTM PE ratio of 11.84 and is yielding 3.23%. Wells Fargo & Company (NYSE:WFC) is one of the best cheap beginner stocks to buy now according to hedge funds.

At the close of the fourth quarter of 2022, 87 hedge funds were bullish on Wells Fargo & Company (NYSE:WFC) and disclosed collective stakes worth $5.56 billion in the company. This is compared to 77 hedge funds in the previous quarter with stakes worth $4.95 billion. The hedge fund sentiment for the stock is positive.

As of December 31, Eagle Capital Management is the largest stockholder in Wells Fargo & Company (NYSE:WFC) and has a position worth $1.1 billion.

Davis Advisors made the following comment about Wells Fargo & Company (NYSE:WFC) in its 2022 annual investor letter:

“Our investment thesis for our next largest bank investment, Wells Fargo, is totally different. As is well known, Wells Fargo & Company (NYSE:WFC) is the country’s third-largest bank, serving one in three U.S. households. Years of regulatory missteps under prior managements resulted in reputational damage, higher-than-average expenses, numerous consent orders, caps on asset growth, all added to the negative impact of low rates on their interest income. However, where others see bad news, we see resiliency and gradual improvement. Wells Fargo’s resiliency is reflected in the fact that despite years of terrible headlines and congressional hearings, Wells Fargo’s core customers stayed put and customer attrition remains extraordinarily low.

As to gradual improvement, new management has made steady headway in closing consent orders, settling regulatory matters and upgrading systems. Thus, rather than increasing profits from growth, Wells Fargo’s earnings growth for the next three-to-five years should come from the combined tailwinds of rising interest income, partially offset by normalizing credit costs, reduced expenses as systems improve and the scandals of the last decade are gradually put behind them, and the return of excess capital through share repurchases and rising dividends. The hypothetical earnings bridge displayed in Figure 6 gives some sense of the earnings power we see unfolding in the years ahead for this durable financial franchise.

While our grounded optimism carries the day, we are mindful of the risk that Wells Fargo’s historically excellent credit culture may have deteriorated, or that exasperated regulators may choose to extract even more major penalties for past infractions.”