We recently compiled a list of the 11 Oversold Blue Chip Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Edison International (NYSE:EIX) stands against the other oversold blue chip stocks.
The uncertainty related to the tariff announcements continues to influence Wall Street. Reuters reported that the S&P 500 is down 4.3% since Trump took office on January 20, and tariffs are the main concern for investors as they believe that can adversely impact the economic growth and be inflationary. While Trump believes that tariffs can increase the country’s revenue, fuel broad-based growth, and can be used as a negotiating tool with other countries, the investors believe that trade policies can weaken consumer confidence and limit the capital spending from companies.
Long Term Outlook Remains Intact
As per Franklin Templeton, the US equities have managed to provide strong gains over the past few years, with the S&P 500 repeatedly touching record highs, thanks to the Magnificent Seven’s dominance in AI. Despite elevated valuations, the broader market outlook is positive. Innovation and investment continue at a pace, sales growth has been accelerating, and earnings are expected to see a double-digit rise this year. Also, the US economy has a more business-friendly administration. That being said, there are risks, mainly related to the US trade policy and the expected impact of tariffs on critical sectors, including technology.
Amidst such uncertainties, Franklin Templeton believes that investor confidence in the US equities is expected to remain strong. While the risks might be elevated, the new administration’s policy changes are expected to finally result in long-term positives for the broader US economy.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Blue Chips to Provide Shelter
While the Mag 7 stocks are well-placed for the long-term growth, the market leadership is expected to broaden as and when acceleration in innovation occurs, says Franklin Templeton. The investment firm believes that active management is of utmost importance. The pivot from AI infrastructure to platforms remains well underway. Therefore, identifying the right companies at the right time—ones possessing the technology, strategy, and adaptability to maintain and sustain long-term growth—are expected to be critical to investment success.
The US equities, mainly large caps, have been performing strongly, courtesy of the innovation and investment. Notably, over the past 6 months, the Dow Jones Industrial Average has seen an increase of over ~4.5%. Even though the Mag 7 stocks continue to support the market momentum, the investment firm sees growing opportunities beyond such market leaders. With the continuation of AI-driven cycle, the competitive landscape remains dynamic and has been creating new growth areas.
Our Methodology
To list the 11 Oversold Blue Chip Stocks to Buy According to Hedge Funds, we used a screener and the SPDR S&P 500 ETF to shortlist the companies that have declined over the past year. Next, we chose the stocks that are popular among hedge funds, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiments.
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).
A wide aerial view of an electric power transmission facility with lines, substations, and overhead wires.
Edison International (NYSE:EIX)
% Decline Over Past One Year: ~18.7%
Number of Hedge Fund Holders: 38
Market Cap as on March 7: $21.7 billion
Edison International (NYSE:EIX) is engaged in generation and distribution of electric power. Mizuho Securities analyst Anthony Crowdell reiterated the bullish stance on the company’s stock, providing a “Buy” rating on February 27. The analyst’s rating is backed by factors such as the company’s healthy 2025 guidance and its efforts to address wildfire-related challenges. Edison International (NYSE:EIX) has revised its 2025 core EPS guidance of $5.94-$6.34.
Despite uncertainties, the company’s management reflected prudent actions that can potentially mitigate financial impacts. Looking ahead, Edison International (NYSE:EIX)’s management exhibited confidence in achieving 2025 EPS guidance, with projections of 5% – 7% core EPS compound annual growth rate through 2028. Edison International (NYSE:EIX) remains focused on continuing its investments in grid hardening and distribution system expansion.
The company’s growth strategy focuses on California’s clean energy transition and electrification goals. Edison International (NYSE:EIX) is well-placed to benefit from the expansion of electric vehicles (EVs) and overall electrification trends within SCE’s service territory. ClearBridge Investments, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“From a sector perspective, meanwhile, our utilities overweight was positive, with Edison International (NYSE:EIX) our top individual contributor. The company reached a tentative deal to recoup $1.7 billion of wildfire and mudslide expenses in California, bolstering its balance sheet, increasing earnings and demonstrating the favorable regulatory environment in California, benefiting both Edison as well as Sempra, our largest utility holding. Another rate-sensitive area — real estate — was the second-best sector performer as rate cuts boosted valuations in this area. Our REITs underweight, however, was a headwind during the period.”
Overall EIX ranks 11th on our list of the oversold blue chip stocks to buy according to hedge funds. While we acknowledge the potential of EIX as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than EIX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.