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Is Ally Financial (ALLY) the Cheap Value Stock to Invest in According to Warren Buffett?

We recently published a list of 10 Cheap Value Stocks to Invest in According to Warren Buffett. In this article, we are going to take a look at where Ally Financial Inc. (NYSE:ALLY) stands against other cheap value stocks to invest in according to Warren Buffett.

Has Warren Buffett given up on stocks amid overstretched valuations? That’s the big question, as the “Oracle of Omaha” has been a net seller in recent months. Buffett and his top advisors, Todd Combs and Ted Weschler, have sold $166.2 billion, more stock than they have bought over the last eight reported quarters.

The selloff spree has seen Berkshire Hathaway’s cash pile swell to over $325 billion, with more than $288 billion invested in Treasuries. The adjustments come amid growing concerns that the stock market has become pricey, making it difficult to find anything of value to buy at discounted valuations.

Some of the selloffs also came amid concerns that corporate income taxes would climb with the continuation of a democrat administration. However, that is not expected to happen with Republicans controlling both houses of Congress and Donald Trump at the helm.

READ ALSO: 10 Best Blue Chip Stocks to Buy for 2025 and Billionaire Israel Englander’s Top 10 Stock Picks Heading Into 2025.

While Buffett has been a net seller in recent months, the actions point to the billionaire investor accumulating capital to pursue cheap stocks once the current correction ends. An optimist in his own right, Buffett has always insisted that even the worst recessions are only temporary and investors can find silver linings at depressed valuations.

While the stock market is still on an upswing, a fantastic buy opportunity should emerge when stock prices fall, according to the billionaire investor.

“[I]n the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank,” he explained. “In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price,” Buffett said.

Warren Buffett, “the Oracle of Omaha,” will go down in history as one of the most effective and successful value investors of all time. In the six decades that he has graced the ups and downs of Wall Street, his investment and holding company Berkshire Hathaway has cumulatively gained 5,500,000%. The fact that the investment firm is up by about 115% over the past five years affirms why Buffett is still a force to reckon with.

Nevertheless, the billionaire investor known for a value investing strategy that focuses on buying undervalued securities and holding them long-term appears to be slowly exiting the active investing fray. The 94-year billionaire investor has already named his middle son, Howard Buffett, his successor. Howie is tasked with steering the multibillion-dollar conglomerate Berkshire Hathaway as a non-executive chairman.

When asked why he settled on Howie, Buffett was clear: “He is getting it because he’s my son. I’m very, very, very lucky in the fact that I trust all three of my children,” he told the Wall Street Journal.

As Warren Buffett exits the stage, all eyes are on Howie to ensure Berkshire Hathaway, with over $1 trillion, continues to thrive. The holding company with one of the most diversified investment portfolios has enjoyed a compound annual growth rate of 19.8% compared to 10.2% for the S&P 500 since 1965. Diversification has proved to be a compelling investment play that has allowed Berkshire Hathaway to spread risk and, most importantly, shrug off volatility in some sectors.

While the US stock market has shown signs of exhaustion, resulting in significant pullbacks, Warren Buffett, an eternal optimist, has frequently advised against betting against America. He acknowledges that stock market corrections and US recessions are natural parts of economic cycles. Still, he believes that bull markets and periods of economic growth tend to last longer than downturns.

This belief underpins his continued bullish stance on the US stock market, even as valuations seem stretched after two years of strong rallies driven by the AI boom and a resilient economy. Despite high valuations, Buffett continues to add to positions he believes will outperform while trimming others.

Even though Buffett has been a net seller over the past two years, he has continued to bolster holdings in stocks that he believes are fairly valued. Consequently, according to Warren Buffett, the 10 cheap value stocks to invest in are those of time-tested businesses well poised to generate significant shareholders in the long run. 

Our Methodology

To make the list of 10 cheap value stocks to invest in according to Warren Buffett, we scanned Berkshire Hathaway’s investment portfolio. The focus was on stocks trading with a forward price-to-earnings multiple of less than 15, as of January 10. We then settled on the top ten holdings with low P/E and examined why they stand out as value investments. Finally, we ranked the stocks in ascending order based on Berkshire Hathaway’s stake in them.

At Insider Monkey, we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

An executive at a desk, surrounded by financial documents and a laptop.

Ally Financial Inc. (NYSE:ALLY)

Forward Price to Earnings Ratio: 7.28

Berkshire Hathaway Stake Value: $1.03 Billion

Number of Hedge Fund Holders: 56

Ally Financial Inc. (NYSE:ALLY) is a digital financial services company that provides financial products and services. It is one of Warren Buffett’s top holdings for exposure in the auto financial sector as an all-digital bank focusing on customers with low fees and high saving rates. Likewise, it is a cheap value stock to invest in as it trades at a discount with a price-to-earnings multiple of 7.28.

While the stock has underperformed in recent months, it remains a top pick owing to its exposure to the auto lending business, which can be highly profitable. The fact that an average auto loan yields 10.5% leaves Ally Financial Inc. (NYSE:ALLY) in a solid position to continue generating significant interest income even with the Fed cutting the benchmark rate. Management expects to add about 80 basis points to the net interest margin as the deposit costs drop.

Ally Financial Inc. (NYSE:ALLY) may also benefit greatly as rates decline. It currently has a 4.2% deposit cost, but if the Fed continues to lower rates, that could drop considerably. Although the bank’s net interest margin is currently a healthy 3.22%, management anticipates that figure will rise to 4% or more in the medium run.

Here is what Delaware Ivy Core Equity Fund stated the following regarding Ally Financial Inc. (NYSE:ALLY) in its Q3 2024 investor letter:

“Ally Financial Inc. (NYSE:ALLY) is primarily an auto lender with solid longer-term returns. As a company dependent on funding its balance sheet (loans) through higher-cost consumer deposits, it will likely be a beneficiary of lower short-term interest rates. Ally has seen consumer delinquency rates and bad debt reserves within its auto lending portfolio increase, causing weakness in earnings and the share price, leading to an opportunity to purchase the shares amid considerable dispute.”

Overall, ALLY ranks 9th on our list of cheap value stocks to invest in according to Warren Buffett. While we acknowledge the potential of ALLY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stock To Buy Now and 30 Most Important AI Stocks According to BlackRock

Disclosure: None. This article is originally published at Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
  • It plays a pivotal role in U.S. LNG exportation—a sector about to explode under President Trump’s renewed “America First” energy doctrine.

Trump has made it clear: Europe and U.S. allies must buy American LNG.

And our company sits in the toll booth—collecting fees on every drop exported.

But that’s not all…

As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

And infrastructure needs a builder with experience, scale, and execution.

This company has its finger in every pie—and Wall Street is just starting to notice.

Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…

This company is completely debt-free.

In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.

It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.

And here’s what the smart money has started whispering…

The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

They’re sharing it quietly, away from the cameras, to rooms full of ultra-wealthy clients.

Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.

And that’s for a business tied to:

  • The AI infrastructure supercycle
  • The onshoring boom driven by Trump-era tariffs
  • A surge in U.S. LNG exports
  • And a unique footprint in nuclear energy—the future of clean, reliable power

You simply won’t find another AI and energy stock this cheap… with this much upside.

This isn’t a hype stock. It’s not riding on hope.

It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…