We recently published a list of 7 Most Undervalued Dividend Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against other most undervalued dividend stocks to buy according to hedge funds.
Stock prices took a steep hit in March as investors grew concerned about a possible economic downturn, driven by unpredictable tariff policies and signs of slowing job growth. The broader market has dropped over 7% from its peak on February 19, putting stocks on the doorstep of a correction.
A group of seasoned investors saw last week’s stock market downturn as a buying opportunity. As the market briefly entered correction territory, wiping out approximately $5 trillion from the broader market’s value, corporate insiders began increasing their purchases. According to data from the Washington Service, the insider sentiment index climbed to 0.46 in March, up from 0.31 in January, with almost two weeks still remaining in the month. This puts the metric on track for its highest monthly level since June, bringing it closer to its historical norm.
Dave Mazza, chief executive officer of Roundhill Investments, made the following comment about the situation:
“If we see corporate insiders begin to use the opportunity in their stock prices to purchase shares, that shows that they have confidence in the underlying economy and in their underlying businesses. That differs from just the headlines, because the headlines are scary.”
In its 2025 US Market Outlook, Morningstar indicated that the US stock market was approaching the upper limit of its fair value range, suggesting that investors should moderate their return expectations for the year. It was noted that, since the end of 2010, the market had traded at such a premium or higher less than 10% of the time. Given these conditions, the firm had adopted a more cautious stance, emphasizing the increasing importance of portfolio positioning.
Morningstar advised investors to overweight value stocks and underweight growth stocks, citing that growth stocks were trading at their highest premium relative to fair value since the tech-driven bubble in early 2021, whereas value stocks remained undervalued. As of March 3, 2025, the Morningstar Value Index had gained 5.54% year to date, while the Morningstar Growth Index had declined 3.81%.
In addition, investors are shifting capital into value funds, which are perceived as more resilient during market downturns compared to growth stocks. Data from Lipper shows that U.S. growth exchange-traded funds (ETFs) saw $3.6 billion in outflows this month, while U.S. value ETFs attracted $1.8 billion in inflows. Value funds, which are largely composed of stocks from sectors like banking, energy, and utilities, provide a cushion against market volatility by focusing on stable, cash-rich, and undervalued companies that tend to be less sensitive to economic swings.
Chris Marangi, co-chief investment officer of value funds at Gabelli Funds, noted that value stocks present an appealing opportunity, especially among small and mid-cap companies. He highlighted that these firms tend to gain more from deregulation and tax cuts while being less impacted by challenges like tariffs. Given this, we will take a look at the most undervalued stocks according to hedge funds.
Our Methodology
For this list, we used a Finviz screener and identified dividend companies with forward P/E ratios below 15, as of March 20. The low price-to-earnings ratio shows that they are traded below their intrinsic value. From the resultant dataset, we selected seven companies that have the highest number of hedge fund investors at the end of Q4 2024. The stocks are ranked in ascending order of hedge funds having stakes in them.
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).
An underground network of pipelines transporting oil through an expansive terrain.
ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 86
Forward P/E Ratio as of March 20: 11.46
ConocoPhillips (NYSE:COP) is a Texas-based global energy company that is engaged in hydrocarbon exploration and production. The company has recently focused on improving operational efficiency and expanding its LNG business. Its strong performance has been driven by disciplined cost management, successful integration of acquisitions, and progress in low-carbon technologies. In recognition of its sustainability efforts, the company received the Oil and Gas Methane Partnership 2.0 Gold Standard in 2024, underscoring its commitment to lowering emissions.
As a company engaged in hydrocarbon exploration and production, ConocoPhillips (NYSE:COP) experienced a notable increase in output during the fourth quarter of 2024. Production rose 14.8% year-over-year to 2,183 thousand barrels of oil equivalent per day (MBOED), largely due to strategic acquisitions, including the completion of its Marathon Oil acquisition in November 2024. The stock has a forward P/E multiple of 11x, which makes it one of the most undervalued stocks according to hedge funds.
ConocoPhillips (NYSE:COP) maintained a strong position, generating $20.1 billion in operating cash flow for the year, with total cash from operations reaching $20.3 billion. Shareholder returns remained a priority, with $3.6 billion distributed through dividends. Following a 34% increase in October, the company’s quarterly dividend now stands at $0.78 per share. Its dividend yield comes in at 3.05%, as of March 20. The company has been rewarding shareholders with growing dividends for the past 10 years.
Overall, COP ranks 4th on our list of most undervalued dividend stocks to buy according to hedge funds. While we acknowledge the potential of COP as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than COP but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.