We recently published a list of Smart Money Ratings For 20 Most Undervalued Stocks. In this article, we are going to take a look at where ConocoPhillips (NYSE:COP) stands against other most undervalued stocks with smart money ratings.
We have passed a quarter into 2025, and the U.S. economy sends mixed signals, causing investors to scramble and decode them. The U.S. GDP contracted by 0.3% in Q1, 2025, as businesses started stockpiling imports at a record pace to brace themselves for the sweeping tariffs introduced by President Trump. Not considering the pandemic era, goods imports have never been this high since 1974.
In addition to dragging the economic growth lower, the rising imports and declining GDP have left even economists unsure of what comes next. Some tend to dismiss the slump as a temporary blip induced by changes in trade policies. Others are raising the alarm about a crack in the economy, influenced by stubborn inflation and slowing consumer spending.
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In the middle of this uncertain period, the Federal Reserve is presented with two options: cut rates to stimulate growth or hold firm to control inflation. As per a CNBC report, there is an upward movement in Core Personal Consumption Expenditures (PCE) prices by 3.5% year-over-year in Q1, well above the Fed’s anticipated 2%. The increase comes while the consumer spending growth has cooled to 1.8%, marking the weakest pace in the last two years.
Pointing to these cross signals, Chair Jerome Powell ruled out pre-emptive rate cuts and advocated trade negotiations to influence the current economic condition, either for better or worse. These claims have got the market on edge. Every headline about tariffs or Treasury yields is sending ripples through portfolios.
Opportunities are also on the rise amid the uncertainty. Historically, the undervalued stocks, trading below their actual worth owing to short-term fears arising from economic ambiguity, have outperformed even their counterparts when the market sentiment shifted. After the 2008 financial crisis, for instance, in 2009, the value stocks representing the market rebounded by 58%, beating the returns of their growth peers. Such a history would repeat itself in the current market environment if investors were to focus on stocks with strong fundamentals that are being overlooked.
We must separate the noise from the nuance to focus on the right stocks. Most of the headlines are fixated on tariffs and GDP dips. While these indicators should not be ignored, we must also look at the underlying strengths that would persist. Some companies are upgrading their equipment in anticipation of potential supply chain disruptions, causing the private domestic investment to increase by 21.9% in Q1. The unemployment rate has not risen from 4.2%, and the April payrolls added 177,000 jobs, indicating the labor market’s strong footing. These divergences point to an environment that invites bargaining opportunities for investors.
This brings us to our carefully curated list of smart money ratings for the 20 most undervalued stocks with strong growth potential. Going through their fundamentals, we have compiled a list of 20 companies trading at discounts far away from their long-term potential. Be it a tech firm undervalued due to tariff fears, or an industrial giant priced for recession. Our picks reflect a simple truth: markets overreact, but fundamentals endure.
Our Methodology
We have used a few criteria when putting together our list of 20 undervalued stocks with smart money ratings. Primarily, we have only considered those stocks with a value that has gained less than 12% from their 52-week lows. All the picks on our list also have a price-to-earnings ratio of less than 25. We ensured that the stock’s value remained at least 20% below its average analyst target price. Together, the P/E ratio and upside potential represent the undervaluation of the stock in the market at a price beneficial to the investors. For listing our picks, we have used the stocks’ upside potential. All the data in the article was taken from financial databases and analyst reports, with all information updated as of May 08, 2025.
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)
Insider Transaction: 0.94%
Upside Potential: 36.23%
Forward P/E: 11.94
ConocoPhillips (NYSE:COP), headquartered in Texas, is one of the largest independent exploration and production companies globally. With a portfolio inclusive of North America, Europe, Asia, and Australia, the company strongly emphasizes shale, LNG, and deepwater assets. ConocoPhillips (NYSE:COP) prioritizes shareholder returns, operational efficiency, and low-carbon investments and leverages them to compete with other players in the market. The company’s performance is heavily linked to global crude oil and natural gas prices and environmental regulations.
ConocoPhillips (NYSE:COP) is currently trading at 9.73% above its 52-week low, showing moderate resilience in the market. Especially during the first quarter of 2025, the company has reported exceeding its production guidance by 2,389,000 barrels of oil equivalent per day. The macroeconomic environment remains uncertain and unfavorable for the company, causing the industry outlooks to be revised lower. However, the integration of Marathon Oil, which was completed ahead of schedule, is anticipated to provide opportunities that could optimize capital efficiency and reduce costs. The return of $2.5 billion to shareholders in the first quarter of 2025 further projects solid cash flows.
Insider conviction seems to be restrained, with insider purchases standing low at just 0.94% over the past 6 months. The company’s forward P/E ratio, standing at 11.94, points toward a possible mispricing in the valuation of the company. Meanwhile, ConocoPhillips (NYSE:COP) has undeniably high institutional confidence, with 86 hedge funds on board, as per Insider Monkey’s Q4 2024 database. With a 36.23% upside potential, the company attracts investors seeking growth opportunities amid the uncertain market conditions.
Overall, COP ranks 14th on our list of most undervalued stocks with smart money ratings. While we acknowledge the potential of COP, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than COP but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
