In this article, we will be looking at the 20 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.
Stock market data on a laptop screen. Photo by Alesia Kozik on Pexels
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).
20. Lamb Weston Holdings, Inc. (NYSE:LW)
Insider Transaction: 0.35%
Upside Potential: 21.98%
Forward P/E: 14.56
Lamb Weston Holdings, Inc. (NYSE:LW), headquartered in Idaho, is a leading global producer and distributor of frozen potato products. The company’s portfolio includes french fries, sweet potato fries, and other value-added offerings. Lamb Weston Holdings, Inc. (NYSE:LW) is currently serving more than 100 countries with a client base comprised of major restaurant chains, foodservice distributors, and retailers. The company’s manufacturing operations are primarily in the Pacific Northwest. Against intense competitors in the market, the company thrives by placing importance on innovation in frozen food processing. It is among the most undervalued stocks on our list.
Currently, Lamb Weston Holdings, Inc. (NYSE:LW) is trading at 5.93% above its 52-week low, which suggests that the company is at the initial stage of its recovery. The 9% increase in volume, as reported in the third quarter of 2025, suggests successful efforts to regain business growth. However, the macroeconomic environment remains uncertain, particularly since the changing consumer spending and preferences could shape the business outcome. Lamb Weston Holdings, Inc. (NYSE:LW) still anticipates consistency in its revenue, through new and innovative products like fridge-friendly fries and tots. Additionally, the company has projected pre-tax savings of at least $55 million in 2025, predicting financial stability during the fiscal year.
Insider transactions have gained an upward trend during the previous six months, but at just 0.35%, indicating limited internal conviction. With 47 hedge funds invested at the end of Q4 2024, institutional interest in the stock remains solid. Lamb Weston Holdings, Inc. (NYSE:LW) carries a forward P/E of 14.56, pointing to relative valuation efficiency. The upside potential of 21.98% seems promising for investors interested in stocks with notable growth potential.
19. Magnolia Oil & Gas Corporation (NYSE:MGY)
Insider Transaction: 0.14%
Upside Potential: 25.48%
Forward P/E: 11.1
Magnolia Oil & Gas Corporation (NYSE:MGY) is an independent exploration and production company headquartered in Texas. The company focuses on oil and natural gas assets in South Texas. Its core operations are centered around the Eagle Ford Shale and Austin Chalk formations, within the Karnes and Giddings areas. Placing importance on disciplined capital allocation and maintaining financial flexibility, Magnolia Oil & Gas Corporation (NYSE:MGY) gains a competitive edge over its peers, particularly against regional E&P firms. To deliver shareholder value, the company leverages its operational efficiency.
Magnolia Oil & Gas Corporation (NYSE:MGY) trades at 8.33% above its 52-week low. The primary contributor to the undervaluation is the year-over-year decline in total revenue per BOE. Despite the record quarterly production volume, the decline is due to lower oil prices. Additionally, due to acquisitions and capital expenditures, the company’s cash balance decreased to $260 million in 2024 from $400 million. However, the company has reduced operating costs by 10% per BOE and gained the board’s approval for a 15% increase in quarterly dividend, suggesting potential growth in 2025.
Though insider buying has increased only by a mere 0.14% over the past 6 months, the number of hedge funds tracked by Insider Monkey holding onto ownership in Magnolia Oil & Gas Corporation (NYSE:MGY) stands at 30 at the end of Q4 2024, indicating a moderate level of institutional interest. The company’s forward P/E stands low at 11.1, which shows undervaluation. With an upside potential of 25.48% based on the estimation from analysts, the stock appears attractive to growth-seeking investors.
18. FMC Corporation (NYSE:FMC)
Insider Transaction: 5.79%
Upside Potential: 28.60%
Forward P/E: 9.19
Pennsylvania-based company FMC Corporation (NYSE:FMC) is a global agricultural sciences company specializing in crop protection products like insecticides, herbicides, and fungicides. Competing with peers like Corteva, the company has a client base worldwide. FMC Corporation (NYSE:FMC)’s innovation pipeline concentrates on precision agriculture and sustainability, including plant health and biological solutions. Though commodity prices and regional planting patterns influence its performance, the company thrives in the agrochemical market through its strategic R&D investments and global distribution network.
The company is valued at 7.66% above its 52-week low, reflecting a modest recovery. The company achieved this recovery by meeting the guidance in 2024 in two quarters. Though the company is experiencing challenges with heightened channel inventories in Eastern Europe, Brazil, and India, FMC Corporation (NYSE:FMC) has reduced its manufacturing costs significantly, aligning with its future growth plans. Introduction of the new active ingredients, Isoflex and Fluinapi, is expected to result in substantial revenue growth, with projected sales of $600 million by 2027, thus gaining a positive outlook.
The company’s forward price-to-earnings ratio of 9.19 suggests it may be trading below its intrinsic value and is one of the most undervalued stocks. Over the past six months, insider transactions have risen by 5.79%, suggesting a meaningful internal confidence level. Institutional interest in FMC Corporation (NYSE:FMC) remains strong, as indicated by 48 hedge funds backing the stock, as per Insider Monkey’s Q4 2024 database. With an analyst’s estimate of 28.60% upside, appreciation in investment is anticipated.