|
|
|
|
|||||
|
|
|
We recently published a list of 10 Cheap Blue Chip Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Verizon Communications Inc. (NYSE:VZ) stands against other cheap blue chip stocks to buy according to hedge funds.
The broad-based market anxiety increased as the US policy uncertainty rose, says Fidelity. The financial markets were weighed down by tariff hikes, deregulation, and tighter immigration policies. The global business cycle is now less synchronized. As per the investment management firm, the US seemed to show mid- and late-cycle dynamics in Q1 2025. Furthermore, the diversification across fixed income and non-US assets is of utmost importance amid growth risks. While the gold and commodities gained, the US dollar decline fueled the non-US equities, says Fidelity.
As per Fidelity, the uncertainty regarding the direction of US policy impacted the financial markets during Q1, with investors digesting the news related to executive actions, such as tariff increases, deregulation announcements, reduced government staffing and programs, and tougher immigration activities. Also, the worries related to the economic effects of the tariff increases on the global economy saw an increase during the days after the quarter closed. Despite elevated growth risks, the global expansion was intact as of the close of Q1. Fidelity opines that diversification in fixed income assets and non-US assets is essential.
As per the investment manager, the S&P 500 Index delivered a return of −4.3% for Q1 2025, partly because of the performance of growth stocks (−10%). On the other hand, gold (+19%) and commodities (+8.9%) saw robust gains amid higher market uncertainty.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
According to Fidelity, the consumer inflation remained rangebound at ~3% during Q1, which was well above the 2% target of the US Fed. The firm anticipates sticky inflation around 3% for the next year, with upside risk resulting from tariff increases. As per the firm, the consumer inflation expectations have increased to multi-decade highs, making it simpler for businesses to pass the increased costs. Coming to the labor, it has remained tight so far, despite increased policy uncertainty, government layoffs, and federal funding cuts, says Fidelity. On the supply side, the broader labor force participation has stalled below the pre-pandemic rate due to slowing immigration as well as demographic constraints.
As per Marci McGregor, Head of Portfolio Strategy (Chief Investment Office), Merrill and Bank of America Private Bank, the next few months can be a good time to play defense. The investors can consider defensive, dividend-paying, and value-oriented stocks. For the long term, the investors can position themselves for when the uncertainty around trade decreases. The volatility can provide a chance to buy assets supporting the long-term strategy at attractive prices, says McGregor.
To list the 10 Cheap Blue Chip Stocks to Buy According to Hedge Funds, we scanned the holdings of the iShares Core S&P 500 ETF and chose companies that trade at a forward P/E of less than ~20.0x. We also mentioned the hedge fund sentiments around each stock, 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).
Number of Hedge Fund Holders: 74
Forward P/E as of April 18: ~9.1x
Verizon Communications Inc. (NYSE:VZ) is engaged in providing communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities. Evercore ISI analyst Vijay Jayant upped the company’s stock from “In Line” to “Outperform,” while raising its price target to $48 from $44. The company’s management remains recognized for the effective execution when it comes to improving the postpaid subscriber trends in the Consumer segment, gaining momentum in the Business wireless customers, and meeting the broadband subscriber targets.
As per the analyst, the market is not fully appreciating Verizon Communications Inc. (NYSE:VZ)’s resilient wireless service revenue growth outlook, efforts related to the fiber expansion, and the potential strategic and financial benefits due to the Frontier acquisition. Overall, the analyst believes that wireless companies can continue to perform well, considering the current market uncertainty and downside risks. Verizon Communications Inc. (NYSE:VZ) continues to make investments in lucrative fields, including Internet of Things (IoT) partnerships, 5G infrastructure, and fiber expansion. Third Point Management, a New York-based investment advisor, published its Q3 2024 investor letter. Here is what the fund said:
“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. Second, Verizon Communications Inc. (NYSE:VZ) announced a deal to acquire Frontier Communications (FYBR), a transaction which the fund benefited from by virtue of its investment in FYBR debt. This transaction, aimed at increasing’s VZ fiber footprint, has led to broad revaluation of fiber retail networks that we think is appropriate. While we continue to expect to see FWA rapidly erode non-upgraded cable and especially copper’s share of the low-end broadband market, the VZ deal underscores the value of the higher end footprint.”
Overall, VZ ranks 8th on our list of cheap blue chip stocks to buy according to hedge funds. While we acknowledge the potential of VZ 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. 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 a deeply undervalued AI stock that is more promising than VZ but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
| 33 min | |
| 2 hours | |
| 3 hours | |
| 3 hours | |
| 3 hours | |
| 3 hours | |
| 3 hours | |
| 4 hours | |
| 4 hours | |
| 4 hours | |
| 4 hours | |
| 4 hours | |
| 4 hours | |
| 4 hours | |
| 4 hours |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, backtesting, and much more.
Learn more about FINVIZ*Elite