The AES Corporation (AES): Among The Lowest PE Ratio Stocks in S&P 500

We recently published a list of 10 Lowest PE Ratio Stocks in S&P 500. In this article, we are going to take a look at where The AES Corporation (NYSE:AES) stands against other most undervalued stocks.

Big tech stocks just suffered a massive hit, with the Magnificent Seven shedding a combined $1.8 trillion in market value over two brutal trading days at the beginning of April 2025. The iPhone-maker was hit the hardest, dropping more than $533 billion, partly due to new tariffs targeting its overseas production. Elon Musk’s EV giant fell over 10% on April 4, and Wall Street’s semiconductor darling lost nearly $400 billion. Jeff Bezos’ e-commerce powerhouse also saw its worst losing streak since 2008. The selloff came after Donald Trump’s newly announced tariffs sparked fears of a global trade war and potential recession. It did not just impact the mega-caps; the pain spread across the tech sector, which saw steep declines in stock prices. Even semiconductor stocks, although not yet directly impacted by tariffs, are being dragged down by growing uncertainty.

Amidst this volatile market landscape, Veteran investor Bill Nygren noted that the chaos caused by Trump’s steep tariffs has opened up a rare window for long-term investors to scoop up undervalued stocks. While he admits the uncertainty is not great for investors and could lead to inflation and slower growth, he sees opportunity in the selloff. Nygren pointed out that many quality companies, including major airlines, banks, and media firms, are now trading at dirt-cheap valuations. Some of them are trading under 7 or 8 times earnings because of overly negative investor sentiment. Nygren believes that if you hold these types of stocks long enough, there is a good chance they will deliver solid returns.

Hedge fund billionaire Warren Buffett also endorses Bill Nygren’s approach. Buffett made his $165 billion fortune by practicing value investing. He is known for buying stocks that are undervalued compared to their true worth and holding onto them for the long run. His approach focuses on companies with robust fundamentals, solid management, and potential for future growth, rather than chasing after risky or short-term trends. Value investing involves looking for stocks with low price-to-earnings ratios, and it often requires investors to go against the market's emotions and short-term movements.

Our Methodology

For this article, we used the Finviz screener and filtered out S&P stocks. Then, we applied a filter to arrange these stocks in ascending order of P/E ratios. We picked the 10 stocks with the lowest P/E ratios to compile this list. We have also mentioned the hedge fund sentiment around the holdings as per Insider Monkey's Q4 2024 database, ranking the list from least to most hedge fund holders.

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).

The AES Corporation (NYSE:AES)

P/E Ratio as of April 29: 4.30

Number of Hedge Fund Holders: 53

The AES Corporation (NYSE:AES) is a global energy company that generates and distributes electricity using sources like coal, gas, hydro, wind, solar, and biomass. It serves residential, commercial, and government sectors. On April 10, Jefferies downgraded AES from Buy to Hold, bringing down the price target from $15 to $10. Jefferies cited a weak balance sheet, complex global operations, and limited long-term visibility on US tax credit benefits for the downgrade. The firm believes these factors could hinder investor interest and reduce the company’s growth potential beyond 2027. The AES Corporation (NYSE:AES) ranks 7th on our list of stocks with a low PE ratio.

On February 21, The AES Corporation (NYSE:AES) announced a quarterly dividend of $0.17595 per share, which will be distributed on May 15, to shareholders on record as of May 1.

In 2024, AES reported $698 million in net income, which is an $880 million increase from the year before. This was supported by strong performance from new renewable energy projects, fewer asset impairments, capital gains from selling AES Brasil, and currency exchange benefits. However, the company’s adjusted EBITDA dropped by $189 million to $2.64 billion, due to severe droughts and outages in Colombia, and lower profits in energy infrastructure. AES Corporation expects steady growth in 2025, with projected adjusted EBITDA between $2.65 and $2.85 billion. The company also forecasts adjusted earnings per share between $2.10 and $2.26 for 2025 and is maintaining its goal of 7-9% annual EPS growth through 2027.

According to Insider Monkey’s fourth quarter database, 53 hedge funds were bullish on The AES Corporation (NYSE:AES), compared to 47 funds in the last quarter. William B. Gray’s Orbis Investment Management was the biggest stakeholder of the company, with 22.5 million shares valued at nearly $291 million.

Overall, AES ranks 7th among the lowest PE ratio stocks in the S&P. While we acknowledge the potential of AES 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. 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 AES 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.