We recently published a list of 13 Most Undervalued NASDAQ Stocks To Buy According To Hedge Funds. In this article, we are going to take a look at where Charter Communications, Inc. (NASDAQ:CHTR) stands against other most undervalued NASDAQ stocks to buy according to hedge funds.
The NASDAQ Index closed more than 10% below its December high of 20,174 on March 6, 2025. This officially puts the index in a market correction – which has happened a dozen times since 2010. Historically, the index has delivered an average return of 21% in the 12 months following its first close in correction territory, compared to an annual average of 15% over the entire period. This suggests that past corrections have often been followed by above average gains. Meanwhile, proposed tariffs under the Trump administration could significantly affect trade. As of February 27, 2025, these tariffs were set to raise the average tax on US imports to 13.8%, which is the highest level since 1939. Some duties are already in effect, shaking up the stock market.
Adding to market uncertainty is the current government’s inconsistent trade policy. Initially, tariffs were set to take effect on Chinese, Canadian, and Mexican imports on February 4. However, duties on Canadian and Mexican goods were postponed until March 4, then further adjusted on March 6, granting exemptions until April 2 for goods complying with the free trade agreement. These back-and-forth policy changes have contributed to market volatility. Despite the uncertainty, history shows that the NASDAQ has recovered from every past correction, suggesting this pullback could present a buying opportunity for investors.
Understandably, the market has seen considerable movement this year, influenced by earnings reports, concerns over DeepSeek, and uncertainty around President Trump’s tariff policies. With rising volatility, investors should focus on fundamentals, take a long-term approach, and carefully evaluate valuations. As of February 28, 2025, the US stock market was trading about 1% below fair value. Morningstar’s 2025 US Market Outlook suggests that the market was approaching the upper end of its fair value range, noting investors should set realistic expectations for returns. Morningstar advised favoring value stocks over growth stocks, as growth stocks were priced at their highest premium since the 2021 tech boom, while value stocks remained undervalued. In a market where economic policies can quickly shift valuations, portfolio positioning is crucial. Regardless of short-term tariff impacts, investors should focus on stocks trading well below their long-term value while being cautious with overvalued ones.
In a turbulent market where growth stocks are tumbling and value stocks have gained, sector valuations are starting to balance out. Healthcare, real estate, and basic materials, which were undervalued at the start of 2025, have moved closer to fair value. Meanwhile, consumer cyclical stocks, previously the most overvalued, have now dropped to fair value. Some sectors have moved differently, like communication services becoming more undervalued, while consumer defensive stocks have continued to rise and are now the most overvalued, trading at a 17% premium.
Our Methodology
For this article, we used the Finviz screener to filter out stocks listed on the NASDAQ exchange with a forward P/E ratio of less than 15. Using Insider Monkey’s Q4 2024 hedge fund database, we examined the hedge fund sentiment for each stock and selected 13 most popular ones. The stocks are ranked in ascending order based on the number of hedge fund holders as of Q4 2024. We have also mentioned the forward P/E ratio as of March 12 for each company.
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).
Is Charter Communications, Inc. (CHTR) The Most Undervalued NASDAQ Stock To Buy According To Hedge Funds?
A line of cable boxes and modern televisions, representing the company's video services.
Charter Communications, Inc. (NASDAQ:CHTR) is a Connecticut-based broadband and cable provider that offers internet, TV, mobile, and voice services to customers across the United States. It is one of the most undervalued stocks. On January 31, Benchmark analyst Matthew Harrigan issued a Buy rating on CHTR with a price target of $450 ahead of the company’s earnings release. While broadband prices may drop, Harrigan expected Charter had already adjusted its bundled pricing to retain customers, highlighting the company’s proactive approach in a competitive market.
In 2024, Charter Communications, Inc. (NASDAQ:CHTR)’s revenue grew by 1%, while full-year EBITDA rose by 3.1%, driven by strong mobile growth, cost-saving efforts, and political advertising. In Q4, adjusted EBITDA was reduced by about $35 million due to hurricane-related customer credits and revenue impacts, while storm-related expenses added approximately $125 million in capital expenditures. Free cash flow for the quarter was $984 million, down $80 million from the previous year, mainly due to higher capital spending, taxes, and interest costs, partially offset by improved cable working capital and higher EBITDA.
According to Insider Monkey’s fourth quarter database, 71 hedge funds were bullish on Charter Communications, Inc. (NASDAQ:CHTR), up from 61 funds in the preceding quarter. Natixis Global Asset Management’s Harris Associates held the biggest position in the company, with 4.34 million shares worth approximately $1.49 billion.
Overall, CHTR ranks 11th on our list of most undervalued NASDAQ stocks to buy according to hedge funds. While we acknowledge the potential of CHTR to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CHTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
