We recently published a list of 12 Most Undervalued Large Cap Stocks to Buy Now. In this article, we are going to take a look at where Charter Communications, Inc. (NASDAQ:CHTR) stands against other most undervalued large cap stocks to buy now.

On March 4, David Katz, Chief Investment Officer at Matrix Asset Advisors, joined ‘The Exchange’ on CNBC to share his perspective on the current state of the bull market and what February’s mixed action and sector rotation might signal for the rest of the year. Katz acknowledged that while people might not want to hear it, the volatility seen in February is likely to persist throughout the year, with both upside and downside movements. He emphasized that this creates opportunities for investors but also necessitates caution. Katz highlighted several positive factors supporting the market, which included a strong economy and solid corporate performance. However, he expressed concerns about certain policies from the administration, such as tariffs, immigration, and the relationship with the Fed. While these issues have been largely ignored by the market so far, Katz warned that they could eventually lead to a 3-5% correction. Despite this, he remained optimistic about the economy’s ability to navigate these challenges and recommended buying into market dips rather than chasing rallies.

To support his sentiment, Katz pointed to companies that have already experienced significant corrections and are positioned to perform well regardless of broader market movements. He highlighted their strong fundamentals, attractive valuations (most trading at under 13-14 times earnings), and good outlooks. He also noted that last year’s market leaders have slowed significantly, while sectors that underperformed are beginning to show meaningful improvement, a trend he expects to continue. This sector rotation suggests that investors should be prepared to adapt their strategies as different sectors gain momentum throughout the year.

Methodology

We used the Finviz stock screener to compile a list of the top stocks trading between $10 billion and $200 billion. We then selected stocks with a forward P/E ratio under 15 and made a list of 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.

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).

A line of cable boxes and modern televisions, representing the company's video services.

Charter Communications, Inc. (NASDAQ:CHTR)

Forward Price-to-Earnings Ratio as of March 4: 9.77

Number of Hedge Fund Holders: 71

Charter Communications, Inc. (NASDAQ:CHTR) is a US broadband connectivity and cable operator. It provides internet, video, mobile, and voice services to both residential and commercial customers, alongside advanced business and wholesale communication solutions.

Its Spectrum Mobile business was the star performer in 2024. Spectrum Mobile is the company’s mobile phone service that uses its existing network infrastructure to provide cellular service. This is bundled with its internet services. It added over 2 million new mobile lines in 2024, which positions Spectrum Mobile as the fastest-growing mobile provider in the US. One reason behind this growth is its seamless integration with Charter Communications, Inc.’s (NASDAQ:CHTR) existing broadband services. This converged connectivity, which is available across 100% of its network, allows customers to experience a unified service.

As of Q4 2024, Spectrum Mobile had penetrated ~8% of Charter Communications, Inc.’s (NASDAQ:CHTR) total passings. It emphasizes the value proposition of bundling Spectrum Mobile with its broadband services. These packages often result in substantial cost savings for customers, which makes them an attractive option.

Despite market skepticism and a delayed merger, Brennan Asset Management sees Charter Communications, Inc. (NASDAQ:CHTR) making operational progress, particularly in customer retention and strategic bundling. It stated the following in its Q4 2024 investor letter:

“Charter Communications, Inc. (NASDAQ:CHTR): Still Hated…But Progress Continues and CHTR/Liberty Broadband (LBRDK) Terms Finalized: We discussed Charter (CHTR) in our 2024 Q1 letter and then reviewed CHTR’s offer to repurchase Liberty Broadband shares in our Q3 2024 letter. CHTR continues to show operational progress. While there is likely to be some continued Affordable Connectivity Program (ACP) noise during the early part of 2025, CHTR has done an admirable job in retaining customers, and total losses are far lower than originally feared. While the stock (frustratingly) will bounce around with small changes in quarterly broadband additions/losses versus expectations, we still believe that CHTR’s ultimate success will come down to whether they can create packages that encourage customers to jointly consider broadband and cell phone prices rather than mentally segregating the two bills. As we previously discussed, we are cautiously optimistic that CHTR’s more aggressive broadband/bundling packages can do just that. We also believe that CHTR’s streaming aggregation product could be another positive differentiator. During its third quarter conference call, CHTR announced that it did not expect to be a meaningful participant in the Broadband Equity, Access, and Deployment (BEAD) program. This cutback in expansionary capex after 2025 likely means a more rapid return to aggressive share repurchases, especially once the company’s network investments are completed in 2027.

Separately, CHTR and LBRDK came to terms with the merger proposal that we discussed in our third quarter letter. The final deal was probably viewed somewhat disappointingly by LBRDK investors, considering that the exchange ratio was closer to CHTR’s original proposal — 0.236 shares of CHTR for each LBRDK share with GCI Communications (GCI) not included versus LBRDK’s proposal for 0.29 CHTR/LBRDK including GCI. That said, the part that most frustrated some was disclosure that the LBRDK/CHTR deal will not close until June 2027. This later closing was designed so LBRDK could sell down CHTR and deleverage prior to the merger, but this also means that LBRDK likely will trade at a discount until closer to deal closing. While we understand the criticisms, CHTR was the only likely buyer for LBRDK, and this deal will simplify CHTR’s capital structure and ultimately allow a collapse of the LBRDK discount.”

Overall, CHTR ranks 12th on our list of most undervalued large cap stocks to buy now. While we acknowledge the potential of CHTR as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high 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.

 

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Disclosure: None. This article is originally published at Insider Monkey.