BOSTON ( TheStreet) -- Dow stocks, still among the cheapest in the U.S. market, are becoming popular investments of value-oriented hedge funds. David Tepper of Appaloosa Management held nine Dow stocks at the end of the fourth quarter. He's perhaps the most closely-watched hedge-fund manager today. Having more than doubled his fund in 2009, Tepper returned about 30% last year. He only buys stocks he considers to be undervalued. Below is an overview of his Dow picks, with a focus on fundamentals and valuation.
Tepper increased his Bank of America stake by 2.6 million shares during the fourth quarter, signaling optimism about the stock's 2011 upside. Bank of America's stock has fallen 2.3% in the past 12 months, underperforming indices. Currently, 21, or 60%, of the analysts covering Bank of America rate it "buy." JPMorgan, ranking the bank "overweight", forecasts a rise of 35% to $20. Deutsche Bank expects Bank of America's stock to fall to $13 during 2011.