In this article: 11 Best penny stocks to invest in now. Check out our article for an overview of these stocks. Five Best Value Penny Stocks to Invest Now.
At the start of 2024, many analysts were sounding the alarm about the valuations of megacap technology stocks, which hit new highs in the final quarter of 2023 amid the AI boom. While these analysts were right about some companies that failed to sustain the bull market (Apple, Tesla, etc.), they turned out to be wrong about the leaders in the AI space (NVIDIA, etc.). Under these circumstances, many experts are also talking about the possibility of a revival of value stocks.
Will the value return in 2024?
In March, a Bloomberg report detailed how many investment firms were pouring money into value stocks in sectors such as financials, energy, materials and utilities. Investors who favor these sectors include Nanette Abhof Jacobson, global investment strategist at The Hartford Funds, who favors stocks in these “unloved sectors.” there was. The Bloomberg report also mentions Precilium Private Wealth, which says value investing is attractive in the current environment.
BlackRock’s pivot to value
Another shift toward value investing occurred in January 2024, when BlackRock began a major restructuring of its model portfolio to emphasize value over growth. According to a Bloomberg report, Michael Gates, head of Model Portfolio Solutions for the Americas within BlackRock's Multi-Asset Strategies & Solutions Group, said the firm's “growth style reflects our bullish view of the economy and the bearish economic outlook.” “We are switching to a value-oriented style.” landing. “
Expressing confidence in value investing, Franklin Templeton said in a December 2023 report that value stocks look more “promising” in 2024 and beyond amid financial market volatility. Comparing the current P/E ratio and returns over the next 10 years for global growth and value stocks, the report found that “stocks with lower P/E ratios have higher future returns over the next 10 years, based on FactSet and MSCI data. It has been shown that “we have achieved this.” As a result, with high valuations in growth stocks, we believe there are many opportunities to find attractive value opportunities with strong future returns. ”
David Einhorn's Comments on Value Investing During the 2024 Thorn Conference
Billionaire David Einhorn said at the 2024 Son Investment Conference that it's a great time to be a value investor. But he also said that value investing as an industry is dead (I discussed Einhorn's thoughts on the demise of the value investing industry here). When asked about these seemingly contradictory opinions on CNBC's show, Einhorn said the value investing industry and value investing as an investment strategy are two different things. He said that in the transition from traditional strategies to index funds, where “millions of dollars have been redeemed,” many fund managers who were being paid large sums of money by people to research undervalued stocks. He said he lost his job and assets under management. But Einhorn said this development has reduced competition in the industry, and people like him are now in a unique position to find undervalued stocks.
Value stock performance
Compared to the S&P 500's rise, the Vanguard Value Index Fund ETF (NYSEARCA:VTV) is up 3.9% year-to-date through April 14, and the Schwab U.S. Large Cap Value ETF (NYSEARCA:SCHV) is up 3.9% over the same period. It has increased by 3.3%. 8%. The Russell 1000 Index (INDEXRUSSELL: RUI) is up 7.7% through April 13, 2024, and the index is up about 23% over the past year. RUI tracks U.S. mid-cap and large-cap companies with valuable characteristics.
Value investor Seth Claman's 2000 predictions
In a letter to investors in 2000, legendary value investor Seth Claman lamented the market's irrational behavior and warned that sooner or later investors will return to traditional ways of valuing companies. He said he was deaf.
“I sometimes joke about the new rule of thumb for market valuations. It seems like all the stocks that failed to meet earnings expectations are now trading at 10 times earnings, whereas previously they were profitable. All the companies reporting losses appear to be trading at $5 per share, which many investors shy away from. “These stocks are selling because everyone else is staying away.'' .Why would a stock like that go up, they wonder? Even those who invest value in DNA generally see a situation where there is a catalyst to realize the underlying value. Over time, this will change.'' At some point in the future, the undervaluation of small-cap stocks that lack exciting growth characteristics will widen and investors will be drawn back in. Dew. After all, the point of investing isn't to have a great story to tell. ”
methodology In this article, we first used a stock screener to identify penny stocks with a P/E ratio below 15. From these stocks, we selected the 11 companies with the highest number of hedge fund investors. We prioritized stocks in sectors such as consumer, healthcare, energy, materials, and utilities. Unlike the well-known companies that consistently make headlines, such as Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), and Eli Lilly And Co (NYSE:LLY), the stocks mentioned on this list are comparative It is not a brand that is well known and attracts attention. It's been talked about a lot in the news. Why pay attention to hedge fund sentiment? The top 10 consensus stocks selected by hedge funds have outperformed the S&P 500 index by more than 140 percentage points over the past 10 years (Please see here for the detail).
11. Ambev SA (NYSE:ABEV)
Number of hedge fund investors: 13
Beverage company Ambev SA (NYSE:ABEV) is one of the best penny stocks to buy, according to hedge funds. A total of 13 hedge funds tracked by Insider Monkey held shares in Ambev SA (NYSE:ABEV) at the end of 2023. The largest stake in Ambev SA (NYSE:ABEV) is owned by Jean-Marie Eveillard's First Eagle Investment Management. owns $876 million in stock in Ambev SA (NYSE:ABEV).
10. Gerdau SA ADR (NYSE:GGB)
Number of hedge fund investors: 13
Steel company Gerdau SA ADR (NYSE:GGB) is one of the best value penny stocks to buy, according to hedge funds. According to Insider Monkey's analysis, 13 funds held shares in Gerdau SA ADR (NYSE:GGB) at the end of 2023. John Bauer's Contrarian Capital owns $88 million in Gerdau SA ADR (NYSE:GGB).
9. Destination XL Group (NASDAQ:DXLG)
Number of hedge fund investors: 14
Apparel company Destination XL Group (NASDAQ:DXLG) has a low P/E ratio and ranks as one of the most undervalued penny stocks to buy, according to hedge funds. According to Insider Monkey's hedge fund database, 14 funds held shares in Destination XL Group (NASDAQ:DXLG) at the end of 2023.
Last month, Destination XL Group Inc (NASDAQ:DXLG) announced its fourth quarter financial results. Adjusted EPS for the period was $0.10, beating estimates by $0.03. Revenue for the quarter was $137.1 million, down 4.7% year over year, and $1.24 million less than expected.
8. Santander SA ADR (NYSE:SAN)
Number of hedge fund investors: 14
Banco Santander SA ADR (NYSE:SAN) is one of the most undervalued stocks in the financial industry, trading for less than $5 as of April 12th. Last month, Barclays upgraded the stock from Equal Eight to Overweight. Barclays likes Banco Santander SA ADR's (NYSE:SAN) long-term earnings outlook.
7. Icl Group Co., Ltd. (NYSE:ICL)
Number of hedge fund investors: 14
Specialty minerals company Icl Group Ltd (NYSE:ICL) is one of the best value penny stocks to buy, according to hedge funds.
Earlier this year, Icl Group Ltd (NYSE:ICL) announced the acquisition of Nitro 1000, a Brazilian biologics manufacturer, developer and supplier, for approximately $30 million.
Unlike Microsoft Corporation (NASDAQ:MSFT), Nvidia Corporation (NASDAQ:NVDA), and Eli Lilly and Company (NYSE:LLY), which are popular among hedge funds, ICL is a small company with only 14 hedge fund investors. It's a large scale company.
6. Eastman Kodak Company (NYSE:KODK)
Number of hedge fund investors: 14
Of the 14 hedge funds that owned Eastman Kodak Company (NYSE:KODK) stock at the end of 2023, Paul Marshall and Ian Weiss' Marshall Weiss LLP held Eastman Kodak Company (NYSE:KODK) stock at the end of 2023. :KODK)'s largest shareholder with $2.7. Million stakes.
During its fourth quarter earnings call, the company shared key business insights:
“We are very pleased with our working capital levels and have remained focused on serving our customers through this difficult economic period.Cash used in investing activities was $32 million this year, compared with the prior year. The prior year included a $25 million equity investment in Wildcat Discovery Technologies. Cash provided by financing activities amounted to $85 million for the year, compared to $43 million for the previous year. This financing activity drove improvements in cash. Due to the impact of refinancing transactions occurring in the third quarter of 2023. Cash provided by financing activities in the prior year included his $49 million in additional cash, net of fees and expenses, from proceeds received from the exercise of a delayed draw term loan. In the second quarter of 2022. ”
Please read the full transcript of the financial results conference here.
In March, Eastman Kodak Company (NYSE:KODK) announced its fourth quarter results. Gross profit for the period was $47 million, compared to $43 million in the final quarter of 2022. In addition to KODK, the hedge fund also invested in Microsoft Corp. ( NASDAQ:MSFT ), Nvidia Inc. ( NASDAQ:NVDA ) and Eli Lilly & Co. Company (NYSE:LLY).
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Disclosure. none. 11 Best Value Penny Stocks to Invest Now Originally published on Insider Monkey.
