In this article, we will take a look at the 10 cheap rising stocks to buy.
Investing in stocks when they are trading cheap as compared to their true valuations is perhaps one of the simplest and straightforward ways to make money. But it’s easier said than done, especially when the markets are going through turmoil amid rising inflation, banking crisis and the Federal Reserve’s policy of rate hikes. Still, wise investors insist on buying cheap and undervalued stocks for the long term. In October 2022, Jeremy Siegel, Professor of Finance at the Wharton School of the University of Pennsylvania in Philadelphia, Pennsylvania, said that stocks were “marvelous” for long term. Siegel, who is optimistic about the stock market, said at the time that the fear of interest rate hikes and global macroeconomic challenges were keeping investors at bay when it comes to investing in the stock market. While he acknowledged that in the short term investing in stocks could be “rocky,” the analyst said he wouldn’t be surprised if the stocks would be 20%-30% higher in the future. Siegel remains bullish on the stock market in 2023. In his latest commentary, the professor said that had the banking crisis occurred later, it would have led to much higher interest rates. Siegel believes the “silver lining” in all of the current market chaos is that the banking crisis could cause the Federal Reserve to slow or pause interest rate hikes.
“I enter the second quarter with a cautious outlook. I would like to see the Fed recognize the cumulative impact of its tightening and that inflationary pressures are no longer a primary concern. I would go with a pause at the next Fed meeting, but we still have six weeks to go. We will be getting CPI data, employment data, and a lot more anecdotal data on lending and borrowing impacts to gauge the Fed’s likely course,” Siegel wrote.
There’s one thing common between the top investors and hedge fund managers in the world: they always invest in solid businesses that are fundamentally strong and have a lifecycle that equates to an eternity. One such successful investor is Leon Cooperman. Cooper recently gave an interview to Forbes and explained why he is skeptical of investing in stocks trading at outlandish valuations.
I always have been value oriented. I was a disciple of Warren Buffett, Benjamin Graham and David Dodd, and I like to get more for my money than I pay. I’ve observed that technology is a double-edged sword. Somebody’s innovation is another’s obsolescence, so I’ve never understood paying high multiples for businesses when they could have a short run life. Look at Meta as a perfect example. TikTok seems to be taking their market away from them and their stock has collapsed. When you pay a very high multiple, it seems that you have to have confidence in a high level of earnings growth for a protracted period of time. The product cycle is getting shorter and the competition more intense, so that’s not a game I feel comfortable playing.
While many won’t agree with Cooperman’s example of Meta — and the billionaire is not against investing in tech stocks (Cooperman’s Q4’2021 portfolio featured MSFT, AMZN and GOOG) — his core rationale is ever-green and remains an open secret to success in the stock markets.
While stock markets remain tricky, long-term investors might find these weeks the best period to invest their money for long-term gains. In its latest outlook report on Q2 of 2023, Blackrock said that while bonds currently offer the “best opportunity to invest at attractive prices since the global financial crisis,” stocks continue to play a “critical role in a long-term investment plan.”
Photo by Chris Liverani on Unsplash
Our Methodology
For this article we used the Finviz stock screener to find stocks with PE ratios less than 15 and share price gains over 10% in the past 30 days as of April 4. We sorted the resultant dataset in descending order of market cap and picked top 10 names.
Cheap Rising Stocks to Buy
10. Brookfield Renewable Corporation (NYSE:BEPC)
Number of Hedge Fund Holders: 0
Brookfield Renewable Corporation (NYSE:BEPC) shares have gained about 15% over the past 30 days through April 4. In February, Brookfield Renewable Corporation (NYSE:BEPC) posted its Q4 results which missed analyst estimates. Brookfield Renewable Corporation (NYSE:BEPC)’s Q4 FFO came in at $0.35, missing estimates by $0.01. Revenue in the quarter increased by 10.1% year over year to reach $1.2 billion, missing estimates by $20 million. Despite missing estimates, Brookfield Renewable Corporation (NYSE:BEPC) increased its quarterly dividend 5.5%.
In November, Wells Fargo included Brookfield Renewable Corporation (NYSE:BEPC) in its Quality Small-Cap Portfolio. Wells Fargo said at that time that it believes small-cap stocks will outpace their large-cap counterparts in the near term.
9. Navitas Semiconductor Corporation (NASDAQ:NVTS)
Number of Hedge Fund Holders: 3
California-based Navitas Semiconductor Corporation (NASDAQ:NVTS) makes gallium nitride (GaN) power integrated circuits used in power conversion and charging. Navitas Semiconductor Corporation (NASDAQ:NVTS) has gained about 14.5% over the past 30 days through April 4.
Navitas Semiconductor Corporation (NASDAQ:NVTS) in February posted its Q4 results. GAAP EPS in the quarter was -$0.04. Revenue in the quarter increased by about 68.3% year over year to total $12.35 million. After the results, Deutsche Bank analyst Ross Seymore upped his price target on the stock to $8 from $6 and kept a Buy rating. The analyst likes the reacceleration in Navitas Semiconductor Corporation (NASDAQ:NVTS) business driven by “increasingly broad set of drivers.”
Baird also increased its price target on the stock to $10 from $8.
As of the end of the fourth quarter of 2022, 3 hedge funds tracked by Insider Monkey had stakes in Navitas Semiconductor Corporation (NASDAQ:NVTS).
8. Riley Exploration Permian, Inc. (NYSE:REPX)
Number of Hedge Fund Holders: 5
Oil and gas company Riley Exploration Permian, Inc. (NYSE:REPX) ranks 8th in our list of the cheap rising stocks to buy. Riley Exploration Permian, Inc. (NYSE:REPX) has gained about 29% over the past 30 days through April 4. In March, Riley Exploration Permian, Inc. (NYSE:REPX) posted its Q4 results. GAAP EPS in the quarter came in at $1.35, beating estimates by $0.12. Revenue in the quarter increased by about 36.3% year over year to $78.05 million, beating estimates by $12.05 million.
As of the end of the fourth quarter of 2022, 5 hedge funds tracked by Insider Monkey had stakes in Riley Exploration Permian, Inc. (NYSE:REPX).
7. POSCO Holdings Inc. (NYSE:PKX)
Number of Hedge Fund Holders: 7
South Korean steel company POSCO Holdings Inc. (NYSE:PKX) shares have gained about 17% over the past 30 days through April 4. POSCO Holdings Inc. (NYSE:PKX) jumped on the last day of March after Hyundai Motor Securities analyst H.W. Park said in a note that POSCO Holdings Inc. (NYSE:PKX) could swing to an operating profit in the first quarter.
As of the end of the last quarter of 2022, 7 hedge funds in Insider Monkey’s database reported owning stakes in POSCO Holdings Inc. (NYSE:PKX). The most significant shareholder of POSCO Holdings Inc. (NYSE:PKX) was Richard S. Pzena’s Pzena Investment Management which owns a $4 million stake in the company.
6. Zymeworks Inc. (NYSE:ZYME)
Number of Hedge Fund Holders: 24
Shares of the Canadian Biotech company Zymeworks Inc. (NYSE:ZYME) have been on the rise lately amid strong Q4 results and appreciation from Wall Street analysts.
Wells Fargo’ Derek Archila recently gave bullish comments on Zymeworks Inc. (NYSE:ZYME), citing the company’s royalty streams and milestones from its lead oncology candidate. The firm set a $12 price target on Zymeworks Inc. (NYSE:ZYME).
During the fourth quarter, Zymeworks Inc. (NYSE:ZYME)’s revenue came in at $402.5 million, crushing Wall Street estimates of $214.3 million. EPS in the period came in at $4.65 beating the consensus EPS estimate of $3.11.
As of December 31, 2022, Zymeworks Inc. (NYSE:ZYME) had $492.2 million of cash, cash equivalents and short-term investments.
As of the end of the fourth quarter of 2022, 24 hedge funds tracked by Insider Monkey had stakes in Zymeworks Inc. (NYSE:ZYME).
5. KB Home (NYSE:KBH)
Number of Hedge Fund Holders: 31
Homebuilding company KB Home (NYSE:KBH) shares have gained about 16% in the past month through April 4. The stock has a TTM PE ratio of 4.47.
In March, J.P. Morgan upgraded KB Home (NYSE:KBH) to Neutral from Underweight after the company’s strong Q1 report and solid 2023 guidance. JPMorgan’s analyst Michael Rehaut highlighted that KB Home (NYSE:KBH) bought back 2 million shares during the first quarter. The analyst believes KB Home (NYSE:KBH) could buy back more shares through the rest of the year. The analyst now expects KBH’s operating EPS for 2023 at $5.29, matching the average analyst estimate, compared with the $2.57 prior view.
KB Home (NYSE:KBH) expects its housing revenue in 2023 to be in the range of $5.20 billion to $5.90 billion. Average selling price in the period is expected to be in the range of $480,000 to $490,000.
4. Sanofi (NASDAQ:SNY)
Number of Hedge Fund Holders: 34
French pharmaceutical company Sanofi (NASDAQ:SNY) is one of the undervalued rising stocks to buy. Sanofi (NASDAQ:SNY) has gained about 14% over the past 30 days through April 4.
In March, Sanofi (NASDAQ:SNY) and Regeneron Pharmaceuticals (NASDAQ:REGN) reported their drug Dupixent met the main goal and all key secondary goals of a phase 3 trial to treat adults who were current or former smokers with chronic obstructive pulmonary disease (COPD).
Recently, media reports suggested that Sanofi (NASDAQ:SNY) had begun the process to spin-off its consumer healthcare business in India.
As of the end of the last quarter of 2022, 34 hedge funds had stakes in Sanofi (NASDAQ:SNY). The net worth of these stakes was about $1.8 billion.
ClearBridge Investments made the following comment about Sanofi (NASDAQ:SNY) in its Q3 2022 investor letter:
“Health care proved to be the most challenging sector to navigate during the quarter, as several companies were subjected to elevated risk aversion due to possible litigation implications. Two of our top five largest individual detractors for the period were in the health care sector: Sanofi (NASDAQ:SNY) and Bayer (OTCPK:BAYZF). Sanofi, a French pharmaceutical and health care company, saw its share price fall after it was named as a co-defendant in a class action lawsuit alleging that Sanofi and other sellers of the heartburn medication Zantac failed to warn of the drug’s risk of containing a possible carcinogen.”
3. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 34
California-based IT company Super Micro Computer, Inc. (NASDAQ:SMCI) ranks 3rd in our list of cheap rising stocks to buy. Super Micro Computer, Inc. (NASDAQ:SMCI) has gained about 14% in the past month through April 4. Much of this rally is fueled by the latest AI boom and Super Micro Computer, Inc. (NASDAQ:SMCI)’s smart moves to cash the latest trend. In March, Super Micro Computer, Inc. (NASDAQ:SMCI) announced the launch of its AI development platform, powered by NVIDIA. Super Micro Computer, Inc. (NASDAQ:SMCI) said this platform is an application-optimized system for developing and running AI-based software.
In January, Super Micro Computer, Inc. (NASDAQ:SMCI) posted its fiscal Q2 results. Adjusted EPS in the quarter came in at $3.26 beating estimates by $0.23. Revenue in the quarter increased by 54% year over year to reach $1.8 billion, beating estimates by $20 million.
As of the end of the fourth quarter of 2022, 34 hedge funds tracked by Insider Monkey reported having stakes in Super Micro Computer, Inc. (NASDAQ:SMCI). The biggest stakeholder of Super Micro Computer, Inc. (NASDAQ:SMCI) was David Brown’s Hawk Ridge Management which owns a $93 million stake.
2. DICK’S Sporting Goods, Inc. (NYSE:DKS)
Number of Hedge Fund Holders: 40
Sports goods retailer DICK’S Sporting Goods, Inc. (NYSE:DKS) shares have gained about 11% over the past 30 days through April 4. DICK’S Sporting Goods, Inc. (NYSE:DKS) in March posted stronger-than-expected Q4 results. DICK’S Sporting Goods, Inc. (NYSE:DKS) also upped its quarterly dividend by a whopping 105% when compared to the previous dividend.
As of the end of the fourth quarter of 2022, 40 hedge funds tracked by Insider Monkey had stakes in DICK’S Sporting Goods, Inc. (NYSE:DKS). The total value of these stakes was $1.5 billion. The biggest stakeholder of DICK’S Sporting Goods, Inc. (NYSE:DKS) was Stephen Mandel’s Lone Pine Capital which owns a $603 million stake.
1. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 52
Ranking 1st in our list of the cheap rising stocks is famous vaccine maker Moderna, Inc. (NASDAQ:MRNA). Over the past 30 days, the stock has gained about 10.7% through mid-day trading of April 4. Moderna, Inc. (NASDAQ:MRNA) is a highly popular stock among elite hedge funds. Insider Monkey data shows that 52 hedge funds had stakes in the company as of the end of the last quarter of 2022, up from 44 hedge funds in the previous quarter. The most significant stakeholder of Moderna, Inc. (NASDAQ:MRNA) during this period was Philippe Laffont’s Coatue Management which had a $1.1 billion stake in the company.
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Disclosure: None. 10 Cheap Rising Stocks to Buy is originally published on Insider Monkey.
