In this article, we discuss the 10 cheap stocks to buy before Christmas.
Investors who are looking for a reliable short-term growth opportunity can make a safe bet on the stocks that are expected to benefit from the increase in retail sales during the holiday season. Almost all indicators point to a massive surge in consumer spending during the Christmas period, largely due to the normalization of the economy compared to the COVID-19 restrictions of 2020 that had limited the ability of shoppers to spend on gifts and other items. The National Retail Federation expects holiday sales to generate $860 billion in revenue.
Other predictions for the season paint a similar picture. For example, Deloitte, a professional services firm, has projected that holiday retail sales will jump 11% year-on-year in 2021 to jump over $1.2 trillion. Similarly, Bain, an emerging market research firm, claims in a conservative forecast that holiday sales will grow 7% year-on-year and reach $800 billion in value this year. Clothes, electronics, jewelry, and food stocks all stand to benefit from this boom. Even small companies, that trade cheaply on the market, will soar as revenues jump.
Investors who want exposure to some cheap but low-risk investments during the holiday season should check out some of the top stocks to buy before Christmas which include Paysafe Limited (NYSE:PSFE), Flex Ltd. (NASDAQ:FLEX), and Ambev S.A. (NYSE:ABEV), among others discussed in detail below.
Our Methodology
Here is our list of the 10 cheap stocks to buy before Christmas. All the firms listed below are priced under $20 per share and market products/services that have the potential to benefit from the holiday season coming up ahead.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Cheap Stocks to Buy Before Christmas
10. MamaMancini’s Holdings, Inc. (NASDAQ:MMMB)
Number of Hedge Fund Holders: N/A
Share Price as of November 4, 2021: $2.65
MamaMancini’s Holdings, Inc. (NASDAQ:MMMB) operates in the packaged foods and meat industry. It sells frozen and refrigerated food products in the United States. During the holiday season, as families around the country gather together for dinners at their homes and in restaurants, the sales of the company tend to increase. The firm was recently awarded the QVC Food of the Month award for the 3-Cheese Beef and Turkey Meatballs it makes and sells.
In earnings results for the second quarter, posted on September 9, MamaMancini’s Holdings, Inc. (NASDAQ:MMMB) reported earnings per share of $0.01, in line with expectations. The revenue over the period was $12 million, beating predictions by $0.6 million.
In late August, MamaMancini’s Holdings, Inc. (NASDAQ:MMMB) had announced that it had secured a $10 million credit facility at M&T Bank with an interest rate of 3.5% to fund future acquisition plans of the firm.
Just like Paysafe Limited (NYSE:PSFE), Flex Ltd. (NASDAQ:FLEX), and Ambev S.A. (NYSE:ABEV), MamaMancini’s Holdings, Inc. (NASDAQ:MMMB) is one of the stocks with upcoming growth catalysts.
9. RAVE Restaurant Group, Inc. (NASDAQ:RAVE)
Number of Hedge Fund Holders: 3
Share Price as of November 4, 2021: $1.23
RAVE Restaurant Group, Inc. (NASDAQ:RAVE) owns and runs franchise pizza restaurants under the Pizza Inn brand name across the world. The restaurants offer buffet, express, and delivery options. The firm also runs the Pie Five brand. It has recently inked two important agreements for expansion of the franchise. The first is a deal to open three new locations in Palestine while the other promises the opening of five new stores in Qatar.
The fundamentals of RAVE Restaurant Group, Inc. (NASDAQ:RAVE) are also solid considering that it only has a market cap of around $22 million. In the fourth quarter results, the company reported a revenue of $2.3 million, up 46% year-on-year.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $849,000 in RAVE Restaurant Group, Inc. (NASDAQ:RAVE), the same as in the preceding quarter worth $882,000.
8. LightInTheBox Holding Co., Ltd. (NYSE:LITB)
Number of Hedge Fund Holders: 4
Share Price as of November 4, 2021: $1.64
LightInTheBox Holding Co., Ltd. (NYSE:LITB) owns and runs a cross-border ecommerce platform. The platform is different from other ecommerce stocks as it procures products directly from the manufacturers to deliver to customers. The stock has soared in the past few weeks on the back of positive quarterly results and looks set to rise further as the holiday season approaches and the online shopping frenzy begins.
The share price of LightInTheBox Holding Co., Ltd. (NYSE:LITB) jumped over 16% in early September as quarterly results revealed an improvement in gross margin by 330 basis points and revenue jumped more than 7% year-on-year.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in LightInTheBox Holding Co., Ltd. (NYSE:LITB) with 2 million shares worth more than $4 million.
At the end of the second quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $6.4 million in LightInTheBox Holding Co., Ltd. (NYSE:LITB), up from 2 in the preceding quarter worth $5.2 million.
7. Regis Corporation (NYSE:RGS)
Number of Hedge Fund Holders: 8
Share Price as of November 4, 2021: $3.09
Regis Corporation (NYSE: RGS) owns and operates hair styling and hair care salons. The company stands to benefit from the upcoming Christmas season as people flock to salons to prepare for the holiday meet-and-greets. Loop Capital analyst Laura Champine has a Buy rating on the stock with a price target of $6. The analyst believes the company can benefit from post-COVID recovery in the latter months of this year.
Regis Corporation (NYSE: RGS) recently posted earnings for the first fiscal quarter, reporting earnings per share of -$0.28, missing estimates by $0.15. The revenue over the period was $77 million, beating predictions by $7.4 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Royce & Associates is a leading shareholder in Regis Corporation (NYSE: RGS) with 1.8 million shares worth more than $17.6 million.
At the end of the second quarter of 2021, 8 hedge funds in the database of Insider Monkey held stakes worth $35 million in Regis Corporation (NYSE: RGS), down from 10 in the preceding quarter worth $173 million.
6. Arcos Dorados Holdings Inc. (NYSE:ARCO)
Number of Hedge Fund Holders: 10
Share Price as of November 4, 2021: $4.55
JPMorgan recently assumed coverage of Arcos Dorados Holdings Inc. (NYSE:ARCO) stock with an Overweight rating and a price target of $8.50, noting that quick service restaurants in Latin America could recover to 2019 levels by the end of 2021. Arcos owns and operates McDonald’s restaurants in twenty countries across Latin America. The holiday season looks set to jumpstart the post-pandemic recovery for the firm as the virus cases decline in the region.
Arcos Dorados Holdings Inc. (NYSE:ARCO) beat market predictions on earnings per share and revenue in the second quarter by $0.07 and $23 million respectively. It also announced in late July that it would distribute a stock dividend for 2021.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Moerus Capital Management is a leading shareholder in Arcos Dorados Holdings Inc. (NYSE:ARCO) with 4.7 million shares worth more than $28 million.
At the end of the second quarter of 2021, 10 hedge funds in the database of Insider Monkey held stakes worth $40 million in Arcos Dorados Holdings Inc. (NYSE:ARCO), down from 12 in the preceding quarter worth $50 million.
Along with Paysafe Limited (NYSE:PSFE), Flex Ltd. (NASDAQ:FLEX), and Ambev S.A. (NYSE:ABEV), Arcos Dorados Holdings Inc. (NYSE:ARCO) is one of the stocks that stands to gain in the coming months.
5. Ambev S.A. (NYSE:ABEV)
Number of Hedge Fund Holders: 18
Share Price as of November 4, 2021: $3.14
Ambev S.A. (NYSE:ABEV) makes and sells beer, carbonated drinks, and other non-alcoholic beverages. It primarily operates in Latin America. The holiday season is a significant source of revenue for the company as sales during the period increase dramatically compared to other months of the year. Bank of America recently upgraded the stock to Neutral from Underperform with a R$18.60 target.
Jean Jereissati, the CEO of Ambev S.A. (NYSE:ABEV), during the third quarter earnings call, said that the company had delivered a 20% net revenue growth in the quarter with volumes up 8% year-on-year despite undergoing a transformation.
At the end of the second quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $301 million in Ambev S.A. (NYSE:ABEV), the same as in the preceding quarter worth $228 million.
In its Q1 2020 investor letter, Broyhill Asset Management, an asset management firm, highlighted a few stocks and Ambev S.A. (NYSE:ABEV) was one of them. Here is what the fund said:
“We also diversified our beer exposure during the quarter, adding a direct investment in Ambev (ABEV) to compliment our existing investment in Anheuser Busch Inbev (BUD). As the current environment has punished highly leveraged businesses like BUD (despite the company’s ability to generate strong and recurring cash flow), the opportunity to own ABEV, with net cash on its balance sheet and the highest returns on capital in the industry—at a lower multiple than its parent—was too good to pass up.
Together, these names represent roughly 20% of our capital today. Given their cheap valuations, combined with the fact that beer and tobacco consumption has historically increased during recession, one could argue that we should have even more exposure to these Sin Stocks. In principle, we agree, and given the opportunity, we’d be happy to increase our positions. But in the interim, we are highly sensitive to maintaining balance in the portfolio. At one end, we own high quality, defensive businesses that should fare well in almost any environment. At the other end, we’ve begun building a portfolio of more cyclical businesses, positioned to rebound sharply and gain share once the clouds clear. We discuss a few of these investments below.”
4. Funko, Inc. (NASDAQ:FNKO)
Number of Hedge Fund Holders: 19
Share Price as of November 4, 2021: $17.13
Funko, Inc. (NASDAQ:FNKO) makes and sells pop culture consumer products. The sales of these products, which are licensed by different brands, skyrocket during the holiday season because they make for great gift items for people of all ages. The stock is up 152% year-to-date on the back of reports that it is planning to enter the NFT market. The firm will shortly release third quarter earnings results, with analysts backing the firm to beat expectations.
Jefferies analyst Stephanie Wissink recently upgraded Funko, Inc. (NASDAQ:FNKO) stock to Buy from Hold and increased the price target to $25 from $21, noting that returning in-store traffic would benefit the company in the coming months.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Woodson Capital Management is a leading shareholder in Funko, Inc. (NASDAQ:FNKO) with 3.6 million shares worth more than $76 million.
3. The Container Store Group, Inc. (NYSE:TCS)
Number of Hedge Fund Holders: 21
Share Price as of November 4, 2021: $13.64
The Container Store Group, Inc. (NYSE:TCS) recently posted earnings for the second fiscal quarter, reporting earnings per share of $0.54, beating estimates by $0.25. The revenue over the period was $275 million, up 11% year-on-year. The company operates in the retail sector and markets storage and organization products. The stock stands to benefit from the increase in retail sales over the next few months.
Despite solid fundamentals and upcoming growth catalyst, the short interest on The Container Store Group, Inc. (NYSE:TCS) stock remains high at over 14%. Over the past year, the shares have returned more than 43% to investors.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $296 million in The Container Store Group, Inc. (NYSE:TCS), up from 18 in the previous quarter worth $362 million.
2. Flex Ltd. (NASDAQ:FLEX)
Number of Hedge Fund Holders: 43
Share Price as of November 4, 2021: $17.83
Flex Ltd. (NASDAQ:FLEX) provides supply chain services and solutions to the semiconductor industry. The products sold by the semiconductor industry are used in electronics around the world. During the holiday season, a lot of retail outlets have sales on these items, during which a lot of electronics are sold. With supply chain issues disrupting the production of chips, the role the company plays in the coming months has become of vital importance.
Flex Ltd. (NASDAQ:FLEX) has quietly been expanding business capabilities as it navigates supply chain problems for chipmakers. In October, the firm announced that it had acquired Anord Mardix, a critical power solutions provider, for $540 million.
At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Flex Ltd. (NASDAQ:FLEX), down from 48 the preceding quarter worth $1.6 billion.
In its Q4 2020 investor letter, Sound Shore Management, an asset management firm, highlighted a few stocks and Flex Ltd. (NASDAQ:FLEX) was one of them. Here is what the fund said:
“Our third quarter addition of contract manufacturer Flex provides a great example. Originally an electronics-focused outsource manufacturer with highly cyclical cash flows and short product lifecycles, the company has evolved its customer base toward the capital goods, automotive and healthcare industries. Having successfully recast itself as a longer-cycle, “new industrial,” Flex’s stock is benefitting from more stable and diversified cash flows and more consistent revenue growth. CEO Revathi Advaithi joined in early 2019 and she has refocused the company by accelerating the transition to these longer-cycle businesses. Moreover, the company has been shareholder oriented, using the company’s ample free cash to reduce shares outstanding by 35% in the last decade. Lastly, Flex’s Nextracker division should provide nice upside. The solar tracking company manufactures motors, software and systems for utility-scale power generation projects and business is growing quickly as the shift toward sustainable energy sources hastens. We believe Nextracker is underappreciated and could represent a significant amount of hidden value. At 13 times earnings Flex is a very attractive risk reward opportunity.”
1. Paysafe Limited (NYSE:PSFE)
Number of Hedge Fund Holders: 50
Share Price as of November 4, 2021: $7.73
Paysafe Limited (NYSE:PSFE) also features on our list of cheap stocks to buy before Christmas because the company provides digital commerce solutions to businesses. In the wake of the uncertainty around COVID-19, a lot of businesses have plans to expand their digital offerings in time for the holiday season and are thus turning to Paysafe. Bank of America has a Buy rating on the stock with a price target of $15.
Paysafe Limited (NYSE:PSFE) recently announced that it had partnered with Bitrise, a mobile development platform, to improve the digital wallet solutions offered by the company to different businesses around the world.
At the end of the second quarter of 2021, 50 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Paysafe Limited (NYSE:PSFE), up from 41 in the previous quarter worth $1.3 billion.
You can also take a peek at 10 Best Healthcare Dividend Stocks to Buy Now and 10 Dividend Stocks with Over 20 Years of Dividend Increases.
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Disclosure. None. 10 Cheap Stocks to Buy Before Christmas is originally published on Insider Monkey.
