In this article, we will take a look at the 10 dirt cheap stocks to buy.
Amid a disastrous 2022 some analysts and market pundits are predicting a market rebound in late 2023 or 2024. Historically, market declines have given a golden opportunity for investors to pile into stocks before they rebound to higher valuations. As inflation begins to show signs of cooling in the US, the Federal Reserve might begin to ease monetary policy in 2023 and eventually halt rate hikes. In a Bloomberg survey, about 70% of the top global investors said they expected stocks to rise in 2023.
However, there seems to be a consensus among market analysts that we are set to face a recession this year. A Bloomberg Economics model shows a 100% probability of recession starting by August 2023, and some market experts believe the market slowdown would not cause central banks to take any unexpected action. The Bloomberg report quoted Deutsche Bank Private Bank’s global chief investment officer Christian Nolting, who thinks that policymakers in the US and Europe are now “resigned” to weaker economic growth in 2023. The analyst said that recession might be short but “will not be painless.”
Despite the possible market situation in 2023 or beyond, the fact remains that successful investors always ignore short-term volatility when investing and pile into solid stocks when they are trading at lower prices. Sooner or later the stock market is expected to turn the corner. When it does, only those investors would come out as winners who had invested when things were bad.
JPMorgan said in a latest report that P/E ratios are much closer to fair value than they have been in recent years. This is one of the biggest benefits of the latest market correction. Talking about the US stock market, JPMorgan said that its expected return in 2023 from US equities increased from 4.1% to 7.9% in U.S. dollar terms. The firm noted that in its last year’s forecast, valuations were a significant headwind. But current earnings multiples give a much better starting point.
Photo by AlphaTradeZone
Our Methodology
For this article we scanned Insider Monkey’s database of 920 elite hedge funds’ holdings and picked 12 stocks that are priced under $15 as of January 12. Most of the companies that are profitable in this list have a PE ratio of under 15. For loss-making companies, we have mentioned the growth catalysts and analyst ratings that justify our claim of “dirt cheap” since these companies present an attractive entry point for investors who want to reap profits in the long term.
The list is ranked in descending order of stock prices.
Dirt Cheap Stocks To Buy
10. Asana, Inc. (NYSE:ASAN)
Price as of January 12: $14.04
P/E Ratio: N/A
Number of Hedge Fund Holders: 26
Asana is a software company that is famous for its SaaS-based project management platform. Asana, Inc. (NYSE:ASAN) has a growing list of customers including big names like Spotify and Accenture. Asana, Inc. (NYSE:ASAN)’s founder and CEO is Dustin Moskovitz, who also cofounded Facebook (now Meta Platforms). The executive, who owns about half of Asana, Inc. (NYSE:ASAN), also reported some insider buying. In September, Moskovitz purchased 19.273 million shares of Asana, Inc. (NYSE:ASAN) at $18.16 per share, higher than January 12 price of $14.
For the third quarter, Asana, Inc. (NYSE:ASAN) posted revenue of $141.44 million, which surpassed analyst estimates by $2.42 million.
9. UiPath Inc. (NYSE:PATH)
Price as of January 12: $13.59
P/E Ratio: N/A
Number of Hedge Fund Holders: 26
UiPath Inc. (NYSE:PATH) is a software company that is operating in the high-growth segment of robotic process automation. UiPath Inc. (NYSE:PATH) was hammered in 2022, losing about 65% in value over the past 12 months. However, UiPath Inc. (NYSE:PATH) has a great chance for a rebound amid the automation wave that is taking over the world. The RPA industry is expected to reach about $44 billion in value by 2029 and UiPath Inc. (NYSE:PATH) is a leader in this space. Major companies, including Uber, General Electric, Autodesk, Virgin, Google, among others, use UiPath products for automation.
UiPath’s third quarter results were strong. Revenue in the period came in at $262.74 million, beating the Street estimates by $6.81 million. Net new ARR came in at $67 million in the period, which showed a 38% growth on a YoY basis.
A total of 26 hedge funds tracked by Insider Monkey reported having stakes in UiPath Inc. (NYSE:PATH).
8. Ford Motor Company (NYSE:F)
Price as of January 12: $13.43
P/E Ratio: 6.07
Number of Hedge Fund Holders: 47
Ford is one of the best cheap stocks to buy. The US automaker is slowly but surely gaining a significant market share of the lucrative EV market. Ford Motor Company (NYSE:F) now ranks at the second spot, behind Tesla, in terms of EV sales in the US. Ford Motor Company (NYSE:F)’s truck sales are also strong. Its F-series truck was the best-selling truck in the US in 2022, notching the award for the 46th straight year.
Hedge funds are bullish on this cheap stock. As of the end of the third quarter, 46 hedge funds tracked by Insider Monkey reported having stakes in Ford. The total value of these shares was $1.2 billion. The biggest stakeholder of Ford Motor Company (NYSE:F) at the end of September 2022 was Ken Fisher’s hedge fund, which had a $504 million stake in Ford Motor Company (NYSE:F).
7. Coursera, Inc. (NYSE:COUR)
Price as of January 12: $13.07
P/E Ratio: N/A
Number of Hedge Fund Holders: 22
Online course platform Coursera ranks 8th in our list of the best dirt cheap stocks to buy now. Coursera, Inc. (NYSE:COUR) has a long-term growth potential since it has a strong position in the online education market which is set to grow as more and more people opt to upskill themselves. Coursera, Inc. (NYSE:COUR) also collaborates with over 275 top universities and businesses to offer an online education.
In the third quarter, Coursera, Inc. (NYSE:COUR)’s revenue jumped 9.3% QoQ to $136.3 million, up from $109.0 million a year ago.
As of the end of the third quarter, 22 hedge funds tracked by Insider Monkey reported having stakes in Coursera. Gilchrist Berg’s Water Street Capital has a $12.2 million stake in Coursera, Inc. (NYSE:COUR).
Here is what ClearBridge SMID Cap Growth Strategy has to say about Coursera, Inc. in its Q3 2021 investor letter:
“We also added two positions in the IPO aftermarket, (one is) online education portal Coursera. Coursera, which makes academic courses from some of the world’s leading universities available through its platform and offers online degree programs, saw its shares trade lower following its March IPO but has seen significant uptake for its services since the onset of COVID.”
6. NIO Inc. (NYSE:NIO)
Price as of January 12: $11.81
P/E Ratio: N/A
Number of Hedge Fund Holders: 26
There has been a lot of hype around Chinese EV company NIO Inc. (NYSE:NIO) over the past few years. While some have lost hope on NIO Inc. (NYSE:NIO), some believe the stock is set for a rebound. In December, Morgan Stanley gave bullish comments about Nio despite the company giving a weak Q4 forecast. Morgan Stanley said in a report that the guidance should not trigger a sharp selloff because the “fallout from China’s reopening should be sector-wide and likely transitional.” The bank said that in the near future it expects the market to “refocus on the pace of resurgence in store traffic/order intake.” Morgan Stanley reiterated its Overweight rating on NIO Inc. (NYSE:NIO) and gave a $16.10 price target for Nio.
As of the end of the third quarter, 26 elite hedge funds of the 920 funds tracked by Insider Monkey reported having stakes in NIO Inc. (NYSE:NIO), compared to 25 funds in the previous quarter. The total value of these stakes is $519 million.
5. Teva Pharmaceutical Industries Limited (NYSE:TEVA)
Price as of January 12: $11.37
Forward P/E: 4.28
Number of Hedge Fund Holders: 27
Teva Pharmaceutical is an Israel-based pharma company that offers an attractive entry point for long-term investors, according to several market analysts. On an adjusted basis, Teva Pharmaceutical Industries Limited (NYSE:TEVA) has a forward PE multiple of 3.63x, compared to the industry average of 19. Teva Pharmaceutical Industries Limited (NYSE:TEVA) is known for its generics and drugs that address central nervous system diseases such as multiple sclerosis, migraine, and neurodegenerative disorders.
Earlier this month, Teva Pharmaceutical Industries Limited (NYSE:TEVA) said that it entered settlement agreements with 48 states to resolve claims the pharma company contributed to the opioid epidemic. According to the terms of the settlement, Teva Pharmaceutical Industries Limited (NYSE:TEVA) will pay about $4.35 billion in total.
As of the end of the September quarter, 27 hedge funds tracked by Insider Monkey had stakes in Teva. The total value of these stakes was $573 million. The biggest stakeholder of Teva Pharmaceutical Industries Limited (NYSE:TEVA) was the famous value investor David Abrams’ Abrams Capital Management, with a $193 million stake.
4. Orange S.A. (NSYE:ORAN)
Price as of January 12: $10.79
P/E Ratio: 6.58
Number of Hedge Fund Holders: 5
Orange SA is a French telecom company which has operations in major European countries, Middle East and Africa. Despite its cheap price, Orange S.A. (NSYE:ORAN) is a solid dividend payer and has a dividend yield of about 10% as of January 12. Orange’s business took a hit in 2022 amid macroeconomic situation and rising competition. But Orange S.A. (NSYE:ORAN) is taking several measures to solve this problem. For example, to offset competition in Spain, Orange S.A. (NSYE:ORAN) decided to combine its operations with MásMóvil in a deal worth €18.6 billion.
In the third quarter, Orange S.A. (NSYE:ORAN)’s revenue gained about 3%. However, Orange S.A. (NSYE:ORAN)’s management was quite frank and said that it was facing “an exceptional economic context” which requires Orange S.A. (NSYE:ORAN) to make “appropriate choices” in the coming months. Orange will share its plan on February 16.
3. Fisker Inc. (NYSE:FSR)
Price as of January 12: $8.05
P/E Ratio: N/A
Number of Hedge Fund Holders: 15
Fisker is an American EV company that has some promising growth potential. Fisker Inc. (NYSE:FSR) is known for its Fisker Ocean electric SUV. The SUV’s base model provides 250 miles of range for less than $37,500. In 2023, Fisker Inc. (NYSE:FSR) plans to produce 42,400 units. Fisker Inc. (NYSE:FSR) also plans to launch another electric vehicle in 2024. This vehicle is named Pear and its basic model will start at $30,000.
In November, Evercore ISI started covering Fisker at an Outperform rating and a $15 price target.
Evercore’s team said that Fisker’s business model is differentiated from its rivals like Rivian (RIVN) and Lucid (LCID) and this advantage could help Fisker Inc. (NYSE:FSR) get solid market share.
2. Lumen Technologies, Inc. (NYSE:LUMN)
Price as of January 12: $6.04
P/E Ratio: 3.02
Number of Hedge Fund Holders: 34
Lumen is one of the best dirt cheap stocks to buy now. Lumen Technologies, Inc. (NYSE:LUMN) provides data communication, VoIP, IP, fiber infrastructure and related services. The stock was hammered after Lumen Technologies, Inc. (NYSE:LUMN) announced in November that it was eliminating its dividend and allocating resources for share buyback programs instead. Lumen Technologies, Inc. (NYSE:LUMN) has a $1.5 billion share buyback program, with the flexibility of deploying it within a two-year window. The stock has a PE ratio of 3 as of January 12. While dividend termination was a bad news, Lumen bulls believe that the company is doing what was necessary. The stock could be profitable for long-term investors. Lumen Technologies, Inc. (NYSE:LUMN)’s management is also planning to divest non-core and low-growth assets to deleverage Lumen Technologies, Inc. (NYSE:LUMN)’s balance sheet. These measures can show results in the future.
As of the end of the third quarter, 34 hedge funds tracked by Insider Monkey reported having stakes in Lumen Technologies, Inc. (NYSE:LUMN), compared to 42 funds in the previous quarter.
Here is what Longleaf Partners specifically said about Lumen Technologies, Inc. (NYSE:LUMN) in its Q3 2022 investor letter:
“Lumen Technologies, Inc. (NYSE:LUMN) – Global fiber company Lumen was the top detractor in the quarter. In September, the company announced a new CEO, Kate Johnson, would take over for Jeff Storey. Johnson has a strong track record of delivering organic revenue growth, the primary area where Lumen has struggled. Johnson held previous roles at GE and Microsoft, where she most recently served as head of Microsoft US and doubled her division’s revenue in only four years. Multiple checks through our network vouch for her and suggest this leadership change is a positive upgrade that will bring the discipline and focus on sales that Lumen has been missing. The market reacted negatively with concern over the potential for another dividend cut or strategy change. We are confident the stock price reaction is highly overblown versus any impact that a potential dividend cut would have on value per share. The stock now trades at 4.5x EBITDA, and we believe the best value accretive capital allocation move today is share repurchase. Shortly after quarter end, Lumen closed on the sale of part of its consumer business to Apollo, further improving its balance sheet and business mix.”
1. Transocean Ltd. (NYSE:RIG)
Price as of January 12: $5.45
P/E Ratio: N/A
Number of Hedge Fund Holders: 36
Over the past six months Transocean shares have gained more than 100% in value, surpassing peers Valaris (NYSE:VAL), Noble Corp. (NYSE:NE), Seadrill (NYSE:SDRL) and Diamond Offshore Drilling (DO). However, the stock still looks dirt cheap and shows potential to gain in the near term as investors gain more confidence in Transocean Ltd. (NYSE:RIG)’s ability to fix its liquidity issues. Recently, Transocean Ltd. (NYSE:RIG) announced contract awards or extensions for five of its drilling rigs. Together, the fixtures represent approximately $488 million of firm backlog. In November, Transocean Ltd. (NYSE:RIG) said it expects its adjusted contract drilling revenues to be between $2.9 billion and $3 billion.
You can also take a peek at Top Stocks in Each Sector and Dow 30 Stocks List 2022.
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Disclosure: None. 10 Dirt Cheap Stocks To Buy is originally published on Insider Monkey.
