In this piece, we will take a look at the 13 best growth stocks under $10 to buy. If you want to skip our overview of growth investing and the latest stock market news, then you can take a look at the 5 Best Growth Stocks Under $10 to Buy.
The AI gold rush on Wall Street has enabled indexes to set new records and allowed companies like NVIDIA Corporation (NASDAQ:NVDA) to reshape the valuation dynamics of the stock market. This surge, which has covered any company that investors believe has exposure to the demand for AI hardware and software, has also shown that growth stocks are the right way to go when considering profits through share price appreciation.
These stocks are those that are determined by investors to have significant competitive advantages that can ensure that their future earnings are significantly higher than current levels. This optimism is reflected through their share prices, and analysts and investors measure the investor sentiment through the price to earnings ratio. The higher the P/E ratio is compared to the industry benchmark, the more investors believe that the future is bright. At the same time, growth stocks are also among the riskiest in the market.
This is because the value of a stock is a reflection of the investors’ belief in its future. A share price shows what investors expect a company can earn in the future, with these expectations adding to the potential fundamental based valuation that might be baked into the share price. Consequently, since expectations can be fickle, and in today’s fast paced news environment news spreads like wildfire, the share price can tank much faster than it took to build the gains.
In fact, we don’t have to sift through many growth stocks to understand this risk. Continuing with our discussion of NVIDIA, the firm’s trailing P/E ratio currently sits at 69.09 while the forward P/E ratio is 34.25. The recent growth in its earnings has brought this valuation down to earth, since as recently as in July 2023, NVIDIA’s trailing P/E ratio was 243.38. So how does this relate to the risks with growth stocks? Well, in April 2024, another AI stock, the San Jose, California based semiconductor firm Super Micro Computer, Inc. (NASDAQ:SMCI) failed to release a preliminary earnings report ahead of its earnings for the first quarter of 2024. While it’s normal for firms to not post this report, for Super Micro, it was a deviation from historic norms that led analysts to wonder if there was something amiss that the firm was uncertain of declaring before its official results came out.
As a result, the growth expectations that were baked into semiconductor growth AI stocks had to shift. For Super Micro, the aftermath was devastating as the shares tanked by a whopping 23% despite the fact that its P/E ratio has floated around 20 – 25 for most of the past twelve months. For NVIDIA, the firm that had a triple digit P/E ratio the news was just as bad, as, despite no fault of its own, the re calibration of investor expectations that are baked into a growth stock also led to a 10% NVIDIA share price drop.
Since NVIDIA is heading into yet another crucial earnings release, and now with the backdrop of potential trouble at Super Micro, let’s see what the hedge funds are saying about this growth stock. Here’s one such excerpt from Polen Capital‘s investor letter for the fourth quarter of 2023:
Given many of NVIDIA’s customers or its end customers are still very much in the experimentation phase with generative AI, it is unclear how sustainable the current demand for GPUs truly is. At the same time, it is known that NVIDIA has historically been highly cyclical. By the end of 2024, we believe NVIDIA will already account for roughly half the market for datacenter chips, servers, and networking equipment, which is unprecedented. Even though the valuation at 25x forward earnings doesn’t look very demanding at first glance, it assumes NVIDIA will own virtually the entire datacenter chip market in just the next few years and will sustain year-on-year growth despite being a cyclical business that is currently experiencing much higher new peaks.
We believe NVIDIA is a highly advantaged business, but we also believe the long-term growth outcomes are currently too variable, and the expectations built into the company’s $1.2 trillion valuation as of this writing assume the most optimistic of those scenarios.
So, as the first quarter of 2024 earnings season is shaping to be quite an interesting one indeed, let’s take a look at some growth stocks that are trading for under $10. A couple of notable picks are NexGen Energy Ltd. (NYSE:NXE), BGC Group, Inc. (NASDAQ:BGC), and Algonquin Power & Utilities Corp. (NYSE:AQN).
A money manager at a desk crowded with financial reports and data screens.
Our Methodology
To make our list of the best growth stocks under $10, we selected 32 stocks that are under $10, have a P/E ratio greater than 50, and have a market capitalization greater than $300 million. They were ranked by the number of hedge funds that had bought the shares in Q4 2023 and the top stock were selected.
For these growth stocks under $10, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
13 Best Growth Stocks Under $10 to Buy
13. DocGo Inc. (NASDAQ:DCGO)
Number of Q4 2023 Hedge Fund Shareholders: 13
Latest Trailing P/E Ratio: 59.58
Share Price: $3.57
DocGo Inc. (NASDAQ:DCGO) is an American healthcare transportation services provider that operates ambulances and wheelchairs. Its shares are rated Strong Buy on average, and the average analyst share price target is $9.89.
During December 2023, 13 out of the 933 hedge funds part of Insider Monkey’s database had bought and owned DocGo Inc. (NASDAQ:DCGO)’s shares. It joins NexGen Energy Ltd. (NYSE:NXE), BGC Group, Inc. (NASDAQ:BGC), and Algonquin Power & Utilities Corp. (NYSE:AQN) in our list of the best growth stocks to buy under $10.
12. Endeavour Silver Corp. (NYSE:EXK)
Number of Q4 2023 Hedge Fund Shareholders: 14
Latest Trailing P/E Ratio: 91
Share Price: $2.73
Endeavour Silver Corp. (NYSE:EXK) is a Canadian gold and silver mining company headquartered in Vancouver, Canada. Its shares soared in April 2024 after a favorable report for Endeavour Silver Corp. (NYSE:EXK)’s Mexico silver mine shared that construction had crossed the 50% mark.
By the end of last year’s fourth quarter, 14 out of the 933 hedge funds profiled by Insider Monkey were the firm’s shareholders. Endeavour Silver Corp. (NYSE:EXK)’s largest hedge fund shareholder is Israel Englander’s Millennium Management through its $9.1 million stake.
11. Borr Drilling Limited (NYSE:BORR)
Number of Q4 2023 Hedge Fund Shareholders: 14
Latest Trailing P/E Ratio: 61.44
Share Price: $5.57
Borr Drilling Limited (NYSE:BORR) is an oil and gas drilling contractor headquartered in Hamilton, Bermuda. 2024 has been a tough year for the firm as it became another drilling company that faced a drilling suspension from the Saudi oil giant Aramco.
14 out of the 933 hedge funds part of Insider Monkey’s Q4 2023 database were Borr Drilling Limited (NYSE:BORR) shareholders. William B. Gray’s Orbis Investment Management owned the biggest stake which was worth $61.8 million.
10. B2Gold Corp. (NYSE:BTG)
Number of Q4 2023 Hedge Fund Shareholders: 14
Latest Trailing P/E Ratio: 253.50
Share Price: $2.53
B2Gold Corp. (NYSE:BTG) is a Canadian gold mining company with a presence in Africa and Asia. Despite the fact that its shares are rated Strong Buy on average, the shares were under stress in April 2024 after the nation of Mali reported that industrial gold production in the country would drop by 14%.
As of December 2023 end, 14 out of the 933 hedge funds tracked by Insider Monkey had held a stake in the firm. B2Gold Corp. (NYSE:BTG)’s largest hedge fund investor is Jim Simons’ Renaissance Technologies due to its $93.7 million investment.
9. Reservoir Media, Inc. (NASDAQ:RSVR)
Number of Q4 2023 Hedge Fund Shareholders: 15
Latest Trailing P/E Ratio: 830
Share Price: $8.30
Reservoir Media, Inc. (NASDAQ:RSVR) is an American music recording and publishing company headquartered in New York City. The firm started out 2024 on a strong note after it signed a deal with one of the Middle East’s biggest pop stars Nancy Ajram.
For their fourth quarter of 2023 shareholdings, 15 out of the 933 hedge funds surveyed by Insider Monkey were Reservoir Media, Inc. (NASDAQ:RSVR)’s shareholders. Adam Katz and Andy Dodge’s Irenic Capital Management was the biggest shareholder through its $24.6 million investment.
8. Viavi Solutions Inc. (NASDAQ:VIAV)
Number of Q4 2023 Hedge Fund Shareholders: 18
Latest Trailing P/E Ratio: 398.75
Share Price: $7.97
Viavi Solutions Inc. (NASDAQ:VIAV) is a network testing hardware and software company headquartered in Chandler, Arizona. The firm has been struggling on the financial front as of late since it has beaten analyst EPS estimates in just two out of its four latest quarters.
Insider Monkey’s Q4 2023 survey covering 933 hedge funds revealed that 18 had held a stake in the firm. Viavi Solutions Inc. (NASDAQ:VIAV)’s largest hedge fund investor is Michael Rockefeller and Karl Kroeker’s Woodline Partners as it owns $55.8 million worth of shares.
7. LXP Industrial Trust (NYSE:LXP)
Number of Q4 2023 Hedge Fund Shareholders: 18
Latest Trailing P/E Ratio: 107.62
Share Price: $8.61
LXP Industrial Trust (NYSE:LXP) is a real estate investment trust headquartered in New York City. It deals primarily with investing in industrial properties. Its shares have struggled in 2024 as they are down by 13% year to date.
During December 2023, 18 out of the 933 hedge funds covered by Insider Monkey were LXP Industrial Trust (NYSE:LXP)’s investors. Eduardo Abush’s Waterfront Capital Partners was the biggest shareholder as it held a $34.5 million stake.
6. CEMEX, S.A.B. de C.V. (NYSE:CX)
Number of Q4 2023 Hedge Fund Shareholders: 21
Latest Trailing P/E Ratio: 67.17
Share Price: $8.06
CEMEX, S.A.B. de C.V. (NYSE:CX) is a sizeable Mexican building materials company that sells cement, concrete aggregates, and associated products. March 2024 was a historic month for the firm, as it saw S&P upgrade its credit rating to investment grade, or BBB- for the first time in years from the earlier junk grade status.
Insider Monkey scoured through 933 hedge funds for their fourth quarter of 2023 shareholdings to find that 21 had bought and owned the firm’s shares. CEMEX, S.A.B. de C.V. (NYSE:CX)’s largest hedge fund investor is Howard Marks’ Oaktree Capital Management through its $108 million investment.
NexGen Energy Ltd. (NYSE:NXE), BGC Group, Inc. (NASDAQ:BGC), and Algonquin Power & Utilities Corp. (NYSE:AQN) are some top growth stocks under $10 that hedge funds are buying.
Click to continue reading and see 5 Best Growth Stocks Under $10 to Buy.
Suggested Articles:
- 13 Best Ethical Companies to Invest in 2024
- 10 Best Weight Loss Drug Stocks to Buy Now
- Cathie Wood’s Latest Stock Portfolio: Top 10 Stock Picks
Disclosure. None. 13 Best Growth Stocks Under $10 to Buy was initially published on Insider Monkey.