We recently compiled a list of the 7 Best Rising Penny Stocks To Invest In Now. In this article, we are going to take a look at where Grab Holdings Limited (NASDAQ:GRAB) stands against the other rising penny stocks.

Fed’s Rate Cut Sets the Stage for a Strong Q4

In an episode of Market Storylines on the Inside the Icehouse Podcast feed by Intercontinental Exchange, Jay Woods, Chief Global Strategist at Freedom Capital Markets, discussed Fed rate cuts and the Q4 outlook. Woods discussed the latest Fed rate cut and said that the market absorbed the rate cuts quite positively, with the S&P 500 reaching new all-time highs.

Woods mentioned that, historically, when markets hit new highs in September, the fourth quarter tends to perform well, especially in election years. As the fourth quarter approaches, he highlighted that sectors such as real estate, utilities, and industrials have led the market in the third quarter, while technology has lagged. However, it may rebound in Q4.

Woods also emphasized the importance of upcoming economic data, including the ISM manufacturing report, jobless claims, and the U.S. unemployment report, which will give insight into the labor market and the potential impact of the rate cuts.

Small and Mid-Cap Stocks Set for Major Gains

Ryan Dietrich, Chief Market Strategist at Carson Group, joined Yahoo Finance for an interview on September 29, where he expressed optimism about the stock market’s future. He believes the rate cut was necessary and should have been smaller earlier.

He mentioned that the labor market is showing signs of slowing, with initial jobless claims at a four-month low, and forward earnings for the S&P 500 improving. However, he does not foresee a recession.

Dietrich highlighted that historically, rate cuts near market highs have been followed by strong market performance, with an average annual return of around 14%. He thinks the broader market could see 12-15% gains in the next year, while small and mid-cap stocks might outperform with over 20% returns. His firm is especially focused on mid-cap stocks, which tend to perform well after rate cuts.

While the upcoming election may cause some volatility, especially in October, Dietrich remains confident that markets will stabilize afterward, as they usually react better once uncertainty passes. He expects a strong end-of-year rally and advises investors to remain diversified and take advantage of any market weakness.

Our Methodology

For this article, we used stock screeners to identify over 60 stocks under $5 with a 1-month share price gain of over 10%, as of September 30. The best rising penny stocks are listed in ascending order of their hedge fund sentiment, which was taken from Insider Monkey’s database of over 900 elite hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Grab Holdings Limited (NASDAQ:GRAB)

1-Month Stock Price Performance: 15.96%

Number of Hedge Fund Holders: 34

Grab Holdings Limited (NASDAQ:GRAB) operates a versatile super-app that integrates ride-hailing, food delivery, and digital payment services. The platform serves a wide range of customers across eight Southeast Asian countries, including key markets like Singapore, Malaysia, Indonesia, and Vietnam.

The company’s approach has made it a significant player in the region, allowing users to access multiple services seamlessly through a single app. It is one of the best rising penny stocks to invest in now.

In the second quarter, it reported significant performance metrics, achieving a record high of 41 million Monthly Transacting Users. The figure highlights the growing popularity and utility of the platform among consumers.

The company also experienced impressive growth in its on-demand gross merchandise value (GMV), which rose 18% year-over-year on a constant currency basis, reaching new heights. It was fueled by a 22% increase in on-demand transactions, which points to strong demand for its services and an effective cross-utilization of its various offerings.

Grab Holdings’ (NASDAQ:GRAB) liquidity position remains strong, with cash reserves totaling $5.6 billion by the end of the second quarter, up from $5.3 billion in the previous quarter. The increase in liquidity is partly due to a significant rise in customer deposits within its banking segment, which climbed to $730 million from $479 million.

Such growth boosts financial stability and provides resources for further investments and expansion. Additionally, the company reported net cash liquidity of $5.3 billion, compared to $5.0 billion previously, which shows its ongoing profitability. The company has reaffirmed its full-year revenue guidance for 2024, projecting a range of $2.70 billion to $2.75 billion.

Overall GRAB ranks 2nd on our list of the rising penny stocks to invest in now. While we acknowledge the potential of GRAB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GRAB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article is originally published at Insider Monkey.