We recently compiled a list of the 10 Best One-Dollar Stocks To Buy Now. In this article, we are going to take a look at where Karyopharm Therapeutics Inc. (NASDAQ:KPTI) stands against the other one-dollar stocks.
The upward trend in the stock market has resumed, supported by strong first-quarter and second-quarter results that have relieved investor concerns about inflation. The US economy had a very strong year in 2023. Economic activity increased steadily, job creation was high, unemployment was low, real earnings rose, and inflation declined. Furthermore, the Federal Reserve maintained high interest rates throughout this time in an attempt to control inflation. June recorded a market increase of more than 10%. The large-cap market of the 500 biggest companies has already surged over 17% so far this year as analysts look forward to reduced interest rates in the second half of 2024, along with higher earnings growth and lower inflation.
Historically, since 1928, July has been the strongest month of the year for stocks in terms of performance. The market rose by 1.7% in July. Given that the market posted gains in May and June despite notable economic uncertainty, investors remain bullish that the market can sustain its positive trend.
In a May speech to the Foreign Bankers’ Association, Federal Reserve Chair Jerome Powell recognized the difficulty of bringing inflation down to the desired level. Powell stated that it could be essential to keep interest rates at their present levels for a longer period of time. Interest rates have been fluctuating between 5.25% and 5.5% since July 2023.
Amid concerns over an impending recession brought on by higher interest rates, the US labor market still remains stable. According to the Labor Department, the US economy created 175,000 new jobs in April, although this was less than the 240,000 jobs that economists had predicted. The US labor market maintains a low unemployment rate of 3.9%, while US wages have risen 3.9% YoY. Nonetheless, recession fears are maintained by the historical recession predictor, the inverted U.S. Treasury yield curve, and the New York Fed’s model, which projects a 50% chance of a recession within the next 12 months.
The second quarter of 2024 saw a gain of more than 3% in the US stock market. Under the hood, tech companies continued to lead the artificial intelligence trade, which showed no signs of slowing down throughout the quarter. One striking trend in the stock market this year has been the outperformance of the biggest companies. The large-cap market of the 500 biggest companies gained 4.4% in Q2, bringing its 2024 return to more than 15%. By comparison, the small-cap market had a decline of 3.3%, resulting in a reduced 2024 return of 1.6%.
With over half of 2024 already gone, the US stock market is expected to see significant increases for the second year in a row.
According to DataTrek Research co-founder Nicholas Colas, the 2024 stock market surge is about more than just this year; it also includes the outlook for 2025 and 2026. Colas stated:
“Markets are convinced that U.S. large cap companies will see many years (not just one) of improving earnings. Earnings for 2024 only have to come through slightly better than last year, and nothing occurs on the macro side (economic growth, geopolitics) to derail further earnings growth in 2025 and 2026.”
Investor confidence is supported by historical trends and recent earnings performance. The stock market does well in election years, according to historical statistics, especially when the president is serving his first term, as is the case with Joe Biden.
Methodology:
In this article, we first used a stock screener, Finviz, to list down all stocks trading under $1.5 and above $0.85 (as of the writing of this article) with over 40% institutional ownership. From the resultant dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 920 hedge funds in Q1 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested. We only considered stocks that received “buy” or “strong buy” recommendations from analysts.
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)
A senior healthcare professional in front of a hospital discussing the benefits of a new cancer treatment.
Karyopharm Therapeutics Inc. (NASDAQ:KPTI)
Number of Hedge Fund Investors: 19
Karyopharm Therapeutics Inc. (NASDAQ:KPTI) is a commercial-stage biotechnology company focusing on producing selinexor, a nuclear exportin 1 inhibitor. Through a phase 3 trial, KPTI hopes to add endometrial cancer to the list of diseases for which selinexor is now licensed, in addition to multiple myeloma, which is approved for treatment in later lines of therapy in the US.
The company’s shares have decreased by over 43% since 2019, with slow annual revenue growth over the years. However, currently, it is one of the best one dollar stocks to buy, according to investors. Karyopharm Therapeutics Inc. (NASDAQ:KPTI) has received an average price target of $4.60, reflecting analysts’ bullish outlook on the stock. The price target reflects a potential upside of over 416.04% from the current stock price of 0.89. Meanwhile, 5 analysts have given the stock a “buy” rating. Karyopharm Therapeutics Inc. (NASDAQ:KPTI) was owned by 19 of the 920 hedge funds that Insider Monkey examined in the first quarter of this year. Jonathan Berger’s Birch Grove Capital held the largest stake in the company, with 6,000,00 shares worth $3.21 million.
Karyopharm Therapeutics Inc (NASDAQ:KPTI) saw a sharp rise in February following Novartis’ $2.9 billion acquisition of the oncology-focused business MorphoSys AG. The firm reached 33.13 million in sales in the first quarter of 2024, with U.S. XPOVIO net product revenue forecast to be between $100.0 million and $120.0 million by 2024.
Karyopharm Therapeutics Inc. (NASDAQ:KPTI) is making significant progress with its nuclear exportin 1 inhibitor, selinexor, which will be presented in seven distinct ways at the ASCO meeting. The company is conducting an important study that, if successful, may completely change the treatment of endometrial cancer and myelofibrosis with its main medication, selinexor. Expansion prospects for selinexor, notably in myelofibrosis, will be major drivers of the business, with analysts seeing endometrial maintenance and SENTRY-2 trial combination trials as potentially valuable. The main goal of the SIENDO study was achieved: patients who received Xpovio had a statistically significant improvement in median progression-free survival as compared to placebo.
Karyopharm has $192.4 million in liquid assets, enough to fund its operations until the end of 2025. Karyopharm announced a significant debt restructure that would postpone the majority of repayments until 2028-2029, freeing up $30 million in cash on the balance sheet and lowering the royalty rate on selinexor.
Research on myelofibrosis and endometrial cancer, specifically focusing on individuals with TP53 wild-type, may expand the market for selinexor beyond its current use in multiple myeloma.
Three critical phase 3 studies one for myelofibrosis, one for endometrial cancer, and one more for myeloma are being conducted by KPTI. If any of these studies are successful, selinexor’s commercial prospects might be much improved, with huge upside potential.
It’s possible that KPTI won’t have enough funds on hand to continue operating after crucial trial results. Furthermore, there is no certainty that phase 3 studies will be successful, and a negative outcome might further harm KPTI.
Karyopharm Therapeutics Inc. has intriguing potential in spite of doubts and financial difficulties, with high cash burn rates YoY (42.97% in TTM and 31.20% in 2023) and low sales declining by 5.5.16% in TTM. Given the noteworthy catalysts now in operation, the company’s present value may be regarded as a high-risk “Buy.” Perhaps the present share price is undervalued if one of the major trials is successful in 2025.
Overall KPTI ranks 6th on our list of the best one-dollar stocks to buy. You can visit 10 Best One-Dollar Stocks To Buy Now to see the other one-dollar stocks that are on hedge funds’ radar. While we acknowledge the potential of KPTI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KPTI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center