We recently compiled a list of the 10 Cheap Growth Stocks to Buy Now. In this article, we are going to take a look at where Mesabi Trust (NYSE:MSB) stands against the other cheap growth stocks.
Growth stocks—those of companies expected to grow at an above-average rate compared to other firms—have historically exhibited cyclical performance patterns. For instance, during the 1990s dot-com era, growth stocks did well, as reported by Hartford Funds.
From 2014 to 2024, growth stocks surged ahead of other market segments, with the Russell Growth Index delivering an annualized return of 17%. This return was more than double that of value stocks (8%), small-cap stocks (8%), and international equities (5%). The broader market, which itself has been heavily influenced by large-cap tech companies, delivered a 13% annualized return. This further amplifies the performance of growth-oriented investments.
This growth-driven rally had profound effects on the composition of traditionally balanced portfolios. A standard 60/40 portfolio (60% equities, 40% bonds) that was left untouched over this period would have seen its growth stock allocation more than double from 20% to 42%, crowding out other investment segments.
As financial markets navigate a stabilizing interest rate environment and moderating inflation, investors are revisiting growth equities with renewed focus. Cheap growth stocks have reemerged as a strategic play in 2025. With the Federal Reserve pausing its tightening cycle and inflation cooling to 2.9% (down from 2022’s 9.1% peak), the macroeconomic landscape now favors selective risk-taking.
Analysts suggest that stocks with a price-to-earnings (P/E) ratio below 15x often present attractive investment opportunities. These stocks may offer a combination of growth potential, driven by strong revenue and earnings expansion, as well as resilience, enabling them to perform well even in uncertain macroeconomic conditions.
As Charlie Munger aptly said, “All intelligent investing is value investing—acquiring more than you are paying for. You must value the business in order to value the stock.” This mindset aligns perfectly with identifying companies with lower P/E ratios, where the value they offer can outweigh the price being paid. Given this, we will take a look at some of the best cheap growth stocks to invest in.
Our Methodology
To compile a list of the 10 Cheap Growth Stocks to Buy Now, we first utilized Finviz stock screener to identify US companies with a Price-to-Earnings (P/E) ratio of 15 or lower and an implied sales growth of over 20% over the last five years. From this selection, we then ranked the stocks according to their P/E ratio.
At Insider Monkey, we are obsessed with 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A miner in a hardhat and safety gear toiling in a mine below the surface.
Mesabi Trust (NYSE:MSB)
Price to Earnings ratio: 3.81
Mesabi Trust (NYSE:MSB) is a royalty trust that earns income from the Peter Mitchell Mine, an iron ore operation near Babbitt, Minnesota. With a P/E ratio of 3.8, MSB is one of the best cheap growth stocks to buy.
In a notable vote of confidence, prominent investor Murray Stahl increased his stake in Mesabi Trust (NYSE:MSB) on December 31, 2024. Stahl acquired an additional 183,387 shares at $28.11 per share, bringing his total holdings to 2,843,010 shares. This 6.9% increase in his position highlights his bullish outlook on the Trust’s long-term value proposition. As a seasoned investor known for his deep-value investment approach, Stahl’s move suggests firm conviction in Mesabi Trust’s future prospects.
On January 14, 2025, Mesabi Trust (NYSE:MSB) declared a distribution of $5.95 per Unit of Beneficial Interest, payable on February 20, 2025, to unitholders of record as of January 30, 2025. This substantial increase from the previous year’s $0.37 per unit distribution is primarily due to a $71.2 million arbitration award received on October 4, 2024. This was for underpaid royalties from 2020 to early 2022. Additionally, Mesabi Trust (NYSE:MSB) reported royalty payments of $7.36 million on October 30, 2024, up from $5.67 million in October 2023.
Overall MSB ranks 6th on our list of the cheap growth stocks to buy now. While we acknowledge the potential of MSB 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 MSB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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