We recently compiled a list of the 14 Best Growth Stocks Under $10 to Buy Right Now. In this article, we are going to take a look at where Patterson-UTI Energy, Inc. (NASDAQ:PTEN) stands against the other growth stocks under $10.
Growth stocks refer to companies that grow their earnings and revenues at rates much above those of the broad market. The growth factor in investing has been widely recognized as a significant driver of stock price returns, especially in periods of low interest rates, low volatility, and a growing economy. For reference, growth stocks, as proxied by thematic ETFs, have consistently outperformed the broad US market during secular bull runs, such as the 2010-2021 and the 2023-2024 periods.
However, the growth factor has fallen out of favor during 2025 and slightly lags the broad market year-to-date. As already mentioned above, growth stocks thrive under conditions that aren’t apparently met at the moment. Interest rates are still high, and there’s a lot of uncertainty about whether the Fed will rush to cut them. Furthermore, the outlook on the US economy has been undermined by tumultuous change and actions from the new US administration. The good news is that growth stocks are currently trading at a discount vs. the beginning of the year, which represents a great opportunity for those willing to take a contrarian bet against the broad market. As we discuss below, some trustworthy signals suggest that growth stocks might become favored again and start outperforming the broad market.
READ ALSO: 11 Oversold Growth Stocks to Buy Now
Some indications emerged that point to the possibility that the “tariff detox” period is over and the Trump administration may be shifting to tax cuts and deregulation. Growth stocks love certainty on the economy and geopolitics, meaning that the end of the tariff dilemma is an extremely bullish signal. JP Morgan recently expressed their view on the evolution of US policy:
“On tariffs, the Administration is indicating progress on potential deals with Japan, Korea, and India, which could serve as templates for other trading partners. Of most importance is China, where the Administration has signaled some willingness to find a common ground and possibly get a deal done soon (the increasing risk of a small business default cycle kicking off is gaining attention).”
In addition, there’s plenty of negative official data coming every week, which is causing a lot of fear in the market. We firmly believe much of the negative data is transitory and could rebound at any moment, as soon as the US administration gives the right signal. For instance, container data from China recently showed a massive decline in shipments amid the tariff turmoil; many fear that consumer sales, transportation, and industrial activity will drastically slow down because of lower imports. Some early data from the Dallas and Philadelphia Fed have confirmed that manufacturing and general business activity are cooling, while the New Orders index has plummeted. Now, just think about it – shipments from China can instantly recover the moment that the Trump administration announces a trade deal with its main trade partners. Even if a deal with China directly won’t be reached quickly enough, there are endless possibilities to evade the 140% tariffs through third countries, similar to how European exports continued into Russia after the 2022 sanctions.
Another important indicator, which can be considered forward-looking, remained strong – US employers added 177,000 jobs in April and the unemployment rate was unchanged at 4.2 percent. We believe this represents a firm indication that CEOs are not rushing to downsize their business amid a likely transitory turmoil. Furthermore, we are encouraged to see high yield credit spreads back down from their peak levels two weeks ago – this is highly favorable for small-capitalization stocks, which are mostly in the growth category. This means that fixed-income investors are acknowledging that economic risk is subsiding.
To sum up, a smart way to make money in the stock market is to place contrarian bets when most of the market participants are in deep fear. As growth stocks are trading at a discount amid concerns of the economy slowing down, it is an opportunistic moment to invest in the best growth stocks that could become favored again as the current tariff challenges are navigated.
Our Methodology
To compile our list of the best growth stocks, we use a screener to identify companies with a share price below $10.00 with a revenue CAGR of at least 20% in the last 5 years. Then we compared the list with Insider Monkey’s proprietary database of hedge funds’ ownership and included in the article the top 14 stocks with the largest number of hedge funds that own the stock as of Q4 2024, ranked in ascending order.
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 drilling site in the wilds of nature, highlighting the company’s commitment to exploration.
Patterson-UTI Energy, Inc. (NASDAQ:PTEN)
Stock price as of May 2nd: $6.03
Revenue CAGR last 5 years: 29.52%
Number of Hedge Fund Holders: 47
Patterson-UTI Energy, Inc. (NASDAQ:PTEN) is a provider of drilling and completion services for oil & gas exploration and production in the US and some international markets. PTEN offers several core services, such as contract drilling, integrated well completion, and directional drilling, which are crucial for the exploration process. Additionally, the company provides specialized drill bit solutions that help with exploration in difficult areas, within the US, the Middle East, and other regions. The Houston-based company ranked eighth on our recent list of 12 Best Oil and Gas Dividend Stocks According to Billionaires.
Patterson-UTI Energy, Inc. (NASDAQ:PTEN) delivered strong first quarter results with steady drilling activity across US shale and a robust recovery in completions activity following fourth quarter slowdowns. The company’s integrated service offering provides a unique competitive advantage that is difficult to replicate in US shale. The company maintains strong relationships with the industry’s largest operators, with approximately 60% of revenue coming from the 15 most active E&Ps in the US. The strong competitive position is the primary factor that persuaded us to include PTEN on our list of the best growth stocks to buy.
Patterson-UTI Energy, Inc. (NASDAQ:PTEN) closed Q1 with $225 million in cash and an undrawn $500 million revolver, demonstrating a strong liquidity position. While recent oil price volatility has created some uncertainty, natural gas markets are showing constructive signs with increased activity in gas-focused basins. The company maintains flexibility in its capital allocation, with a commitment to return at least 50% of adjusted free cash flow to shareholders through dividends and share repurchases, while maintaining a strong balance sheet with net debt at just 1x trailing 12 months adjusted EBITDA.
Overall PTEN ranks 5th on our list of the best growth stocks under $10 to buy right now. While we acknowledge the potential of PTEN 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 time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PTEN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
