In this article, we will take a detailed look at the 10 Best Affordable Stocks To Buy Right Now.
The stock market appears to be at a turning point. While major indexes are still hovering near record levels, there’s been increased volatility this earnings season. Stocks tied to artificial intelligence and semiconductors, once investor darlings, have seen significant sell-offs. With the approaching presidential election, and shifting Federal Reserve policies, uncertainty might be the central theme this autumn.
The Job Openings and Labor Turnover Survey, a key report from the Labor Department, revealed that job openings dropped to 7.67 million in July, a decrease of 237,000 from June’s revised figure and the lowest since January 2021. This decline reduced the ratio of job openings per available worker to just under 1.1, a significant drop from its peak of over 2-to-1 in early 2022. The data is expected to support the Federal Reserve’s anticipated move to begin lowering interest rates at their upcoming September 17-18 meeting.
Michael Yoshikami, CEO of Destination Wealth Management, believes the U.S. Federal Reserve could make a significant 50 basis point rate cut without unsettling the markets. His comments align with Nobel Prize-winning economist Joseph Stiglitz, who recently suggested the Fed should consider a half-point cut, arguing that the central bank’s prior tightening moves were excessive. While Yoshikami acknowledged that such a large cut might fuel recession fears, he emphasized that concerns are exaggerated. He also noted that the recent market sell-off, which marked the S&P 500’s worst week since March 2023, followed a period of “massive profits” in the prior month. Despite a turbulent start, August saw gains across major indexes, and September is typically a slower trading period.
Thanos Papasavvas, founder and chief investment officer of ABP Invest, acknowledged growing concerns about a potential economic downturn. ABP recently raised its recession probability for the U.S. to 30%, up from 25% in June, though Papasavvas described the risk as “relatively contained.” He emphasized that key economic indicators, such as manufacturing and unemployment rates, remain “resilient.”
On another front, U.S. factories continued to experience a slowdown in August, raising concerns about the direction of the economy. The Institute for Supply Management’s monthly survey of purchasing managers showed that only 47.2% reported growth for the month, falling below the 50% threshold that signals expansion. Although this was slightly higher than July’s 46.8%, it missed the Dow Jones consensus estimate of 47.9%.
Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee stated:
“While still in contraction territory, U.S. manufacturing activity contracted slower compared to last month. Demand continues to be weak, output declined, and inputs stayed accommodative.”
Despite the index indicating contraction in manufacturing, Fiore noted that a reading above 42.5% typically suggests overall economic expansion. Last month’s weaker-than-expected report triggered a sharp market downturn, leading to an 8.5% drop in the S&P 500 before a partial recovery. Following the latest ISM data release on September 3, stocks continued to fall, with the Dow Jones Industrial Average down nearly 500 points.
Stocks
Our Methodology
To create our list of the best affordable stocks to buy, we used stock screeners to identify undervalued stocks with forward price-to-earnings (P/E) ratios below 15 as of September 16, all of which are also favored by analysts. This selection is based on the popularity of these stocks among the 912 hedge funds tracked by Insider Monkey. The list is arranged in ascending order, according to the number of hedge funds holding each stock.
At Insider Monkey, we are obsessed with 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).
10. Royalty Pharma plc (NASDAQ:RPRX)
Forward P/E Ratio as of September 16: 6.31
Number of Hedge Fund Holders: 34
Royalty Pharma plc (NASDAQ:RPRX) specializes in purchasing biopharmaceutical royalties and funding innovations within the U.S. biopharma sector. The company also identifies, evaluates, and acquires royalties on various biopharmaceutical therapies.
Goldman Sachs recently reaffirmed its Buy rating on RPRX with a target price of $51.00. This endorsement comes after Royalty Pharma’s recent agreement with Ascendis Pharma for a novel hypoparathyroidism drug, Yorvipath. Under the deal, Royalty Pharma plc (NASDAQ:RPRX) will pay Ascendis $150 million upfront for a 3% royalty on U.S. net sales of Yorvipath.
Moreover, in Q2, Royalty Pharma plc (NASDAQ:RPRX) reported impressive growth, exceeding its high-single-digit forecast with a 12% increase in portfolio receipts. The company invested $2 billion in new royalty transactions and acquired royalties on six therapies. The FDA’s approval of Voranigo is anticipated to boost growth, with potential peak sales reaching $1 billion. Additionally, Royalty Pharma plc (NASDAQ:RPRX) has raised its full-year 2024 guidance, now expecting portfolio receipts to fall between $2.7 billion and $2.775 billion.
As of Q2, 72 hedge funds held long positions in Royalty Pharma plc (NASDAQ:RPRX), with a total stake value of $1.09 billion. Viking Global was the largest stakeholder, holding $315.65 million worth of shares.
Patient Capital Opportunity Equity Strategy stated the following regarding Royalty Pharma plc (NASDAQ:RPRX) in its Q2 2024 investor letter:
“While Royalty Pharma plc (NASDAQ:RPRX) is in the health care space, it is more like an investment firm that buys royalty assets in the healthcare space. The company has an extremely strong track record, running the business for over 20 years as a private fund before bringing it public. The market opportunity for external royalty funding has only grown as early-stage start-ups need funding and legacy players are looking to lower their debt levels. We think Royalty Pharma is perfectly positioned as the partner of choice. The company is disciplined, maintaining deal internal rate of returns (IRRs) in the low-teens despite the higher interest rate environment. We think as the company continues to deliver as a public company, the market will start paying attention.”
9. WESCO International, Inc. (NYSE:WCC)
Forward P/E Ratio as of September 16: 10.92
Number of Hedge Fund Holders: 51
WESCO International, Inc. (NYSE:WCC) provides B2B distribution, logistics services, and supply chain solutions, operating through its Electrical & Electronic Solutions, Communications & Security Solutions, and Utility and Broadband Solutions (UBS) segments.
In Q2 2024, WESCO International, Inc. (NYSE:WCC) reported earnings that missed expectations, with an operating shortfall of $0.36 per share, or 7%. Additionally, the company lowered its full-year 2024 earnings per share forecast by 12% below consensus estimates. The weaker performance in Q2 was driven by soft demand in short-cycle sectors, including utility, construction/solar, and broadband. In particular, the utility sector struggled due to delayed government funding, regulatory uncertainties, and inventory issues that affected demand.
Following these results, Loop Capital adjusted its price target for WCC, lowering it from $200 to $190 while maintaining a Buy rating. The firm noted that limited growth in certain segments failed to create the expected operating leverage, and project delays continue to weigh on the utility business within WESCO’s UBS segment. Despite these challenges, the outlook for the second half of the year is only slightly below seasonal norms, with margins remaining stable. Loop Capital expressed optimism about WESCO’s future, citing potential recovery in utility and broadband investments and secular growth trends. The firm’s confidence also stems from WESCO’s capital deployment strategy, including the redemption of preferred shares, which is expected to boost EPS growth.
In the second quarter, 51 hedge funds held positions in the stock, totaling $1.79 billion. Leonard Green & Partners emerged as the top investor, with a position valued at $562.2 million.
Diamond Hill Mid Cap Strategy stated the following regarding WESCO International, Inc. (NYSE:WCC) in its Q2 2024 investor letter:
“Other bottom contributors included Parker-Hannifin, WESCO International, Inc. (NYSE:WCC) and Regal Rexnord. Shares of leading industrial distributor WESCO (WCC) and electric motors and power transmission components manufacturer Regal Rexnord (RRX) were pressured against a backdrop of macroeconomic concerns which are seemingly making investors hesitant to own leveraged cyclical companies like WCC and RRX. However, we believe WCC remains well-positioned to capitalize on several secular tailwinds and to leverage its significant scale advantage to take market share and improve margins.”
8. Devon Energy Corporation (NYSE:DVN)
Forward P/E Ratio as of September 16: 6.87
Number of Hedge Fund Holders: 52
Devon Energy Corporation (NYSE: DVN) is a leading company in the U.S. energy sector, specializing in the exploration, development, and production of oil, natural gas, and natural gas liquids. The company’s strategic investment in its core Delaware Basin assets has boosted productivity, leading the company to raise its production volume estimates twice this year, reflecting a 5% increase over its initial guidance. Additionally, the company has joined the recent wave of industry acquisitions with a $5 billion deal to acquire Grayson Mill’s Williston Basin assets, funded through a mix of cash and stock. Management expects this acquisition to boost oil equivalent production by 15% and generate a similar increase in free cash flow. On that front, Rick Muncrief, President and CEO of the oil giant, said the following during the company’s Q2 2024 Earnings Call:
“The improved outlook is driven entirely by our legacy portfolio. We now expect to produce more than 680,000 BOE per day in 2024, which represents a 5% increase compared to our initial budget expectations heading into the year. In addition, our outlook was further strengthened by the Grayson Mill acquisition in Williston Basin. These assets are an excellent addition to our portfolio, fitting perfectly within our broader strategic framework to accumulate resource and grow oil-weighted production in the best parts of the top U.S. shale plays. Upon completion of the transaction, Devon will be one of the largest oil producers in the U.S. with average daily rates estimated at around 375,000 barrels of oil per day. This transaction nearly triples our production and expands our inventory in the Williston Basin.”
RBC Capital reiterated its “Sector Perform” rating and maintained a $57 price target for Devon Energy Corporation (NYSE:DVN). The review pointed to a slight improvement in Devon’s production outlook, driven by strong well performance and enhanced operational efficiencies. However, the company’s production is expected to slow in the second half of 2024 due to an aggressive drilling schedule earlier in the year and a reduced working interest in the Permian Basin. RBC Capital also indicated that Devon Energy Corporation (NYSE:DVN) may explore additional acquisition opportunities going forward.
Devon Energy Corporation’s Q2 2024 earnings report showcased strong results, with earnings per share of $1.56 and revenue of $4.6 billion, reflecting an 8% year-over-year increase. The company also enhanced shareholder returns, issuing a $0.72 per share variable dividend and executing a significant share repurchase program, buying back approximately $500 million worth of shares during the quarter.
7. Ford Motor Company (NYSE:F)
Forward P/E Ratio as of September 16: 5.59
Number of Hedge Fund Holders: 52
Ford Motor Company (NYSE:F) is a global leader in the automotive industry, producing a range of commercial and luxury vehicles under the Ford and Lincoln brands. The company’s strong cash position and affordable share price has made it a popular choice among investors. By the end of the second quarter, its robust balance sheet included nearly $27 billion in cash and around $45 billion in total liquidity.
Citi recently reaffirmed its buy rating and maintained a $17 price target for Ford Motor Company (NYSE:F), following updates on the company’s electric vehicle (EV) plans. Notably, Ford canceled a three-row EV SUV originally slated for 2027, which had been projected to account for 58,000 units in 2028, or about 8% of Ford’s total North American EV production. Additionally, the automaker announced that the first EV from its California-based skunkworks team will be a mid-size pickup truck, now expected to launch in 2027. This is slightly delayed from S&P’s earlier forecast of a late-2026 production start for the Maverick EV, but aligns with broader expectations for Ford’s new EV lineup rollout starting in 2027. These changes indicate the company’s focus on capital discipline and suggest potential for reducing near-term losses in its Model-e segment.
On August 21, Ford Motor Company (NYSE:F) CFO John Lawler stated that the company’s future capital expenditures will shift, reducing the portion allocated to all-electric vehicles from 40% to 30%, though no specific timeline was provided. This is a significant shift from the automaker’s 2021 plan to invest over $30 billion in EVs through 2025. The adjustment also reflects industry-wide trends of slower-than-expected EV adoption and challenges automakers face in achieving profitability with these vehicles.
6. JD.com (NASDAQ:JD)
Forward P/E Ratio as of September 16: 6.42
Number of Hedge Fund Holders: 59
JD.com (NASDAQ:JD) is a leading internet giant specializing in supply chain-based technology, offering a wide range of products, including computers, communication and consumer electronics, home appliances, and general merchandise. Although online retail remains JD.com’s primary revenue and earnings driver, the company’s logistics division is seeing significant growth, fueled by the global economic recovery.
In its second-quarter 2024 earnings, JD.com (NASDAQ:JD) showcased strong growth, reporting $40.1 billion in revenue, supported by solid performance across key business areas. Operational improvements led to a significant rise in adjusted operating income, reaching $1.6 billion, and boosting the profit margin to 5%, up from 3% the previous year. The company also saw a 29% increase in operating cash flow, totaling $6.98 billion compared to $5.43 billion the year prior.
Morgan Stanley recently reaffirmed its Equalweight rating on JD.com (NASDAQ:JD) with a price target of $28. This comes on the heels of JD.com’s announcement of a new $5 billion share buyback program, set to begin in September 2024 and run through August 2027. The buyback is expected to support the stock price, especially following Walmart’s full divestment of its JD stake.
By the end of the second quarter, 59 hedge funds held stakes in JD.com (NASDAQ:JD), according to Insider Monkey’s database.
Ariel Investments’ Ariel Global Fund discussed JD.com, Inc. (NASDAQ:JD) in its Q1 2024 investor letter, stating:
“We initiated a position in China-based technology-driven E-commerce company, JD.com, Inc. (NASDAQ:JD). The brand has long been known across the region as a superior online shopping channel due to its unique first-party model and unparalleled fulfillment service underpinned by JD Logistics. Yet, a challenging macro environment drove shares lower as shoppers began seeking bargains. In response, the company made significant investments in elevating its third-party merchant platform to enhance its variety of product offerings and price competitiveness for consumers. We believe these actions will yield an improved product mix, stronger top-line growth and margin expansion on a go-forward basis.”
5. Schlumberger Limited. (NYSE:SLB)
Forward P/E Ratio as of September 16: 9.73
Number of Hedge Fund Holders: 67
Schlumberger Limited (NYSE:SLB), a global leader in energy technology, operates across four key divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems.
In the second quarter of 2024, Schlumberger Limited (NYSE:SLB) exceeded expectations with adjusted earnings per share of $0.85 and an adjusted EBITDA margin of 25%. The company also saw a 5% quarter-over-quarter revenue growth across all regions, highlighting its strong international presence. Following the earnings report, TD Cowen raised SLB’s price target to $64, maintaining a Buy rating, while RBC Capital and Citi kept their respective targets at $69 and $62.
Additionally, Schlumberger Limited (NYSE:SLB) successfully demonstrated its sustainable lithium production technology at a Nevada plant, achieving a 96% lithium recovery rate from brine. However, its $7.75 billion acquisition of ChampionX has faced delays due to a second request for information from the U.S. Department of Justice.
At the close of the second quarter, 67 hedge funds held stakes in Schlumberger Limited (NYSE:SLB), with a combined value exceeding $15.08 billion.
4. General Motors Company (NYSE:GM)
Forward P/E Ratio as of September 16: 4.78
Number of Hedge Fund Holders: 72
General Motors Company (NYSE:GM), known for producing trucks, crossovers, cars, and automotive parts, is actively advancing its electric vehicle (EV) strategy. In Q2 alone, GM delivered 22,000 EVs, reflecting a 40% year-over-year increase and boosting its market share by 2.2% compared to the previous year.
RBC Capital recently revised its price target for GM stock, lowering it from $58.00 to $54.00, while maintaining an Outperform rating. This adjustment came after a quarterly conference call, where RBC revised its expectations for GM’s pricing and product mix through 2025. The firm emphasized that GM’s strategy for returning capital to shareholders sets it apart from competitors, contributing to RBC’s positive outlook. Additionally, GM’s inventory position is reportedly stronger than its peers, giving it a potential edge, especially as it considers lowering its battery electric vehicle (BEV) targets for the second half of 2024.
In a notable move, General Motors Company (NYSE:GM) recently partnered with Samsung SDI to establish a joint EV battery plant in the U.S., expanding its battery production capacity. Furthermore, GM is collaborating with Uber Technologies to offer autonomous vehicles from its Cruise division, with customer availability expected by FY25.
As of Q2, 72 hedge funds held long positions in General Motors Company (NYSE:GM), with a combined stake value of $4.1 billion. Natixis Global Asset Management came in as the largest stakeholder with a stake worth $1.59 billion.
3. PDD Holdings Inc. (NASDAQ:PDD)
Forward P/E Ratio as of September 16: 6.64
Number of Hedge Fund Holders: 86
PDD Holdings Inc. (NASDAQ:PDD) is a global commerce group with a diverse range of businesses, including two key ventures: Pinduoduo and Temu. Pinduoduo is an e-commerce platform offering a wide variety of products, while Temu is an online marketplace specializing in heavily discounted consumer goods.
PDD Holdings Inc. (NASDAQ:PDD)’s second-quarter 2024 earnings per American depositary share (EPADS) reached CNY21.60, reflecting a 140% year-over-year increase and meeting expectations. Revenue surged by 86% to CNY97 billion, driven by strong demand for affordable products, although it fell slightly short of analyst estimates. The company’s net margin improved by 8 percentage points year-over-year, benefiting from operational scaling. Despite this strong performance, PDD Holdings Inc. (NASDAQ:PDD) expects growth to slow due to rising competition and global uncertainties.
Analysts have revised their outlooks on PDD accordingly, with Benchmark lowering its price target to $185 but maintained a buy rating, citing solid fundamentals. Additionally, BofA Securities reduced its target to $170 while also retaining a buy recommendation, highlighting PDD Holdings Inc. (NASDAQ:PDD)’s continued market share gains.
According to Insider Monkey’s Q2 data, 86 hedge funds held long positions in PDD Holdings Inc. (NASDAQ:PDD), up from 76 in the previous quarter. Rajiv Jain’s GQG Partners remains the largest stakeholder, with 10.8 million shares valued at $1.43 billion.
2. Exxon Mobil Corporation (NYSE:XOM)
Forward P/E Ratio as of September 16: 12.41
Number of Hedge Fund Holders: 92
Exxon Mobil Corporation (NYSE:XOM), a leading American multinational in the oil and gas sector, engages in the exploration and production of crude oil and natural gas both domestically and internationally.
For the second quarter of 2024, Exxon Mobil Corporation (NYSE:XOM) exceeded earnings expectations, reporting an EPS of $2.14, compared to the anticipated $2.02. The company posted $9.2 billion in earnings, marking its second-best Q2 performance in the past decade. Exxon Mobil Corporation (NYSE:XOM) also achieved record production in Guyana and the Permian Basin, where the latter’s output reached 1.2 million barrels per day. Alongside strong operational results, the company returned $9.5 billion to shareholders, including $4.3 billion in dividends.
With over 40 years of consistent dividend growth, Exxon Mobil Corporation (NYSE:XOM) averages a 2.20% yield over the past five years and plans to invest between $20 billion and $25 billion annually in capital expenditures through 2027.
Hedge fund interest in Exxon Mobil Corporation (NYSE:XOM) rose from 81 in Q1 2024 to 92 in Q2 2024.
Madison Dividend Income Fund stated the following regarding Exxon Mobil Corporation (NYSE:XOM) in its first quarter 2024 investor letter:
“This quarter we are highlighting Exxon Mobil Corporation (NYSE:XOM) as a relative yield example in the Energy sector. XOM is a leading integrated oil and natural gas company. It has upstream assets that develop and produce oil and natural gas, along with downstream refining and chemical manufacturing assets. We believe it has attractive low-cost acreage in the Permian basin and has a sizeable growth opportunity in Guyana. Further, we think XOM has a sustainable competitive advantage due to size and scale, and its ability to integrate refining and chemical assets provides a low-cost advantage versus competitors.
Our thesis on XOM is that it will grow production volumes of oil and gas moderately over the next few years, while limiting excessive capital investment that plagued the industry from 2014-2020. Production growth will come from its 2023 acquisition of Pioneer Natural Resources, which is the largest producer in the Permian basin. XOM plans to double its Permian output by 2027, to 2 million barrels per day. Capital spending will be limited to $20-25 billion per year through 2027, which should allow for significant amounts of cash to be returned to shareholders including a $35 billion share repurchase program and continued dividend increases. Higher oil prices would provide a tailwind to our thesis but are not necessary. We think XOM can grow earnings and cash flow if oil prices remain above $60 per barrel…” (Click here to read the full text)
1. Bank of America Corporation (NYSE:BAC)
Forward P/E Ratio as of September 16: 10.47
Number of Hedge Fund Holders: 92
Bank of America Corporation (NYSE:BAC) is a financial holding company that provides a wide range of services, including savings accounts, deposits, wealth and cash management, investment funds, online banking, and various other financial services.
Deutsche Bank upgraded Bank of America Corporation (NYSE:BAC) from Hold to Buy, raising its price target to $45. The stock has underperformed its peers in the Bank Index (BKX), falling 8.5% over the past six weeks, while the BKX gained 1%. This underperformance is mainly due to the widely publicized sale of shares by Berkshire Hathaway and Warren Buffett, as well as concerns over net interest income being impacted from expected rate cuts and slow loan growth across the sector. However, Deutsche Bank sees the recent drop in Bank of America Corporation (NYSE:BAC)’s share price as an attractive entry point, highlighting the stock as undervalued.
In Q2 2024, Bank of America Corporation (NYSE:BAC) added 278,000 net new checking accounts, bringing the total to over 500,000 for the first half of the year. The wealth management division gained 6,100 new relationships, while the commercial sector grew by thousands of small business accounts and hundreds of commercial banking relationships. The bank now manages $5.7 trillion in client balances, loans, deposits, and investments across its consumer and wealth management segments.
Hedge fund interest in Bank of America Corporation (NYSE:BAC) has also increased, with 92 funds holding stakes in Q2 2024, up from 82 in the previous quarter. These stakes are collectively valued at over $48 billion.
ClearBridge Investments, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“We added several new positions during the quarter. Our largest new addition was Bank of America Corporation (NYSE:BAC), one of the world’s leading financial institutions, serving some 66 million consumer and small business clients across the U.S. as well as large corporations, financial institutions and governments globally. We believe that the interest rate pressure that Bank of America faced in early 2023 has subsided, and risks surrounding deposit outflows have abated, which should allow the company to improve its book value and capital growth as well as benefit from a rebound of capital markets activity.”
While we recognize the potential of BAC as an investment, we believe certain deeply undervalued AI stocks offer greater prospects for higher returns in a shorter period. If you’re seeking an AI stock with even more promise than those on our list and trading at less than 5 times its earnings, check out our report about the cheapest AI stock.
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