1. BGC Group, Inc. (NASDAQ:BGC)
Number of Hedge Fund Holders: 33
Share Price as of October 18, 2024: $9.49
Forward P/E as of October 18, 2024: 10.20
BGC Group, Inc. (NASDAQ:BGC) is one of the best affordable stocks under $10 to buy. The financial services company provides various services including trade execution, broker-dealer services, clearing, and processing. The company offers more than 200 financial products to banks, broker-dealers, investment banks, trading firms, governments, property owners, real estate developers, and investment firms.
BGC Group, Inc. (NASDAQ:BGC) is making good use of technology to enhance its offerings. Since 1998, the company has spent over $1.7 billion on technology. These technologies are focused on meeting the complex needs of BGC’s customers and enhancing efficacy across all its verticals.
In the second quarter of 2024, the company generated revenue worth $550.8 million, up 11.7% year-over-year. The company’s revenues were driven by improving operability and growth across different segments and geographically. Most of its segments reported double digital growth in revenues, namely ECS (Energy, Commodities, and Shipping), Foreign Exchange, and Credit.
Overall, BGC Group, Inc. (NASDAQ:BGC) has significant growth potential as it expands into new high-growth markets and improves internal business efficacy. The company is an affordable stock and we say that because it is trading at a forward P/E of 10, a discount of 21% from the sector median. Analysts polled by Yahoo Finance expect the stock to grow its earnings by 13.4% this year.
O’keefe Stevens Advisory stated the following regarding BGC Group, Inc. (NASDAQ:BGC) in its Q3 2024 investor letter:
“BGC Group, Inc. (NASDAQ:BGC) – After a long-awaited arrival, the FMX Futures Exchange launched on September 24th. Years of expenses flowing through BGC’s financials without offsetting revenue are reversing. While we are keenly aware of the ramp-up period from 0 volume to market share gains provided by the CME, FMX’s compelling offerings are anticipated to gain market share slowly. In addition, per BGC’s standard practice, announced revenue and pre-tax income will come in at the high end of management’s guidance.
Uncertainty is BGC’s best friend. Entering 2024, rate cut expectations of 150bps reflected optimism around the aggressive and dramatic decline of rates. In September, a 50bps cut marked the first rate cut since 2020 and the reversal after 2.5 years of interest rate hikes. Officials target a range of 4.25-4.50% by the end of this year, which signals two quarter-point rate cuts or one half-point cut. For 2025, they expect to cut four more times, bringing their Fed Funds rate to 3.25-3.5%. We are unconvinced the higher inflation experienced in recent years is over, putting these rate-cut expectations at risk. For BGC, whether we experience 50 bps cuts or 150 bps, conflicting economic data points will continue driving record volumes. With one sell-side analyst covering the name, this stock continues to trade under the radar and remains a core holding.”
While we acknowledge the potential of financial services companies, our conviction lies in the belief that 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 BGC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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