10 Best Stocks Under $50 According to Hedge Funds

Published on September 1, 2022 at 8:51 am by Usman Kabir in Hedge Funds, News

In this article, we discuss 10 best stocks under $50 according to hedge funds. If you want to read about some more affordable stocks that hedge funds like, go directly to 5 Best Stocks Under $50 According to Hedge Funds.

The stock market has not been an efficient money-making vehicle in the past few months, especially not for amateur investors who have been rocked by the sudden demise of growth offerings as inflation heats up and interest rates rise, creating a value-oriented marketplace. Even hedge funds have not been immune to this crisis. Latest data from the capital markets firm Preqin suggests that 2022 has been the worst year on record in the past decade for funds that actively buy and sell stocks.

Per the capital markets firm, the cumulative returns of funds that buy and sell stocks have nosedived by over 12% in the last year. The year-to-date cumulative returns for 2022 paint a bleak picture as well and are down more than 11% as of the end of July. The drop comes from the sharpest decline in the benchmark S&P 500 in more than a decade. Even famous stocks like Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA), and The Walt Disney Company (NYSE:DIS) are feeling the heat of this economic slowdown.

The most common strategy that hedge fund managers use to make money for clients is buying and selling stocks. It is unlikely this is going to change any time soon, despite recession fears holding investors hostage. However, the economic crisis has created increased impetus for hedge fund managers to invest in cheaper stocks that offer the same growth potential as their more expensive counterparts but come with lower risk money-wise. These funds are thus buying up shares of firms trading at below $50 per share with strong growth catalysts.

Our Methodology

The companies that are priced under $50 per share, as of September 1, and enjoy popularity among hedge funds were selected for the list. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

Best Stocks Under $50 According to Hedge Funds

10. Brookfield Renewable Partners L.P. (NYSE:BEP)

Number of Hedge Fund Holders: 19

Share Price as of September 1: $37.21

Brookfield Renewable Partners L.P. (NYSE:BEP) owns and runs renewable power generating facilities. On August 5, the firm posted earnings for the second quarter of 2022, reporting funds from operations of $0.46, missing market estimates by $0.01. The revenue over the period was $1.2 billion, up 24% compared to the revenue over the same period last year and beating estimates by $130 million. The firm declared a quarterly dividend of $0.32 per share on August 8, in line with previous. The forward yield was 3.19%.

On August 8, JPMorgan analyst Mark Strouse maintained an Overweight rating on Brookfield Renewable Partners L.P. (NYSE:BEP) stock and raised the price target to $43 from $41, backing the firm to benefit from the Inflation Reduction Act.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in Brookfield Renewable Partners L.P. (NYSE:BEP), with 2.5 million shares worth more than $89 million.

Just like Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA), and The Walt Disney Company (NYSE:DIS), Brookfield Renewable Partners L.P. (NYSE:BEP) is one of the stocks that hedge funds are buying.

In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Brookfield Renewable Partners L.P. (NYSE:BEP) was one of them. Here is what the fund said:

“Brookfield Renewable Partners L.P. (NYSE:BEP) is a pure-play renewables operator and developer headquartered in Canada, focused on international hydro, solar, wind and storage technology. As more private and public institutions announce ambitious carbon reduction initiatives, Brookfield Renewable’s globally diversified, multi- technology renewables business makes it an attractive partner. Brookfield’s development pipeline stands at 18,000 MWs, providing confidence the company can meet its targeted double- digit cash flow growth through to 2025. The market narrative around the energy transition and energy security, along with increasing fossil fuels prices which have driven greater focus on switching to renewables, helped Brookfield shares in the quarter.”

9. Iridium Communications Inc. (NASDAQ:IRDM)

Number of Hedge Fund Holders: 20

Share Price as of September 1: $44.39

Iridium Communications Inc. (NASDAQ:IRDM) operates from Virginia and provides mobile and data communication services to businesses and consumers. In late May, the company announced that it had obtained a contract worth over $324 million from the Space Development Agency in the United States. Under the terms of the deal, the firm will partner with Dynamic Missions System for the establishment of ground control operations and integration for Tranche 1 of the National Defense Space Architecture.

On July 22, Raymond James analyst Ric Prentiss maintained a Strong Buy rating on Iridium Communications Inc. (NASDAQ:IRDM) stock and added it to the firm’s Current Favorites List, noting the company had a runway for strong free cash flow growth in the coming quarters.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in Iridium Communications Inc. (NASDAQ:IRDM), with 2.1 million shares worth more than $81 million.

In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Iridium Communications Inc. (NASDAQ:IRDM) was one of them. Here is what the fund said:

“From 2014 through 2016, the Fund invested in several companies whose stocks underperformed while they were investing in their businesses to enable them to grow. Iridium Communications Inc. (NASDAQ:IRDM) was among those businesses. Its stock outperformed in 2020, 2021, and so far in 2022, as those investments has started generating strong returns. The company continue to invest in its business and now that they are financially stronger, is even better able to finance investments while continuing to grow its core businesses.”

8. Progyny, Inc. (NASDAQ:PGNY)

Number of Hedge Fund Holders: 21

Share Price as of September 1: $40.21

Progyny, Inc. (NASDAQ:PGNY) is a benefits management firm that focuses on fertility and family building benefits. On August 4, the firm posted earnings for the second quarter of 2022, reporting earnings per share of $0.09, beating market estimates by $0.05. The revenue over the period was $195 million, up 51% compared to the revenue over the same period last year and beating estimates by $4.4 million. The firm said that revenue guidance for the third quarter was $190 to $197 million, reflecting growth of 55% to 61%.

Progyny, Inc. (NASDAQ:PGNY) was founded in 2008 and is based in New York. It provides pharmacy benefits solutions, surrogacy and adoption reimbursement programs, as well as personalized concierge-style member support for family building.

At the end of the second quarter of 2022, 21 hedge funds in the database of Insider Monkey held stakes worth $104 million in Progyny, Inc. (NASDAQ:PGNY), up from 18 in the previous quarter worth $110 million.

In its Q1 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Progyny, Inc. (NASDAQ:PGNY) was one of them. Here is what the fund said:

“Fertility benefits management company Progyny, Inc. (NASDAQ:PGNY) reported solid results during the quarter, and we continue to believe the longer- term trends behind the growing need for fertility treatments remain unchanged. Progyny’s customer service, clinical results, and affordability have made it a standout among its peers.

Fertility is an important benefit for companies that are looking to attract and retain women and other underrepresented talent who are focused on family building, and we believe a benefit that companies will increasingly invest in as they lean into their diversity, equity, and inclusion initiatives.”

7. Univar Solutions Inc. (NYSE:UNVR)

Number of Hedge Fund Holders: 33

Share Price as of September 1: $25.22

Univar Solutions Inc. (NYSE:UNVR) markets commodity and specialty chemical products. In mid-July, the company announced that it was expanding a pact with Calumet Specialty Products for the distribution of naphthenic and paraffinic base oils, packed and bulk, throughout Europe. Under the terms of the deal, Univar customers would have access to a broader range of Calumet products in the region. These products lie in the lubricants, greases, metalworking fluids, and adhesives markets.

On July 13, Bank of America analyst Steve Byrne maintained a Buy rating on Univar Solutions Inc. (NYSE:UNVR) stock and lowered the price target to $34 from $36, noting that slower macro growth would weigh on the stock in the near-term.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Lyrical Asset Management is a leading shareholder in Univar Solutions Inc. (NYSE:UNVR), with 5.4 million shares worth more than $135 million.

In its Q2 2022 investor letter, Rhizome Partners highlighted a few stocks and Univar Solutions Inc. (NYSE:UNVR) was one of them. Here is what the fund said:

“Univar Solutions Inc. (NYSE:UNVR) recently sold off about 25% and is now trading at 9-10 times its 2022 price-to-free-cash-flow (P/FCF) multiple with a little over 2 times net debt/EBITDA. Univar, Brenntag, Tricon, IMCD, Helm, and Azelis are the largest chemical distributors in a fragmented industry. Like many distribution businesses, route density is critically important. A truck that can make multiple stops on a route will have structural advantages over its smaller competitors. Univar Solutions Inc. (NYSE:UNVR) has dense routes in North America, its key market. This unique advantage tends to compound over time. Traditionally, chemical distribution is a “pick up the phone and call your sale representative” business. Around the world, there are different degrees of digital penetration in the sales process, with Asia at the leading edge of technology adoption. Univar Solutions and Brenntag are the two leaders that have invested heavily in technology and e-commerce solutions for their customers. Smaller mom-and-pop operators lack the financial and human resources to invest in technology solutions. On the other hand, a purely digital marketplace for purchasing chemicals often struggles to gain critical transaction volume because of the lack of logistics and fulfillment capabilities. Customers can place their orders, but they cannot receive the orders in reasonable time. Dense routes consisting of warehouses and trucks located under 60 minutes driving distance are the “atoms” that prevent “bits” players from attacking the chemical-distribution business.”

6. Vontier Corporation (NYSE:VNT)

Number of Hedge Fund Holders: 33

Share Price as of September 1: $21.92

Vontier Corporation (NYSE:VNT) markets electronic equipment and instruments. On August 4, the firm posted earnings for the second quarter of 2022, reporting earnings per share of $0.72, beating market estimates by $0.02. The revenue over the period was $776 million, up 7% compared to the revenue over the same period last year and beating estimates by $13 million. The firm declared a quarterly dividend of $0.025 per share on August 8, in line with previous. The forward yield was 0.41%.

On July 8, Barclays analyst Julian Mitchell maintained an Overweight rating on Vontier Corporation (NYSE:VNT) stock and lowered the price target to $33 from $39, noting that the demand was continuing to soften for the firm.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Royce & Associates is a leading shareholder in Vontier Corporation (NYSE:VNT), with 2.8 million shares worth more than $65 million.

Along with Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA), and The Walt Disney Company (NYSE:DIS), Vontier Corporation (NYSE:VNT) is one of the stocks on the radar of elite investors.

In its Q2 2022 investor letter, Argosy Investors, an asset management firm, highlighted a few stocks and Vontier Corporation (NYSE:VNT) was one of them. Here is what the fund said:

“Vontier Corporation (NYSE:VNT) is an industrial business focused on mobility with large exposure to retail gas stations and the automotive aftermarket. Trading at 9x estimated 2023E cash flows, VNT is priced for terminal declines in cash flow due to its exposure to internal combustion engines (ICE). Meanwhile, I believe Vontier is successfully pivoting its business towards higher-growth market segments, evidenced by its acquisition of DRB Systems, a point-of-sale (POS) and operating system used by car washes. In more recent comments, VNT has doubled down on its interest in the car wash space, so we expect to see additional investments here. There is a very successful example in Sonny’s, a vertically integrated provider of equipment, service, POS, training, consulting, etc. that has existed in private markets for years. This very well could be a model that DRB, under VNT’s control, attempts to emulate. Given the mission-criticality of these systems to car wash operators, and their small cost relative to total car wash revenues, there is significant pricing power for operators like DRB and Sonny’s. I believe that investors are overly and unnecessarily skeptical of the capital allocation decisions happening at Vontier Corporation (NYSE:VNT), but we believe recent repurchases reflect management confidence in the long-term of the business and appear to be opportunistic based on the business’ attractive valuation.”

Click to continue reading and see 5 Best Stocks Under $50 According to Hedge Funds.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on September 27, 2024 at by Insider Monkey Staff

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Click to continue reading…

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