1. Transocean LTD (NYSE:RIG)
Number of Hedge Fund Holders: 42
Current Share Price: $4.12
Transocean LTD (NYSE:RIG) is an oil and gas company providing offshore drilling services for oil and gas wells worldwide. It operates a fleet of mobile offshore drilling units comprising ultra-deep-water and harsh environment floaters. Its primary clients are integrated energy companies. Government-owned or government-controlled energy companies.
It is one of the best US stocks to buy under $5 as it is currently trading at a discount coming under pressure on the overall industry, facing challenges ranging from fluctuating oil prices to increased regulatory scrutiny. Deteriorating market conditions have pushed the stocks’ valuations to the lowest level.
Amid the deteriorating conditions, Transocean LTD (NYSE:RIG) continues to deliver solid financial results as it also inks multi-million dollar deals that should allow it to generate long-term value. It delivered an adjusted EBITDA of $284 million and contract drilling revenues of $861 million for Q2 2024. Its revenue growth over the past year has been strong at 15.07%
While the company posted a net loss of $123 million in the quarter, it inked a $123 million contract with BP that should strengthen its revenue base. It has also inked a 2-well contract with Beacon Offshore Energy.
Transocean LTD (NYSE:RIG) has also inked six new contracts, including three lucrative deals in the U.S. Gulf of Mexico, highlighting the robust demand for offshore drilling services. This is further supported by Transocean’s substantial $8.8 billion backlog, indicating a healthy pipeline of future work. Additionally, the broader energy sector, particularly offshore drilling, is experiencing positive momentum due to rising oil and gas demand. These factors boosted investor confidence and drove up Transocean LTD (NYSE:RIG)’s stock price.
While the stock trades under $5, it trades at a price-to-earnings multiple of 16, signaling its potential to generate earnings and shareholder value in the future. As of the end of the second quarter of 2024, 42 hedge funds had stakes in Transocean LTD (NYSE:RIG).
The best US stocks to buy under $5 are of high quality companies trading at discounted valuations with tremendous upside potential. However, given that the artificial intelligence arms race is just but starting, there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than the stocks on our list, check out our report about the cheapest AI stock.
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