In this article, we will look at the 10 Most Undervalued Stocks to Buy for Under $10.
Market Outlook: Will October Bring a Pullback or a Rally?
In an interview on CNBC on October 8, Jose Rasco, CIO at HSBC Global Private Banking & Wealth Management discussed the current state of the stock market and the potential for a pullback. Rasco suggests that when the Fed starts to cut rates, fixed income tends to do well, particularly high-yield and investment-grade bonds. He recommends extending the duration and looking for quality credits. He also notes that historically, when the Fed eases, the US market tends to do well, especially during mid-cycle slowdowns. As a result, Rasco is looking for credit opportunities in Asia, particularly in India.
Rasco also mentioned that health care is a sector that tends to do well when the Fed eases. He notes that historically, health care has done very well in such environments, and it’s worth keeping an eye on. He also mentions that the growth-to-value ratio is currently at 2:1, which could lead to a mean reversion, making value stocks more attractive.
Paul Hickey, co-founder at Bespoke Investment suggests that a 1% decline in the market, which has already risen over 20% this year, is not necessarily something to get excited about. However, he does acknowledge that increased volatility is a concern, particularly with the geopolitical situation being the hottest it’s been in years, an upcoming election in November, and the impact of a hurricane in the southern United States. Hickey believes that the election and the hurricane are short-term events, but the geopolitical situation is a worry that could have a more significant impact on the market.
Despite these concerns, Hickey’s team has identified plenty of positives about the market, they believe that if a 5% pullback in the market were to occur, it would be a buying opportunity. In fact, Hickey notes that 5% pullbacks are more common in October than in any other month. Historically, when the market has been up 20% through the first three quarters of the year, October has been negative 7 out of 10 times, but the fourth quarter tends to be positive.
Hickey notes that the yield curve is flattening out, with the two-year yield flirting at 4% and the ten-year yield at 4%. This has implications for fixed-income investments, particularly with financials kicking off earnings later in the week. Hickey expects the yield curve to continue to flatten, which could impact the stock market.
Hickey notes that analysts have been lowering their earnings forecasts, which could set the bar low for companies to surpass. He expects the S&P 500 to see gains during the reporting period, particularly in sectors where the revision spreads are negative, such as technology, energy, and industrials.
While there are concerns about volatility and the geopolitical situation, there are also reasons to be optimistic about the market’s prospects, particularly with the Fed’s easing cycle and the potential for earnings growth. With that in context, let’s take a look at the 10 most undervalued stocks to buy for under $10.
Our Methodology
To compile our list of the 10 most undervalued stocks to buy for under $10, we used the Finviz and Yahoo stock screeners to find the 40 largest companies with stock prices under $10. From that list, we screened for companies that are trading at a forward P/E ratio of under 15 as of October 8. We then narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? 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 Most Undervalued Stocks to Buy for Under $10
10. Ambev (NYSE:ABEV)
Number of Hedge Fund Investors: 18
Forward P/E Ratio as of October 8: 13.84
Stock Price as of October 8: $2.375
Ambev (NYSE:ABEV) is a Brazilian brewing company that operates across Latin America. It is a subsidiary of Anheuser-Busch InBev and produces popular brands such as Brahma, Skol, and Antarctica. Ambev (NYSE:ABEV) dominates the beer market in Brazil and has a strong position in soft drinks and other beverages through its partnership with Pepsi.
Ambev’s (NYSE:ABEV) extensive distribution network and diverse product portfolio have contributed to its resilience in both local and international markets. The company’s strategy of focusing on the premium segment has paid off, with good growth trends and improved margins in Brazil and the Caribbean markets. In Q2, the company’s revenue increased by 6.1% year-over-year, driven by strong growth in Brazil and the Caribbean markets. The Brazil beer segment saw a 7% year-over-year increase in revenue, driven by stronger volumes and pricing. The Caribbean markets also performed well, with a 3% year-over-year increase in volumes.
The company’s costs and margins have also shown good trends, with EBITDA increasing to $1 billion. The company’s profitability has been driven by its successful execution of its strategy, which has included growing core products and investing in premium and core plus products in beer and non-alcoholic segments.
Ambev’s (NYSE:ABEV) valuation is compelling, with a PE ratio of 13.84, which represents a 21.66% discount to its sector to the sector median of 17.66. Industry analysts have a consensus on the stock’s Buy rating, with an average target price of $3.10 that suggests a 26.48% upside potential from its current levels.
9. Valley National Bancorp (NASDAQ:VLY)
Number of Hedge Fund Investors: 19
Forward P/E Ratio as of October 8: 12.83
Stock Price as of October 8: $8.78
Valley National Bancorp (NASDAQ:VLY) is a regional bank based in New Jersey that provides banking and financial services in the Northeast and Florida. The bank offers a range of personal and business banking services, including loans, mortgages, and investment products. Valley National Bancorp (NASDAQ:VLY) has expanded its geographic reach through acquisitions, which has increased its market presence.
Valley National Bancorp (NASDAQ:VLY) is known for its conservative lending approach, focusing on minimizing risk while maintaining steady growth. The bank’s solid asset quality has earned it a reputation for stability. In Q2, the bank’s loan portfolio grew by $400 million, driven by business lending. This growth is consistent with the bank’s efforts to expand its loan portfolio at a moderate pace while reducing its exposure to commercial real estate (CRE).
The bank’s credit performance has been fairly typical, with modest deterioration and a low nonaccrual rate. The bank’s provision for credit losses increased in Q2, but this is expected to slow in the second half of the year. The bank’s deposit recorded a 2% sequential increase in deposits and net interest margin (NIM) expanded by 5bps. The bank’s capital position is also strong, with a common equity tier 1 (CET1) ratio of 9%.
8. Banco Bradesco (NYSE:BBD)
Number of Hedge Fund Investors: 20
Forward P/E Ratio as of October 8: 8.77
Stock Price as of October 8: $2.735
Banco Bradesco (NYSE:BBD) is one of the largest financial institutions in Brazil, providing banking, insurance, and investment services. The bank serves both individuals and businesses, with a vast network of branches throughout the country.
In Q2, Banco Bradesco (NYSE:BBD) reported a 5% year-over-year increase in its loan portfolio, reaching $163 billion. This growth was driven by a 10.2% year-over-year increase in small and medium-sized enterprises (SMEs) and a 5.7% YoY increase in individual loans.
Banco Bradesco’s (NYSE:BBD) loan portfolio growth is a positive sign for the bank’s prospects. Management has been working to improve its risk management practices, which has led to a decline in non-performing loans (NPLs). In Q2, the bank’s NPLs decreased by 50 basis points to 4.3%, with a significant improvement in the 15-90-day delinquency rate.
Banco Bradesco’s (NYSE:BBD) net interest income (NII) also showed a positive trend, increasing by 2.8% quarter-over-quarter to $2.78 billion. The bank’s net financial margin with clients grew by 5% QoQ, despite an 8.4% annual decline. This improvement in NII is a result of the bank’s efforts to increase its lending activities and improve its asset quality.
In addition to its strong lending performance, Banco Bradesco’s (NYSE:BBD) insurance division also delivered impressive results. Insurance revenues grew by 12.7% quarter over quarter and 6.4% year over year to $393 million. The net income of the insurance unit represented 47% of the consolidated result, highlighting the importance of this segment to the bank’s overall profitability.
Banco Bradesco (NYSE:BBD) maintains a robust presence in Brazil’s growing middle-class and emerging market sectors contributing to its long-term growth potential. Banco Bradesco (NYSE:BBD) is also focused on digital transformation, expanding its online banking capabilities and fintech offerings. Despite these positive trends, Banco Bradesco’s (NYSE:BBD) valuation remains attractive with a forward PE ratio of 8.77, which is 26.82% lower than the sector median of 11.98. Analysts forecast that the bank’s earnings will rise by almost 9% in the current year.
7. Cemex (NYSE:CX)
Number of Hedge Fund Investors: 22
Forward P/E Ratio as of October 8: 7.93
Stock Price as of October 8: $6.07
Cemex (NYSE:CX) is a global leader in building materials, with operations in more than 50 countries. Cemex (NYSE:CX) produces cement, concrete, and aggregates used in construction projects worldwide. The company has a strong presence in the Americas, Europe, and Asia.
According to a report by Precedence Research, the global building materials market was valued at $1.35 trillion in 2024 and is expected to be worth around $2 trillion by 2034, at a CAGR of 4% from 2024 to 2034. As demand for infrastructure projects rises, particularly in emerging markets, Cemex (NYSE:CX) is positioned to benefit from long-term industry growth trends.
In Q2, Cemex (NYSE:CX) reported a 2% increase in EBITDA and a significant expansion of its EBITDA margin to the highest level since 2016. The company’s net sales remained flat compared to the same period last year, despite difficult weather conditions in key markets. Management attributed the strong results to the company’s effective commercial approach and growth strategy, which has enabled it to maintain a favorable price-to-cost dynamic.
Cemex (NYSE:CX) achieved several notable milestones during the quarter, including its second Investment Grade rating from Fitch Ratings and recognition as the top-scoring company in the World Benchmarking Alliance’s 2024 Climate and Energy Benchmark. The company’s free cash flow after maintenance expenditures was $252 million, and its growth investments accounted for 10% of total EBITDA. Cemex’s (NYSE:CX) Urbanization Solutions business also saw a 10% increase in EBITDA, while its European operations have nearly reached the company’s consolidated 2030 CO2 reduction target, six years ahead of schedule.
In terms of geographical performance, Cemex’s (NYSE:CX) Mexican operations reported a 6% increase in net sales and a 14% increase in EBITDA, with an EBITDA margin expanding to 32.9%. The company’s South, Central America, and Caribbean region reported a 3% increase in net sales and a 2% decline in EBITDA.
Furthermore, Cemex’s (NYSE:CX) valuation multiples suggest that the stock is undervalued compared to its peers. The company’s forward PE ratio of 7.93 is substantially below its sector median of 16.75. Analysts forecast that the company’s earnings will rise by an impressive 147.25% in the current year.
6. B2Gold (NYSE:BTG)
Number of Hedge Fund Investors: 22
Forward P/E Ratio as of October 8: 12.60
Stock Price as of October 8: $3.0215
B2Gold (NYSE:BTG) is a gold mining company that primarily operates in Africa and the Philippines. The company’s asset portfolio includes key mines such as the Fekola mine in Mali, the Masbate mine in the Philippines, and the Otjikoto mine in Namibia.
On September 11, B2Gold (NYSE:BTG) reached a new agreement on terms with the Mali government for the Fekola Complex. As part of this agreement, B2Gold (NYSE:BTG) anticipates faster approvals for both Fekola Regional and Fekola underground projects. Initial gold production from Fekola Regional is expected to begin in early 2025, while production from Fekola Underground is projected to start by mid-2025.
B2Gold’s (NYSE:BTG) Goose project in Canada, located in the Back River Gold District of Nunavut, is also expected to come online in 2025, with an annual production estimate of over 310,000 ounces of gold. The project boasts total resources exceeding 9.2 million ounces.
In terms of valuation, B2Gold (NYSE:BTG) appears undervalued relative to its peers. The stock is trading at a forward P/E ratio of 12.60, which is a 24.76% discount to the sector median of 16.75. Industry analysts maintained a consensus “Buy” rating on the stock, with an average price target of $4.30, reflecting a 34.92% upside from current levels.
5. ADT (NYSE:ADT)
Number of Hedge Fund Investors: 23
Forward P/E Ratio as of October 8: 10.72
Stock Price as of October 8: $7.03
ADT (NYSE:ADT) is a leading provider of security and smart home solutions in the United States, offering services such as alarm monitoring, video surveillance, and home automation.
ADT (NYSE:ADT) has been steadily expanding its product portfolio by leveraging advancements in smart technology, which enhances its service offerings. The company’s subscription-based business model generates stable recurring revenue, making it appealing to investors seeking stability in the security services industry. ADT (NYSE:ADT) has over 6.4 million subscribers for its security monitoring services.
In collaboration with Google, ADT (NYSE:ADT) launched ADT Self Setup, an innovative, fully integrated DIY smart home security system. This product allows users to customize and manage their home security systems from anywhere using the ADT+ app, providing a flexible and user-friendly experience.
ADT (NYSE:ADT) is poised to benefit from the growing DIY security market, as well as the increasing demand for smart home solutions. The company is also making significant investments in cybersecurity, which is expected to drive future growth in net sales.
With its focus on innovation and customer satisfaction, ADT (NYSE:ADT) is well-positioned for long-term growth. Its stock is currently trading at a forward P/E of 10.72, representing a 37.23% discount to the sector median of 17.09. Analysts project a 28.57% earnings increase this year and have a consensus “Buy” rating on the stock.
4. Itau Unibanco (NYSE:ITUB)
Number of Hedge Fund Investors: 25
Forward P/E Ratio as of October 8: 8.11
Stock Price as of October 8: $6.57
Itau Unibanco (NYSE:ITUB) is one of the largest financial institutions in Latin America and the largest private-sector bank in Brazil. The bank offers a comprehensive range of financial services, including retail and investment banking, as well as insurance.
In Q2, Itau Unibanco (NYSE:ITUB) reported a net income of $1.85 billion, marking a 15.2% year-over-year increase. This robust growth has outpaced its peers, solidifying the bank’s position as one of the most profitable institutions in Brazil. Over the past five years, the bank has consistently grown its net income at a compound annual growth rate (CAGR) of 7.28%.
A key driver of Itau Unibanco’s (NYSE:ITUB) strong financial performance is its high-quality loan portfolio, which maintains a low non-performing loan (NPL) ratio of 2.7%. The portfolio is well-diversified across corporate, retail, and small-to-medium-sized enterprise (SME) segments.
In addition to its financial strength, Itau Unibanco (NYSE:ITUB) benefits from a solid market position in Brazil, with a large customer base and an extensive range of financial products and services. Its strong brand reputation and reliability have earned it widespread recognition as one of Brazil’s most trusted banks.
Itau Unibanco (NYSE:ITUB) presents a solid investment opportunity for those seeking a profitable and stable financial institution. The stock trades at a forward P/E ratio of 8.11 representing a 32.27% discount to the sector median of 11.98. Analysts forecast a 9.27% earnings increase this year.
3. Clarivate (NYSE:CLVT)
Number of Hedge Fund Investors: 27
Forward P/E Ratio as of October 8: 8.83
Stock Price as of October 8: $6.57
Clarivate (NYSE:CLVT) is a leading global provider of information and analytics services, catering to the research and intellectual property sectors. Formed in 2016 from the combination of Thomson Reuters’ Intellectual Property & Science and Financial & Risk businesses, Clarivate (NYSE:CLVT) is headquartered in London and operates in over 40 countries.
Clarivate (NYSE:CLVT) focuses on subscription-based services, ensuring consistent revenue streams and solidifying its position in the data-driven services industry. In Q2, Clarivate’s (NYSE:CLVT) Academic and Government (A&G) segment saw strong organic growth, with subscription revenues increasing by over 3%, alongside a renewal rate exceeding 96%. The Intellectual Property segment also showed improvement, with organic growth rising 270 basis points, signaling stabilization in trademark search volumes. However, the Life Sciences & Healthcare segment faced slower growth due to a weak macroeconomic environment, but analysts expect a strong rebound in FY25 as pharmaceutical companies restart their R&D efforts.
On September 23, Clarivate (NYSE:CLVT) announced a strategic partnership with Relatable Healthcare to introduce a Product Relationship Management (PRM) platform for MedTech companies. This platform integrates Clarivate’s competitive intelligence with Relatable’s software to offer a unified source of product information, driving revenue growth and efficiency for medtech manufacturers and distributors by providing access to detailed product data, cross-references, inventory, and sales materials.
Clarivate’s (NYSE:CLVT) stock trades at a forward P/E ratio of 8.83, reflecting a significant 56.16% discount to the sector median of 20.14.
2. BGC Group (NASDAQ:BGC)
Number of Hedge Fund Investors: 33
Forward P/E Ratio as of October 8: 10.51
Stock Price as of October 8: $9.71
BGC Group (NASDAQ:BGC) is a global brokerage firm that provides services in fixed income, foreign exchange, energy, commodities, shipping, and equities to major clients such as investment banks, trading firms, hedge funds, and governments. The company operates through several subsidiaries and maintains a strong presence in international markets.
On September 24, BGC Group (NASDAQ:BGC) announced the successful launch of the FMX Futures Exchange, a new platform for trading Secured Overnight Financing Rate (SOFR) futures and U.S. treasury futures. This exchange is designed to offer clients a more efficient and cost-effective means to manage interest rate risks, with a cutting-edge trading system that allows for fast trade execution.
The FMX Futures Exchange has partnered with LCH Limited, a prominent derivatives clearing company based in London, to offer clearing and settlement services. This collaboration will allow clients to take advantage of LCH’s extended clearing capabilities, including cross-margining between U.S. interest rate futures and swaps, leading to significant capital savings by reducing collateral requirements. The exchange’s global connectivity further enhances its appeal by providing access to worldwide liquidity for trading interest rate futures.
The launch of the FMX Futures Exchange is expected to positively impact BGC Group’s (NASDAQ:BGC) business by creating new revenue streams through trading and clearing fees, while also attracting new clients and boosting the company’s market share in the derivatives market.
BGC Group’s (NASDAQ:BGC) stock currently trades at a forward P/E ratio of 10.51, reflecting a 12.30% discount to its sector median of 11.98. Analysts anticipate an 11.5% earnings growth for the company this year.
1. Kinross Gold (NYSE:KGC)
Number of Hedge Fund Investors: 37
Forward P/E Ratio as of October 8: 14.90
Stock Price as of October 8: $9.40
Kinross Gold (NYSE:KGC) is a Canadian-based gold mining company with operations across the Americas, West Africa, and Russia. The company focuses on high-quality, low-cost gold development projects, with a promising pipeline that includes the Great Bear project in Ontario, the Manh Choh project in Alaska, and the Lobo-Marte project in Chile, all driving its future growth and expansion.
In Q2, Kinross Gold (NYSE:KGC) reported a 4% decline in gold production to 535,300 ounces, largely due to reduced output at the Tasiast, Paracatu, and La Coipa mines. However, production at its U.S. operations, including Fort Knox and Round Mountain, increased. Despite the production drop, Kinross Gold’s revenue rose 10% year-over-year to $1.43 billion, benefiting from higher gold prices. Although all-in-sustaining costs (AISC) climbed 7% to $1,387 per ounce, the elevated gold price boosted AISC margins by 40% to $955 per ounce.
Kinross Gold’s (NYSE:KGC) focus on cost-effective and high-quality gold production allows the company to generate strong cash flows. With a realized gold price of $2,342 per ounce, the company’s annual operating cash flow potential exceeds $2 billion. Moreover, with gold prices hovering above $2,500 per ounce, its free cash flow projection is between $1.5 billion to $2 billion annually. This cash flow will support growth initiatives and potentially lead to higher dividend payouts.
Kinross Gold (NYSE:KGC) is currently trading at a forward P/E of 14.90, which represents an 11.27% discount to the sector median of 16.79. Analysts expect the company to increase earnings by 32.38% this year.
While we acknowledge the potential of Kinross Gold (NYSE:KGC) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than KGC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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