1. Ferroglobe PLC (NASDAQ:GSM)
Year to Date Gain as of October 25: -33.49%
Forward Price to Earnings Ratio: 9.22
Number of Hedge Fund Holders: 30
Ferroglobe PLC (NASDAQ:GSM) is a basic materials company that produces and sells silicon metal and manganese-based ferroalloys. While the stock is down by about 33.49% year to date, it remains one of the oversold stocks to invest in now as it delivers solid financial results.
In the second quarter, Ferroglobe PLC (NASDAQ:GSM) delivered a 15% increase in revenue that totaled $451 million as adjusted EBITDA more than doubled to $57.7 million. Likewise, the company bounced back to profitability with a net income of $34.9 million, up from a net loss in Q1. The impressive financial results stem from Ferroglobe restarting its French operations, which helped drive silicon metal and manganese-based specialty alloy volumes.
Ferroglobe PLC (NASDAQ:GSM)’s long-term prospects have also received a significant boost after the US Department of Commerce imposed anti-dumping and countervailing duties of 283% and 748%, respectively, on all Russian ferrosilicon imports. The new tariffs should significantly benefit the company’s ferrosilicon business starting early next year.
Ferroglobe PLC (NASDAQ:GSM) is one of the oversold penny stocks to invest in now, as testing using Coreshell nanocoating technology with silicon-rich anode has yielded excellent results. This means that nanocoating technology could play a significant role in the future use of electric batteries, opening a robust market for the company.
In the second quarter, 30 hedge funds held positions in Ferroglobe PLC (NASDAQ:GSM), with total stakes amounting to $164.59 million. As of June 30, Hosking Partners emerged as the largest shareholder, holding a position valued at $48.8 million.
Ave Maria Focused Fund stated the following regarding Ferroglobe PLC (NASDAQ:GSM) in its fourth quarter 2023 investor letter:
“Ferroglobe PLC (NASDAQ:GSM) was added to the portfolio in the fourth quarter. Ferroglobe is a leading manufacturer of silicon metal, which is a critical input for hundreds of industrial and consumer applications. It was formed via a merger of two companies, but the integration initially went poorly, causing a decline in the company’s stock price. New management was brought in to rectify the situation. The new team successfully completed the integration, which lowered the ongoing costs of the operations and eliminated the company’s debt. Going forward, regulations in the United States and Europe should dramatically increase the production of solar panels. Silicon metal is an irreplaceable input for solar panels, and this new demand for silicon metal will make Ferroglobe’s revenue less cyclical. Now that Ferroglobe has a fortress balance sheet, management has room to enact a large share repurchase initiative. At the time of the initial investment, the Fund was able to purchase Ferroglobe for almost half the replacement cost of its assets. The Fund exited positions in Nvidia, Tyler Technologies, and Valvoline, in part, to fund the Ferroglobe purchase and increase the position sizes of some existing holdings.”
While we acknowledge the potential of GSM as an investment, 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 GSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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