In this article, we discuss the 5 best stocks to buy under $50. If you want to read our detailed analysis of the global economic situation, go directly to the 10 Best Stocks to Buy Under $50.
5. Freeport-McMoRan Inc. (NYSE:FCX)
Stock Price as of May 27: $39.65
Number of Hedge Fund Holders: 68
Freeport-McMoRan Inc. (NYSE:FCX) is an Arizona-based mining company with operations in North America, South America, and Indonesia. The company is involved in the exploration of copper, gold, molybdenum, and silver.
In its Q1 2022 results, Freeport-McMoRan Inc. (NYSE:FCX) reported strong sales growth and lower-than-expected costs. The world’s biggest copper mining company also lowered its debt significantly. The company offers a free cash flow (FCF) yield of 7%, which strengthens the case for a strong shareholder return in the form of dividends and share buyback.
Amongst the popular hedge funds holding a stake in the company, Fisher Asset Management holds a stake of $2.52 billion in Freeport-McMoRan Inc. (NYSE:FCX) as of March 31. The hedge fund increased its holdings in the company by 4% on a sequential basis.
Freeport-McMoRan Inc. (NYSE:FCX) was discussed in the Q4 2021 investor letter of Horizon Kinetics LLC. Here’s what the firm said:
“Those were some ideas about copper demand. Here are some specifics about supply. Global copper mine production in the 10 years from 2005 to 2015 rose 2.45% annually. In the next 5 years, to 2020, it increased by only 0.9% annually. Even ignoring the 2020 pandemic year, for the 4 years from to 2019, the expansion rate was 1.66%. We already have the historical context for this: the commodity price collapse prior to 2015, from a position of excess capacity.
What producers must do in that situation, because they have high fixed costs and debt expense, is curtail their exploration and development expenditures and reduce operating costs. They rely on existing mines, instead, and on their highest-grade ores and lowest-cost production. They might not actually reduce current production, but they aren’t replacing the reserves that are being slowly drawn down. You can see this at work at the individual company level.
Freeport-McMoRan will illustrate. It is the world’s third-largest copper producer, closely following Chile’s Codelco and Australia’s BHP Group. In 2014, even though Freeport sold more copper than the prior year, its revenues dropped by over 25%, and it went from $4.8 billion of operating earnings (a 22% margin) to a $(0.2) billion loss. The company’s capital expenditures peaked in 2014 at $3.86 billion and will be about $1.72 billion in 2021, meaning the company is spending 55% less now than it was seven years ago. In inflation-adjusted terms, it’s spending 61% less today than seven years ago…” (Click here to see the full text)
4. GoPro, Inc. (NASDAQ:GPRO)
Stock Price as of May 27: $6.99
Number of Hedge Fund Holders: 26
GoPro, Inc. (NASDAQ:GPRO) is a San Mateo, California-based corporation involved in the production and distribution of action cameras and has now further diversified into mobile applications and video-editing software.
The company realized that its products do not have a high replacement cycle like smartphones, so it has expanded its product portfolio by offering high-end cameras and budget-friendly options as well. GoPro, Inc. (NASDAQ:GPRO) has also introduced a $50/year subscription service that provides a discount on GoPro products and access to the cloud to save videos. The company has transitioned more towards e-commerce sales and has reduced its reliance on channel partners and resellers to generate sales.
GoPro, Inc. (NASDAQ:GPRO) is expected to benefit from higher traveling activity as borders across the world are reopening after an ease in restrictions following the COVID-19 pandemic. The company has been able to get its gross margin to the low 40s and is currently trading at a forward EV multiple of 6x only, which makes it an attractive value play. Furthermore, GoPro, Inc. (NASDAQ:GPRO) has authorized a share buyback plan of $100 million.
As of Q1 2022, 26 hedge funds held a stake in GoPro, Inc. (NASDAQ:GPRO).
3. Skechers U.S.A., Inc. (NYSE:SKX)
Stock Price as of May 27: $39.24
Number of Hedge Fund Holders: 28
Skechers U.S.A., Inc. (NYSE:SKX) is a California-based footwear brand. It is the third biggest athletic footwear brand in the world, with over 4,300 Skechers-branded stores globally. This is nearly four times higher than the global retail stores of athletic footwear giant NIKE, Inc. (NYSE:NKE). Although having a bigger store network results in higher expenses, it is very useful in the fragmented apparel and footwear industry.
Analysts are bullish on the stock as Gabriella Carbone at Deutsche Bank increased the price target on Skechers U.S.A., Inc. (NYSE:SKX) from $62 to $64 on April 27. While maintaining a Buy rating on the stock, the analyst highlighted that the company is experiencing strong top-line growth across all regions, which made it raise its full-year guidance.
Pzena Investment Management is the leading investor in Skechers U.S.A., Inc. (NYSE:SKX), with a stake worth around $281.44 million as of March 31. The hedge fund increased its holdings in the company by 43% sequentially.
Fiduciary Management shared its stance on Skechers U.S.A., Inc. (NYSE:SKX) in its Q1 2022 investor letter. Here’s what the firm said:
“Skechers is the third largest footwear brand in the world. The company designs, manufactures, and distributes footwear for men, women, and children in U.S. and international markets. Its products cover a wide range of footwear categories including casuals, dress casuals, sandals, boots, work boots, performance footwear, and kids footwear. The company operates in three business segments: Domestic Wholesale (23% of sales), International Wholesale (48% of sales), and Direct-to-Consumer (29% of sales). In total, international sales account for approximately 60% of revenue…” (Click here to see the full text)
2. General Motors Company (NYSE:GM)
Stock Price as of May 27: $38.57
Number of Hedge Fund Holders: 76
General Motors Company (NYSE:GM) is a Detroit, Michigan-based automobile manufacturer that is on the back foot due to the electric vehicle (EV) revolution in the US. Furthermore, the global supply chain disruption has also played a part in creating challenges for auto manufacturers to fulfill demand.
General Motors Company (NYSE:GM) stock is currently trading at a forward P/E ratio of 6x only as opposed to the average P/E ratio of 9x for the companies in the S&P 500 Index. This reflects a significant discount against the broader market, making it an attractive proposition. The heavy discount should not be warranted as the company is targeting to see its top line grow by 23% YoY in 2022. Although the automotive industry is going through uncertain times due to supply chain disruptions and the EV revolution, General Motors Company (NYSE:GM) has a strong growth history and brand recognition that will help the company move further. Furthermore, the company has shown flexibility to the ever-changing demands of the customers.
Here’s what Oakmark Global Fund said about General Motors Company (NYSE:GM) in its Q1 2022 investor letter.
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”
1. Marathon Oil Corporation (NYSE:MRO)
Stock Price as of May 27: $31.07
Number of Hedge Fund Holders: 43
Marathon Oil Corporation (NYSE:MRO) is a Houston, Texas-based crude oil and natural gas exploration and production (E&P) company.
During Q1 2022, Marathon Oil Corporation (NYSE:MRO) reported an increase in revenue of 49.2% YoY to $1.76 billion, which surpassed the consensus estimate of $1.69 billion. Meanwhile, the non-GAAP EPS of $1.02 was four cents higher than the analysts’ forecast. Marathon Oil Corporation (NYSE:MRO) stock is presently trading at a 4x forecasted free cash flow, which is a cheap multiple for an oil and gas E&P company that has a strong balance sheet, a healthy shareholder return program in place, and a low breakeven cost of $35 per barrel. Crude oil prices can be expected to remain around the current level, which makes Marathon Oil Corporation’s (NYSE:MRO) stock an attractive investment.
Marathon Oil Corporation (NYSE:MRO) was held by 43 hedge funds at the end of Q1 2022, up from 40 in the preceding quarter.
You can also take a peek at the 10 Stocks to Buy According to Canyon Capital Advisors and 10 UK Dividend Stocks To Buy.
