In this article, we discuss 5 best stocks under $50 according to hedge funds. If you want to read about some more stocks that hedge funds like, go directly to 10 Best Stocks Under $50 According to Hedge Funds.
5. Tapestry, Inc. (NYSE:TPR)
Number of Hedge Fund Holders: 36
Share Price as of September 1: $34.73
Tapestry, Inc. (NYSE:TPR) provides luxury accessories and branded lifestyle products. On August 18, the firm posted earnings for the second quarter of 2022, reporting earnings per share of $0.78, beating market estimates by $0.01. The revenue over the period was $1.6 billion, almost the same as the revenue over the same period last year and missing estimates by $20 million. The board of the firm also approved a 20% increase to the dividend, with a quarterly cash dividend of $0.30 per share.
On August 22, Barclays analyst Adrienne Yih maintained an Overweight rating on Tapestry, Inc. (NYSE:TPR) stock and raised the price target to $43 from $39, appreciating the second quarter earnings beat of the firm.
At the end of the second quarter of 2022, 36 hedge funds in the database of Insider Monkey held stakes worth $535 million in Tapestry, Inc. (NYSE:TPR), compared to 39 in the preceding quarter worth $605 million.
In its Q3 2021 investor letter, Ariel Investments highlighted a few stocks and Tapestry, Inc. (NYSE:TPR) was one of them. Here is what the fund said:
“Luxury accessory and lifestyle brand, Tapestry, Inc. (NYSE:TPR) was the top contributor to performance over the trailing one-year period. Revenue improvement across all three brands with a notable increase in consumer demand, particularly for the Coach business, triple-digit growth in e-commerce, and better than expected pricing, drove margins higher. Looking ahead, we expect Tapestry’s supply chain and SKU rationalization initiatives to continue to deliver margin expansion. Together, with early signs of improved receptivity for the Kate Spade brand, we believe a significant value creation opportunity lies ahead.”
4. Valvoline Inc. (NYSE:VVV)
Number of Hedge Fund Holders: 39
Share Price as of September 1: $29.07
Valvoline Inc. (NYSE:VVV) markets automotive maintenance products. In early August, the company announced that it had agreed to sell the global products business it owned to Saudi oil giant Aramco for $2.65 billion in cash. Under the terms of the deal, the former will own the brand for all retail services purposes globally, excluding China and certain countries in the Middle East and North Africa, while Aramco will own the Valvoline brand for all products used globally. The firm said it would use the funds to accelerate the return of capital to shareholders.
On August 9, Citi analyst Chasen Bender maintained a Buy rating on Valvoline Inc. (NYSE:VVV) stock and lowered the price target to $35 from $37, noting the firm had a big growth opportunity ahead in retail services.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Brave Warrior Capital is a leading shareholder in Valvoline Inc. (NYSE:VVV), with 7.5 million shares worth more than $218 million.
In its Q2 2021 investor letter, Wasatch Core Growth Fund highlighted a few stocks and Valvoline Inc. (NYSE:VVV) was one of them. Here is what the fund said:
“Another significant contributor was Valvoline Inc. (NYSE:VVV), a company that manufactures lubricants and car parts and operates oil-change service centers. In addition to benefiting from the economic reopening, the company has discovered the advantages of making a mobile app available. Valvoline Inc. (NYSE:VVV) customers can use the app to find the closest service center and view live estimated wait times. Certainly, the adoption of technology to improve productivity and convenience isn’t a new theme. But we see mobile digitalization as a highly disruptive innovation that creates additional relationships among companies, distributors and customers. As a result, mobile digitalization is a competitive consideration in more and more of the companies that we evaluate for investment. In the first quarter, Valvoline’s stock declined partially because investors worried about the increasing popularity of electric vehicles (EVs)—which are much less dependent on petroleum products. But the stock rebounded in the second quarter, we think partly based on the realization that EVs still represent a tiny percentage of new cars sold and an even smaller percentage of cars in service. Moreover, Valvoline Inc. (NYSE:VVV) reported strong earnings and raised projections for the future.”
3. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 46
Share Price as of September 1: $33.85
Teck Resources Limited (NYSE:TECK) is a diversified metals and mining firm. The company has an impressive dividend history stretching back more than a decade. It has consistently paid a dividend to shareholders for the past eleven years. The sector median in this regard is ten years. These payouts are slowly starting to register growth as well. In late July, the firm declared a quarterly dividend of C$0.125 per share, in line with previous. The forward yield was 1.45%. The dividend is payable to shareholders by late September.
On August 16, investment advisory Stifel maintained a Buy rating on Teck Resources Limited (NYSE:TECK) stock and lowered the price target to C$59 from C$62. Analyst Alex Terentiew issued the ratings update.
At the end of the second quarter of 2022, 46 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Teck Resources Limited (NYSE:TECK), compared to 56 in the previous quarter worth $2.6 billion.
2. Capri Holdings Limited (NYSE:CPRI)
Number of Hedge Fund Holders: 46
Share Price as of September 1: $47.18
Capri Holdings Limited (NYSE:CPRI) makes and sells branded apparel, accessories, and luxury goods. On August 9, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $1.50, beating market estimates by $0.14. The revenue over the period was $1.3 billion, up 8% compared to the revenue over the same period last year and beating estimates by $60 million. The firm said it expected total revenue of approximately $5.85 billion versus consensus estimates of $5.84 billion in 2023.
On August 11, Barclays analyst Adrienne Yih maintained an Overweight rating on Capri Holdings Limited (NYSE:CPRI) stock and increased the price target to $72 from $66, noting the firm had an underlying brand strength in core markets offsetting weakness in China.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Rima Senvest Management is a leading shareholder in Capri Holdings Limited (NYSE:CPRI), with 7.2 million shares worth more than $299 million.
In its Q4 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and Capri Holdings Limited (NYSE:CPRI) was one of them. Here is what the fund said:
“Capri Holdings Limited (NYSE:CPRI) is a global fashion luxury group consisting of three brands: Michael Kors, accounting for 72% of fiscal year 2021 sales, Jimmy Choo, accounting for 10% of sales, and Versace, accounting for 18% of sales. The brands cover various fashion categories, including women’s and men’s accessories, footwear, ready-to-wear, wearable technology, watches, jewelry, eyewear and fragrance products. Capri Holdings Limited (NYSE:CPRI) mainly operates within the $70 billion accessories segment of the global luxury market, which is growing 5% to 6% annually. Capri shares outperformed in the last three months of 2021 after the company reported strong results for the fiscal quarter ended September 25. Revenue, margins and earnings per share all beat management’s internal expectations, and the company raised its fiscal year 2022 outlook for all three brands, despite supply chain pressure. Capri Holdings Limited (NYSE:CPRI) also approved a new two-year share repurchase program of up to $1 billion, replacing its existing $500 million program, which had $250 million of availability remaining.”
1. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 55
Share Price as of September 1: $17.54
AT&T Inc. (NYSE:T) is a media, communications, and technology firm. On July 21, the firm posted earnings for the second quarter of 2022, reporting earnings per share of $0.65, beating analyst expectations by $0.03. The revenue over the period was more than $29 billion, down close to 17% compared to the revenue over the same period last year and beating estimates by $130 million. The firm also revealed that it was increasing mobility service revenue guidance to 4.5-5% growth for the full year.
On August 18, MoffettNathanson analyst Craig Moffett maintained a Market Perform rating on AT&T Inc. (NYSE:T) stock and lowered the price target to $17 from $19, appreciating the accelerated subscriber growth of the firm.
At the end of the second quarter of 2022, 55 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in AT&T Inc. (NYSE:T), compared to 74 in the preceding quarter worth $4 billion.
In its Q2 2022 investor letter, Argosy Investors, an asset management firm, highlighted a few stocks and AT&T Inc. (NYSE:T) was one of them. Here is what the fund said:
“I purchased shares of AT&T Inc. (NYSE:T) prior to its spin-off of Warner Brothers Discovery (WBD). Most people are probably familiar with AT&T. They are a major cellular service provider, and until recently owner of the Time Warner media assets, which include HBO, CNN, TNT, TBS, Cartoon Network, DC Comics and the Batman content brands, and more. At the time of my purchase, I estimated that the combined T/WBD assets traded at a 15% levered FCF yield, or 6x FCF. I also believe that WBD, which now has HBO Max, has future growth in front of it which was previously in doubt when Discovery was primarily tied to the declining cable television bundle. Since then, Netflix reported disappointing subscriber growth, which threw all streaming companies into disarray. WBD followed that news with a disappointing outlook on its business during its own quarterly earnings.
As a result, shares of WBD have declined nearly 40% since the spin-off. WBD now trades for 7x 2023E FCF and there is great potential for returns over the next few years as WBD pays down debt used to finance its merger combining Warner Brothers and Discovery and grows. We do not own a large position in WBD at present, but we may add to it over time.”
You can also take a peek at 10 Penny Stocks Redditors are Buying in August and 10 Best Nickel Stocks to Buy Now.
