In this article, we discuss the 5 cheap stocks to buy before Christmas. If you want to read our detailed analysis of these stocks, go directly to the 10 Cheap Stocks to Buy Before Christmas.
5. Ambev S.A. (NYSE:ABEV)
Number of Hedge Fund Holders: 18
Share Price as of November 4, 2021: $3.14
Ambev S.A. (NYSE:ABEV) makes and sells beer, carbonated drinks, and other non-alcoholic beverages. It primarily operates in Latin America. The holiday season is a significant source of revenue for the company as sales during the period increase dramatically compared to other months of the year. Bank of America recently upgraded the stock to Neutral from Underperform with a R$18.60 target.
Jean Jereissati, the CEO of Ambev S.A. (NYSE:ABEV), during the third quarter earnings call, said that the company had delivered a 20% net revenue growth in the quarter with volumes up 8% year-on-year despite undergoing a transformation.
At the end of the second quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $301 million in Ambev S.A. (NYSE:ABEV), the same as in the preceding quarter worth $228 million.
In its Q1 2020 investor letter, Broyhill Asset Management, an asset management firm, highlighted a few stocks and Ambev S.A. (NYSE:ABEV) was one of them. Here is what the fund said:
“We also diversified our beer exposure during the quarter, adding a direct investment in Ambev (ABEV) to compliment our existing investment in Anheuser Busch Inbev (BUD). As the current environment has punished highly leveraged businesses like BUD (despite the company’s ability to generate strong and recurring cash flow), the opportunity to own ABEV, with net cash on its balance sheet and the highest returns on capital in the industry—at a lower multiple than its parent—was too good to pass up.
Together, these names represent roughly 20% of our capital today. Given their cheap valuations, combined with the fact that beer and tobacco consumption has historically increased during recession, one could argue that we should have even more exposure to these Sin Stocks. In principle, we agree, and given the opportunity, we’d be happy to increase our positions. But in the interim, we are highly sensitive to maintaining balance in the portfolio. At one end, we own high quality, defensive businesses that should fare well in almost any environment. At the other end, we’ve begun building a portfolio of more cyclical businesses, positioned to rebound sharply and gain share once the clouds clear. We discuss a few of these investments below.”
4. Funko, Inc. (NASDAQ:FNKO)
Number of Hedge Fund Holders: 19
Share Price as of November 4, 2021: $17.13
Funko, Inc. (NASDAQ:FNKO) makes and sells pop culture consumer products. The sales of these products, which are licensed by different brands, skyrocket during the holiday season because they make for great gift items for people of all ages. The stock is up 152% year-to-date on the back of reports that it is planning to enter the NFT market. The firm will shortly release third quarter earnings results, with analysts backing the firm to beat expectations.
Jefferies analyst Stephanie Wissink recently upgraded Funko, Inc. (NASDAQ:FNKO) stock to Buy from Hold and increased the price target to $25 from $21, noting that returning in-store traffic would benefit the company in the coming months.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Woodson Capital Management is a leading shareholder in Funko, Inc. (NASDAQ:FNKO) with 3.6 million shares worth more than $76 million.
3. The Container Store Group, Inc. (NYSE:TCS)
Number of Hedge Fund Holders: 21
Share Price as of November 4, 2021: $13.64
The Container Store Group, Inc. (NYSE:TCS) recently posted earnings for the second fiscal quarter, reporting earnings per share of $0.54, beating estimates by $0.25. The revenue over the period was $275 million, up 11% year-on-year. The company operates in the retail sector and markets storage and organization products. The stock stands to benefit from the increase in retail sales over the next few months.
Despite solid fundamentals and upcoming growth catalyst, the short interest on The Container Store Group, Inc. (NYSE:TCS) stock remains high at over 14%. Over the past year, the shares have returned more than 43% to investors.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $296 million in The Container Store Group, Inc. (NYSE:TCS), up from 18 in the previous quarter worth $362 million.
2. Flex Ltd. (NASDAQ:FLEX)
Number of Hedge Fund Holders: 43
Share Price as of November 4, 2021: $17.83
Flex Ltd. (NASDAQ:FLEX) provides supply chain services and solutions to the semiconductor industry. The products sold by the semiconductor industry are used in electronics around the world. During the holiday season, a lot of retail outlets have sales on these items, during which a lot of electronics are sold. With supply chain issues disrupting the production of chips, the role the company plays in the coming months has become of vital importance.
Flex Ltd. (NASDAQ:FLEX) has quietly been expanding business capabilities as it navigates supply chain problems for chipmakers. In October, the firm announced that it had acquired Anord Mardix, a critical power solutions provider, for $540 million.
At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Flex Ltd. (NASDAQ:FLEX), down from 48 the preceding quarter worth $1.6 billion.
In its Q4 2020 investor letter, Sound Shore Management, an asset management firm, highlighted a few stocks and Flex Ltd. (NASDAQ:FLEX) was one of them. Here is what the fund said:
“Our third quarter addition of contract manufacturer Flex provides a great example. Originally an electronics-focused outsource manufacturer with highly cyclical cash flows and short product lifecycles, the company has evolved its customer base toward the capital goods, automotive and healthcare industries. Having successfully recast itself as a longer-cycle, “new industrial,” Flex’s stock is benefitting from more stable and diversified cash flows and more consistent revenue growth. CEO Revathi Advaithi joined in early 2019 and she has refocused the company by accelerating the transition to these longer-cycle businesses. Moreover, the company has been shareholder oriented, using the company’s ample free cash to reduce shares outstanding by 35% in the last decade. Lastly, Flex’s Nextracker division should provide nice upside. The solar tracking company manufactures motors, software and systems for utility-scale power generation projects and business is growing quickly as the shift toward sustainable energy sources hastens. We believe Nextracker is underappreciated and could represent a significant amount of hidden value. At 13 times earnings Flex is a very attractive risk reward opportunity.”
1. Paysafe Limited (NYSE:PSFE)
Number of Hedge Fund Holders: 50
Share Price as of November 4, 2021: $7.73
Paysafe Limited (NYSE:PSFE) also features on our list of cheap stocks to buy before Christmas because the company provides digital commerce solutions to businesses. In the wake of the uncertainty around COVID-19, a lot of businesses have plans to expand their digital offerings in time for the holiday season and are thus turning to Paysafe. Bank of America has a Buy rating on the stock with a price target of $15.
Paysafe Limited (NYSE:PSFE) recently announced that it had partnered with Bitrise, a mobile development platform, to improve the digital wallet solutions offered by the company to different businesses around the world.
At the end of the second quarter of 2021, 50 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Paysafe Limited (NYSE:PSFE), up from 41 in the previous quarter worth $1.3 billion.
You can also take a peek at 10 Best Healthcare Dividend Stocks to Buy Now and 10 Dividend Stocks with Over 20 Years of Dividend Increases.
