In this article, we will look at the 7 Best Low Cost Stocks To Buy Under $50.
Where are the Best Opportunities in the Bull Market Right Now?
A lot has happened in the stock market during the last couple of weeks. The Fed cut rates by 50 basis points to help the weakening labor market. A few days ago we saw the Chinese stimulus being announced which included a series of positive measures by the government to ease the economic pressure.
We recently covered the Chinese stimulus and its expected impact on the global economy in 7 Cheap Internet Stocks To Invest In Now. Here’s an excerpt from the article:
“Recently, China’s stock market has seen a sharp rally, driven by some aggressive measures by the government to revive the economy. China is the world’s second-largest economy and one of the key players in the technology industry. This huge economy has faced a series of challenges for the past few years in the shape of a sharp property market downturn and a lack of consumer confidence.
The government measures include interest rate cuts and liquidity injection into the market. On September 24, Reuters reported China’s central bank cut bank reserve requirement by 50 basis points and it also reduced interest rate by 20 basis points to 1.5%. Moreover, the bank also plans to issue 2 trillion yuan in special sovereign bonds.
These measures resulted in the CSI 300 index trading higher. The index closed 4.5% higher after the announcement whereas the Hong Kong Index gained 3.6%. This move by the Chinese central bank is said to have a positive effect around the globe. Analysts in the United States are already discussing the news as “China Boost”. While many analysts are calling this boost to be short-lived, others are confident that this is a positive mood and will benefit the market in the long term.”
The Fed rate cut and the Chinese stimulus are expected to affect the market positively. Adam Parker, Trivariate Research founder and CEO; Lauren Goodwin, New York Life Investments chief market strategist; and Kristina Hooper, Invesco chief global market strategist joined CNBC recently to talk about the best opportunities in the current bull market.
Adam Parker expressed that the market is outpacing the Federal Reserve’s action. He highlighted a sense of optimism surrounding AI deployment over the next few years, but he also raised concerns about market valuations exceeding economic realities. Parker likes the healthcare sector as it is driven by AI and believes that this will put the industry in a leading market position. He also believes that the Chinese Stimulus is a positive sign for the energy and industrial sectors.
On the other hand, Lauren Goodwin talked about how the rate cuts are supposed to affect the market. She thinks growth is the key indicator while analyzing the market. When the Fed is cutting rates, profit, and earnings margins typically stay where they are until growth starts to slow down. Moreover, she also pointed out that it is difficult to see the real economic catalyst that gives growth an upstart, without inflation. She also thinks that the upcoming period is going to be volatile between growth kicking up and then slowing down. Goodwin mentioned that she is going to be the buyer of the rally until unemployment starts rising and growth becomes a problem.
Lastly, Kristina Hooper mentioned the recent Fed cut to be a crisis cut in a non-crisis environment. She emphasized the Fed is cutting into growth, however, we will see a brief slowdown. The Fed has not only cut the rate by 50 basis points but is expected to cut by another 50 during the year and significantly more next year. These rate cuts are similar to throwing jet fuel in the market but that does not mean the stock market will go crazy. Hooper thinks that the fuel will help industries that have not rallied much recently benefit from the accelerating economy. She mentioned cyclicals to be one of the industries which are expected to enjoy the growth rally and also pointed out that the recent China stimulus will only help the cause.
Now let’s talk about the 7 best low cost stocks to buy under $50.
A close-up of a portfolio of stocks, emphasizing the broad equity portfolio of the company.
Our Methodology
We compiled the 7 best low cost stocks under $50 using the Finviz stock screener. Using the screener we first aggregated the list of stocks that were trading below the Forward Price-to-Earning ratio of 23.98 (the market’s forward P/E as per the Wall Street Journal) and a share price of under $50. We also took into account the EPS growth rate. Then we ranked the list by the number of hedge funds to get the best stocks. Please note that the list is ranked in ascending order of the number of hedge fund holders in Q2 2024.
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).
7 Best Low Cost Stocks To Buy Under $50
7. HP Inc. (NYSE:HPQ)
Share Price: $35.41
Forward P/E Ratio: 10.89
Earnings Growth This Year: 3.00%
Number of Hedge Fund Holders: 41
HP Inc. (NYSE:HPQ) is a technology company specializing in personal computing and printing solutions. The company has been facing trouble due to underperformance in its printer business. The problem persisted in the fiscal 3rd quarter of 2024. The printing segment revenue decreased 2.8% year-over-year. The pressure regarding this segment originates from a higher work-from-home trend in the industry and strong competition from its rivals.
However, this offset does not mean the company is a lost cause. In fact, despite a decline in one of its biggest segments, HP Inc. (NYSE:HPQ) has still been able to improve its total revenue by 2% year-over-year, which exceeded analyst expectations.
Management’s focus on enhancing their Personal Systems segment with artificial intelligence saved the day for HP Inc. (NYSE:HPQ). The segment revenue amounted to $9.37 billion and was up 5.3% year-over-year.
The company has made significant leaps in the AI PC sector which seems to be boosting investor confidence. In May, this year the company launched its first generation PC, which uses the latest Qualcomm processor. Moreover, HP Inc. (NYSE:HPQ) has also introduced one of the world’s thinnest next-generation AI PCs which uses the latest AMD processors and delivers around 55 TOPS of NPU performance.
These developments in the AI PC industry led to strong results for the third quarter and are expected to deliver significant growth moving forward. HPQ is cheap at current levels, it is trading at 11 times its forward earnings, with analysts expecting its earnings to grow by 3% during the year. Thereby, making it one of the low-cost stocks to buy under $50.
Greenlight Capital stated the following regarding HP Inc. (NYSE:HPQ) in its Q2 2024 investor letter:
“In addition to gold, we had four material winners in our long portfolio this quarter. HP Inc. (NYSE:HPQ) jumped from $30.22 to $35.02. After seven quarters of declines, PC sales turned marginally positive during the quarter. The industry appears to be in the early stages of an upcycle, perhaps to be enhanced by recently launched AI-enabled PCs that are expected to ramp up over the next several quarters.”
6. JD.com, Inc. (NASDAQ:JD)
Share Price: $39.90
Forward P/E Ratio: 9.56
Earnings Growth This Year: 28.00%
Number of Hedge Fund Holders: 59
JD.com, Inc. (NASDAQ:JD) is a key player in the e-commerce industry in China and internationally. The company has a unique business model for an e-commerce retailer. Typically such companies have third-party merchants that deliver and manage the return process of products. However, for JD.com, Inc. (NASDAQ:JD) the company not only acquires its inventory at wholesale rates but also manages the logistics itself. This results in high margins for the company and also as one of the differentiating factors in a competitive market.
The second quarter of 2024 revealed that its logistics arm was the strongest contributor in terms of revenue growth. The segment revenue improved more than 7.9% year-over-year even beating its marketplace revenue growth.
Overall, the company’s revenue was up 1.2% year-over-year reaching $4.1 billion. Out of this $3.3 billion came from its general merchandise products. The business in China seems to be stabilizing, moreover, the recent rate cuts by the Chinese Central Bank have also placed the market in a strong position, especially for undervalued stocks.
JD.com, Inc. (NASDAQ:JD) is also cheap at current levels which means that it is positioned well to benefit from the current market condition. It ranks 6th on our list of best low-cost stocks to buy under $50.
Ariel Global Fund stated the following regarding JD.com, Inc. (NASDAQ:JD) in its first quarter 2024 investor letter:
“We initiated a position in China-based technology-driven E-commerce company, JD.com, Inc. (NASDAQ:JD). The brand has long been known across the region as a superior online shopping channel due to its unique first-party model and unparalleled fulfillment service underpinned by JD Logistics. Yet, a challenging macro environment drove shares lower as shoppers began seeking bargains. In response, the company made significant investments in elevating its third-party merchant platform to enhance its variety of product offerings and price competitiveness for consumers. We believe these actions will yield an improved product mix, stronger top-line growth and margin expansion on a go-forward basis.”
5. Comcast Corporation (NASDAQ:CMCSA)
Share Price: $41.64
Forward P/E Ratio: 9.78
Earnings Growth This Year: 5.50%
Number of Hedge Fund Holders: 61
Comcast Corporation (NASDAQ:CMCSA) is one of the largest media and internet providers in the United States. It operates its media and content creation wings through renowned brands such as Telemundo, Universal Pictures, and NBC. It also operates various entertainment theme parks within the country.
The traditional media distribution channels are fading away internationally, Comcast Corporation (NASDAQ:CMCSA) has come out strong with its internet services segment to keep its profitability and revenue generation engines running. It has around 32 million broadband customers, which places it as a market leader in the United States.
The connections continued to grow during the second quarter of 2024, its wireless lines reached a 12% penetration rate adding around 322,000 new connections. The company also enjoys a healthy average revenue per user of 3.6% and has been able to maintain a historic average of 3% to 4%, indicating its operational robustness.
Lastly, although the overall revenue of the company came in with a decline of 2.7% year-over-year during the latest quarter, the earnings per share were above analyst expectations by around 9%.
Comcast Corporation (NASDAQ:CMCSA) is one of the best low-cost stocks to buy under $50. It was trading at $41.64 at the time of this writing. Moreover, the stock has a forward price-to-earnings ratio of only 10, making it undervalued at current levels.
ClearBridge Large Cap Value Strategy made the following comment about Comcast Corporation (NASDAQ:CMCSA) in its Q3 2023 investor letter:
“Long-term holdings Charter and Comcast Corporation (NASDAQ:CMCSA) delivered strong second-quarter results relative to expectations; their stable recurring revenue streams and undemanding valuations were rewarded in the current environment. Cable multiples compressed over the past 24 months on fears of heightened competition in their core broadband business from fixed wireless and fiber providers. While fiber remains a competitive alternative to cable broadband over the long term, high upfront investments and a materially higher cost of capital are resulting in slower buildouts than previously expected. Fixed wireless also continues to gain traction, particularly in rural markets, but share gains also appear to be moderating. At the same time, both Comcast and Charter are expanding their footprints into rural and adjacent markets while gaining wireless market share, leveraging their mobile virtual network operator agreements with Verizon. We think both cable companies are well-positioned to continue to grow while generating substantial free cash flows. We added to Comcast during the quarter.”
4. Schlumberger Limited (NYSE:SLB)
Share Price: $42.29
Forward P/E Ratio: 11.77
Earnings Growth This Year: 17.10%
Number of Hedge Fund Holders: 67
Schlumberger Limited (NYSE:SLB) is an international technology company that focuses on the oil and gas industry. It mainly operates through 4 main business segments namely Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. The comprehensive range of products and services offered by the company ensures that it supports oil and gas exploration at every stage with the latest artificial intelligence and data analytics technologies.
It is one of the best low cost stocks to buy under $50. The stock is trading at only 12 times its forward earnings, with earnings expected to grow by 17% during the year.
Schlumberger Limited (NYSE:SLB) has been making significant breakthroughs in the energy sector using artificial intelligence. It recently launched its Lumi data and AI platform which integrates AI capabilities into energy sector workflows. The platform provides high-quality data to help improve the collaboration and decision-making process for the industry.
Moreover, the company has also announced its collaboration with the famous chip maker NVIDIA to develop generative AI solutions that will specifically focus on the energy sector. The solution developed by the collaboration will be integrated into Schlumberger Limited’s (NYSE:SLB) existing platforms to enhance their capabilities.
These advancements topped with its robust financial performance put the company on a path for long-term growth. During the second quarter of 2024, the company improved its revenue by 13% year-over-year and net income by 8%. It also has strong cash flow generation capabilities and made $1.44 billion from operations and $776 million as free cash flow.
Artisan Value Fund stated the following regarding Schlumberger Limited (NYSE:SLB) in its fourth quarter 2023 investor letter:
“On the downside in Q4, our two energy holdings, Schlumberger Limited (NYSE:SLB), the world’s largest oil services company, and EOG Resources, a US shale-focused E&P company, were weak along with the broader sector. We have stringent criteria for business quality, which is particularly important in commodities sectors as these businesses do not control the underlying commodity prices, which can be volatile. We expect Schlumberger to continue to successfully navigate market volatility and deliver on its free cash flow and profit margin growth objectives from combination of activity growth and pricing gains. The stock has been among our top contributors since we initiated our position in December 2020.”
3. General Motors Company (NYSE:GM)
Share Price: $46.48
Forward P/E Ratio: 4.59
Earnings Growth This Year: 30.60%
Number of Hedge Fund Holders: 72
General Motors Company (NYSE:GM) is a leading automotive manufacturer in the United States. The company has a robust portfolio of combustion engine and electric vehicles sold under powerful brand names including but not limited to GMC, Chevrolet, and Cadillac brands.
The company has been doing well in terms of its production capacity and with the general supply chain issues fading away the business seems to be performing above its pre-pandemic levels. During the second quarter of 2024, the company delivered 40% year-over-year growth for its EV portfolio, which bested the market average of 11%.
The second quarter marked the best quarterly sales for the company since the fourth quarter of 2020, meaning that it has successfully beaten its pandemic lows. These record sales give the company price power leverage, which resulted in its revenue growing 7% year-over-year to reach $48 billion.
The stock of General Motors Company (NYSE:GM) is trading at only 4.59 times its forward earnings with analysts expecting its earnings to grow by 30.60% during the year. Thereby making it cheaply valued at current levels.
Diamond Hill Large Cap Concentrated Strategy stated the following regarding General Motors Company (NYSE:GM) in its Q2 2024 investor letter:
“Other top Q2 contributors included Extra Space Storage and General Motors Company (NYSE:GM). Shares of automobile manufacturer General Motors (GM) rose as its internal combustion engine business has also received a boost from the recent slowdown in electric vehicle adoption among consumers. GM also announced additional share repurchases in Q2, reinforcing its commitment to returning cash to shareholders.”
2. Pfizer Inc. (NYSE:PFE)
Share Price: $29.09
Forward P/E Ratio: 10.97
Earnings Growth This Year: 43.50%
Number of Hedge Fund Holders: 84
Pfizer Inc. (NYSE:PFE) is a global biopharmaceutical company that engages in researching, developing, and selling medicines. This healthcare stock is trading at an incredibly low price-to-earnings ratio of 11, whereas analysts expect its earnings to grow by 43.50% during the year.
The company is focused on developing its pipeline of new medicines and increasing its market reach. As of the second quarter of 2024, the number of patients impacted by the company’s medicines stood at more than 192 million on a year-to-date basis.
Pfizer Inc. (NYSE:PFE) has also been active in acquiring other biotech companies to develop a world-class research and production portfolio. It recently acquired Seagen, which is a biotechnology firm. The acquisition is expected to add more than $10 billion in revenues by 2030.
Speaking of revenue, the company generated around $13.3 billion in revenue for the second quarter which was up 3% operationally. Moreover, its large-scale production levels are helping reduce the cost of sales which was down by 6% operationally.
In addition to this Pfizer Inc. (NYSE:PFE) also offers a stable dividend yield of around 5.7%. This high dividend yield is expected to benefit the company when combined with the recent interest rate cuts. Its cheap valuation makes it one of the best low cost stocks to buy under $50.
Parnassus Value Equity Fund stated the following regarding Pfizer Inc. (NYSE:PFE) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
1. Bank of America Corporation (NYSE:BAC)
Share Price: $39.40
Forward P/E Ratio: 12.12
Earnings Growth This Year: 5.80%
Number of Hedge Fund Holders: 92
Bank of America Corporation (NYSE:BAC) is the second-largest bank in the United States in terms of assets. It operates as a financial holding company that provides a range of banking services including deposits, cash management, and saving accounts among others.
The recent news of Berkshire Hathaway selling around 5.8 million shares of the company came in as a shock for its investors. As the reason behind the share sell-off was unknown, many investors wondered if it was a sign of the business of Bank of America Corporation (NYSE:BAC) going down.
What we know from the company’s earnings call and overall financial performance does not point towards a weak business it suggests that the bank is doing well financially. The second quarter of 2024 revealed that the bank added around 278,000 new checking accounts to its portfolio. Moreover, it also announced adding more than 6,000 new relationships in the wealth management segment.
The loan portfolio of the Bank of America Corporation (NYSE:BAC) also witnessed a 2% growth year-over-year to $1.91 billion. All these positive highlights overshadowed the flat revenue growth rate of 1% for the bank.
What’s more interesting about the stock is its cheap valuation. BAC is trading at only 12 times its forward earnings while analysts are expecting a 6% increase in its earnings during the year. This makes the banking stock one of the best low cost stocks to buy under $50.
Diamond Hill Large Cap Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its Q2 2024 investor letter:
“Other top contributors in Q2 included Bank of America Corporation (NYSE:BAC) and Extra Space Storage. Shares of financial services company Bank of America rose in the quarter as it looks increasingly likely net interest income will inflect and begin growing again in 2024’s back half and into 2025.”
While we acknowledge the potential of Bank of America Corporation (NYSE:BAC) 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 a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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