We recently compiled a list of the 8 Best Value Penny Stocks to Invest in Now. In this article, we are going to take a look at where Ambev S.A. (NYSE:ABEV) stands against the other penny stocks.
The few weeks leading to President Donald Trump’s inauguration were the merriest for investors. A lot of money piled into the stock market, which saw the broad market index gain 2.74% in the last week of the inauguration. But all of that happened to be an ephemeral episode.
The S&P 500 has been down 4.13% in the past five days, and this is not the only index in red this week. The tech-heavy Nasdaq composite has pulled back 6.86% in the past five days, and so has the Dow, although it has a smaller margin of 1.31%. In fact, all of the indices are on pace for their worst week this year, with the Nasdaq and the S&P looking to record the worst week in five months.
What is interesting is that the same reason sentiment was hugely positive at the opening of the year is also one of the main factors driving the volatile market. Early in February, Trump said he would use tariffs to compel the US’s neighbors (Canada and Mexico) and its largest trading partner (China) to help them address immigration and drug issues. The tariffs on China went into effect on February 4, and those on the neighbors are scheduled to begin implementation on March 4, 2025. Investors were hoping that this threat would fizzle out, but a recent post on Trump’s Truth Social account indicates the opposite.
READ ALSO: 8 Worst Performing Mutual Funds in 2024 and 10 Best Get Rich Quick Stocks To Invest In.
The problem is that even the threat of tariffs is enough to throw the market into a frenzy. Investors are not wrong to panic because experts agree that the tariffs will soften the economy. According to Erica York, vice president of federal tax policy at the Tax Foundation, the tariffs will inflict pain on the US economy.
York says: “It means incomes and returns to shareholders in the US economy are lower instead, because if businesses have to eat those higher costs, it means they have less to pay their workers. It means they have less to hire and expand employment, or less to invest. So no matter what channel the price impact takes, it’s Americans who are hurt by the tariffs.”
And this situation has created an environment where the market appears irrational. According to Jay Hatfield, CEO of Infrastructure Capital Advisors, “We’re in a stalled, range-bound, slightly irrational market as we wait for policy clarity.”
The economic softening resulting from the tariffs is made worse by a softer-than-expected consumer confidence reading. According to the latest release, US consumer confidence dropped sharply in February 2025. In fact, The Conference Board’s Stephanie Guichard notes, “In February, consumer confidence registered the largest monthly decline since August 2021.” Add to that the disappointing retail sales data and a jump in jobless claims, and you have a properly rattled stock market.
The problem with a broadly underperforming market, as indicated by all the indices being in the red for the better part of the past 30 days, is that investors tend to undervalue some shares that deserve a better valuation. But this is not always a bad thing because it opens up potential opportunities.
In a recent interview, Bank of America’s Marci McGregor said that “volatility can open up potential growth opportunities as some investments become more reasonably priced, aligning with value stock strategies.” At the same time, penny stocks are likely to make huge moves in a volatile market, according to Timothy Sykes, a long-time penny stock trader.
If investors’ worries about the health of the US economy continue to mount, the market’s subdued sentiment is likely to continue. In other words, there’s never been a more apt time to consider a combination of value and penny stocks—value penny stocks.
Our Methodology
To make the list of the 8 best-value penny stocks to invest in now, we used a screener to identify stocks trading under $5 per share with forward P/E ratios of less than 20, as of March 3. We further looked for stocks with a positive upside potential of over 30% based on analysts’ consensus price targets. Finally, we ranked the companies based on hedge fund sentiment using Insider Monkey’s database of 1008 elite hedge funds’ holdings at the end of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up on several cans of freshly brewed beer in a commercial brewery.
Ambev S.A. (NYSE:ABEV)
Price as of March 3: $2.07
Forward P/E ratio: 12.25
Analysts upside potential: 48.31%
Number of hedge fund holders: 22
Ambev S.A. (NYSE:ABEV) is one of Brazil’s largest companies and a major player in the beverage industry across the Americas. It is a subsidiary of Anheuser-Busch InBev, which is the world’s largest brewer by volume. The company produces and distributes beer, carbonated soft drinks, and other non-alcoholic beverages in Latin America.
Despite challenging market conditions, Ambev’s financials are robust. The fourth quarter of 2024 adjusted net profit increased 7.5% year-over-year to 5.02 billion reals ($874.63 million). The company posted this impressive performance despite a 3.2% decline in total volumes due to softer market conditions in Argentina and adverse weather in Brazil. It also managed to grow its organic net revenue by 4.2% to 27.04 billion reals ($4.71 billion), with growth occurring across most business units.
In addition to the traditional operational areas, Ambev S.A. (NYSE:ABEV) is aggressively entering the digital space, and the gamble is paying off. According to management:
“We continued to evolve on our digital transformation, expanding the availability and usage of BEES, our B2B digital platform, across our main operations and improving convenience to our consumers through Zé Delivery, our DTC platform in Brazil. By the end of 2024, BEES was live in eight of our top ten markets, with 1.3 million monthly active buyers and more than 88% of our gross revenue transacted through the platform. On the DTC front, Zé Delivery reached 9 million buyers, translating into over 66 million orders (a 10% increase compared to 2023).”
This financial and operational robustness is why Ambev S.A. (NYSE:ABEV) is among the top five on our list of the Best Value Penny Stocks to Invest in Now.
Overall ABEV ranks 4th on our list of the best value penny stocks to invest in now. While we acknowledge the potential of ABEV 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 time frame. If you are looking for an AI stock that is more promising than ABEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.