We recently compiled a list of the 8 Unstoppable Stocks That Could Make You Richer. In this article, we are going to take a look at where AST SpaceMobile Inc. (NASDAQ:ASTS) stands against the other unstoppable stocks.
Navigating Volatile Equity Markets
In the current climate of extreme market volatility, finding safe and stable investments is challenging. Valuations seem overstretched following one of the longest bull runs, with major indices reaching record highs. Despite this, the focus should remain on stocks of companies with strong fundamentals and solid long-term prospects.
Similarly, it’s crucial to consider companies that can withstand uncertainties caused by various headwinds, such as rising geopolitical tensions, the US election, and the high interest rate environment. While the recent Federal Reserve rate cut, declining inflation rates, and a prolonged bull market have benefited investors, not all stocks are responding uniformly.
READ ALSO: 8 Worst Performing Tech Stocks in 2024 and 10 Worst Performing Blue Chip Stocks in 2024.
How Are Economic and Geopolitical Factors Influencing Investments?
As the US election approaches, economic issues remain the primary concern for most voters. Despite the equity market’s upward trend, the US economy has experienced several shocks, including slowdowns in the labor and real estate markets. Although inflation has decreased from a high of 9.2% to 2.4%, the Federal Reserve had to cut interest rates by 50 basis points to prevent a recession.
“Even as the data shows inflation has theoretically been slowing down, it has become more important in people’s minds over the course of the last three quarters, not less important,” said Jay Campbell, partner at Hart Research, the Democratic pollster for the survey.
The significant drop in inflation has coincided with higher growth expectations, driving upward momentum in the equity markets. Strong macroeconomic data, such as impressive GDP and retail sales figures, have supported these growth expectations. Amid these expectations, bond yields have increased, indicating that investors are selling safe-haven assets. Economists at Goldman Sachs suggest that the rise in yields is due to promising growth prospects rather than factors like the anticipation of Donald Trump’s potential presidency or concerns about the Fed’s rate cuts causing inflation to spike again.
“Yields have risen significantly over the past several weeks, which we find has owed primarily to continued strong U.S. growth momentum rather than shifts in election odds,” Goldman said in a recent note.
Conversely, escalating trade and tariff tensions between the US and China pose a threat to market sentiment. The International Monetary Fund has warned that these tensions could have costly economic consequences globally.
“We are seeing geopolitically driven trade around the world, which is why when you look at overall trade to GDP that’s holding up fine, but who’s trading with whom is certainly changing,” said Gita Gopinath, deputy managing director of the International Monetary Fund, to CNBC on October 23, 2024.
In response to perceived unfair trade practices by Beijing, the US and EU have increased tariffs on certain Chinese goods, further escalating trade tensions this year.
Despite rising geopolitical tensions, long-term investing remains the best strategy for building a profitable portfolio and sustaining growth over time. Key factors to consider include investing in businesses rather than just share prices, understanding the underlying business, and consistently investing during both market highs and lows.
Our Methodology
For this article, we identified approximately 20 stocks with a year-to-date share price gain of over 30% as of October 25 and an average analyst price target upside of at least 30%. We then narrowed the list to the 8 stocks with the highest average analyst price target upsides, ranking them primarily by upside potential and secondarily by year-to-date gains.
At Insider Monkey, we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of a communications satellite in orbit, beaming its signal down to Earth.
AST SpaceMobile Inc. (NASDAQ:ASTS)
Average Analysts Upside Potential as of October 25: 70.95%
Year-to-date gains: 423.16%
Number of Hedge Fund Holders: 15
AST SpaceMobile (NASDAQ:ASTS) is a technology company that, together with its subsidiaries, provides a space-based cellular broadband network. The company operates five satellites in orbit that offer a cellular broadband network and plans to manage up to 95 satellites.
Its edge as an unstoppable stock that could make you richer stems from the fact that it is developing a service that can be offered for sale to several telecom companies. Partnering with telecommunication heavyweights Verizon and AT&T should allow the company to access an existing pool of cell customers. Consequently, it will not have to develop its own clientele, unlike rival Starlink, which is essentially attempting to go it alone.
Secondly, AST SpaceMobile (NASDAQ:ASTS) can raise money from its partners to cover the enormous expenses of establishing a global satellite network. It will probably still need to raise more funds from investors, which could dilute current shareholders, but having deep-pocketed partners is a clear benefit to the long-term success of the company.
AST SpaceMobile has contracts with numerous other businesses worldwide, giving it access to over 2.8 billion potential customers in the long run. There appears to be a lot of potential for the company as it grows over time, assuming it continues operating effectively.
The support that AST SpaceMobile (NASDAQ:ASTS) enjoys from AT&T and Verizon affirms its long-term prospects as a potential challenger of Starlink. This might explain why the stock is already up by more than 400% and rated as a by with an average price target of $43.73, implying a 70.95% upside potential as of October 25, 2024.
At the end of the second quarter of 2024, 15 hedge funds in the database of Insider Monkey held stakes worth $67.38 million in AST SpaceMobile, Inc. (NASDAQ:ASTS), compared to 13 in the preceding quarter worth $19.49 million.
Overall ASTS ranks 4th on our list of the unstoppable stocks that could make you richer. While we acknowledge the potential of ASTS as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ASTS 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.