We recently compiled a list of the 10 Best Low Priced Stocks to Invest in Now. In this article, we are going to take a look at where BGC Group, Inc. (NASDAQ:BGC) stands against the other low priced stocks.
As per American Century Investments, global small-cap stocks might be well-placed to benefit from changes in the macroeconomic factors in 2025. Inflation, elevated interest rates, and fears of recession impacted smaller companies in recent years, resulting in the significant underperformance of small-caps as compared to the large-caps. This trend was seen in 2024, with large caps dominating through the first half. However, sentiments shifted at mid-year when some momentum was seen in small caps.
What Lies Ahead?
The small caps picked up an additional tailwind post the US elections, says American Century Investments. The investors expected stocks, mainly small-caps, to benefit from Trump’s approach to taxes, tariffs, and regulations. The expectations for continued cuts by the US Fed and several other central banks have resulted in favorable conditions for small-caps. Trump’s approach towards tariffs can result in large companies bringing their supply chains closer. The small-caps can benefit from higher capital spending associated with reshoring and nearshoring.
The growth of AI is anticipated to continue to increase demand for data centers and energy. Even though the Mag 7 companies have managed to get more attention, American Century Investments believes that this trend can also support small-caps in multiple categories. The beneficiaries might include data center operators and providers of energy-efficient cooling solutions. While M&A and IPO activity witnessed a fall in 2022 and 2023, reduced rates and a favorable US regulatory environment can result in more deals in 2025. The investment firm expects that deregulation might fuel capital markets activity, supporting banks and boutique investment firms.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Tailwinds for Small Caps
BNP Paribas Asset Management expects that earnings will fuel the next leg higher for small-cap stocks. The analysts are expecting strong earnings growth i.e., by 42% in 2025 and by 36% in 2026 in comparison to just 6% in 2024. This is ahead of the historical earnings growth rate of 15%. For decades after China was admitted to the World Trade Organisation (WTO) in 2001, US companies were focused on outsourcing production to lower-cost nations (like China) to drive profits.
The asset management firm now expects this trend to reverse over the coming years. During COVID-19, having supply chains and manufacturing far from home resulted in significant difficulties for US firms. Therefore, they are now looking to ‘re-shore’ production. Also, elevated geopolitical tensions and protectionism remain other catalysts, supported by financial support from the US federal government’s CHIPS Act as well as the Infrastructure Investment and Jobs Act.
Our Methodology
To list the 10 Best Low Priced Stocks to Invest in Now, we used a screener and shortlisted the stocks trading at less than $10. Next, we chose the ones that were popular among hedge funds. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as 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 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
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BGC Group, Inc. (NASDAQ:BGC)
Stock Price as of February 22: $9.23
Number of Hedge Fund Holders: 33
BGC Group, Inc. (NASDAQ:BGC) operates as a financial brokerage and technology company. The company saw strong Q4 2024 and FY 2024 revenues, increasing by 11% and 12%, respectively. Its robust revenue growth was fueled by its ECS, Rates, and Foreign Exchange businesses, which have been outperforming the market. BGC Group, Inc. (NASDAQ:BGC) highlighted that this momentum continued into 2025, with trading volumes currently exceeding last year’s first-quarter records.
The company has a healthy track record of successful M&A integration and growth. Sage and OTC can add $450 million of annual ECS revenue. Notably, ECS brokerage diversifies the macroeconomic drivers that fuel trading volumes across BGC Group, Inc. (NASDAQ:BGC)’s global platform. For Q1 2025, the company expects revenues in the range of $610 million – $660 million and pre-tax adjusted earnings of between $145 million – $161 million. BGC Group, Inc. (NASDAQ:BGC) announced that it has agreed to acquire OTC Global Holdings, LP. With the help of this acquisition, the company plans to further expand and diversify its global ECS business.
O’keefe Stevens Advisory, an investment advisory firm, released its Q3 2024 investor letter. Here is what the fund said:
“BGC Group, Inc. (NASDAQ:BGC) – After a long-awaited arrival, the FMX Futures Exchange launched on September 24th. Years of expenses flowing through BGC’s financials without offsetting revenue are reversing. While we are keenly aware of the ramp-up period from 0 volume to market share gains provided by the CME, FMX’s compelling offerings are anticipated to gain market share slowly. In addition, per BGC’s standard practice, announced revenue and pre-tax income will come in at the high end of management’s guidance.
Uncertainty is BGC’s best friend. Entering 2024, rate cut expectations of 150bps reflected optimism around the aggressive and dramatic decline of rates. In September, a 50bps cut marked the first rate cut since 2020 and the reversal after 2.5 years of interest rate hikes. Officials target a range of 4.25-4.50% by the end of this year, which signals two quarter-point rate cuts or one half-point cut. For 2025, they expect to cut four more times, bringing their Fed Funds rate to 3.25-3.5%. We are unconvinced the higher inflation experienced in recent years is over, putting these rate-cut expectations at risk. For BGC, whether we experience 50 bps cuts or 150 bps, conflicting economic data points will continue driving record volumes. With one sell-side analyst covering the name, this stock continues to trade under the radar and remains a core holding.”
Overall BGC ranks 4th on our list of the best low priced stocks to invest in now. While we acknowledge the potential of BGC as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than BGC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
