We recently compiled a list of the 10 Best NYSE Penny Stocks To Buy. In this article, we are going to take a look at where FinVolution Group (NYSE:FINV) stands against the other NYSE penny stocks.
The latest Consumer Price Index (CPI) data by the Bureau of Labor Statistics was released on June 12, which suggests a deceleration in inflation, which could be positive for the US market and economy. Stabilizing prices, particularly in core categories like shelter and food, indicate potential relief for consumers and might influence the Federal Reserve’s monetary policy decisions favorably. The steadying of inflation could enhance consumer confidence and support economic stability.
Additionally, the latest inflation report for May, released on June 28, showed that personal income in the U.S. increased by $114.1 billion, up 0.5%, while disposable personal income (DPI) also rose by 0.5% to $94 billion, showing its slowest increase since March 2021. The core Personal Consumption Expenditures (PCE) index, a key measure for the Federal Reserve that excludes food and energy costs, rose by 0.1% from April, matching Wall Street’s expectations and slowing from April’s 0.3% rise. Annually, core PCE increased by 2.6% which was the smallest gain in over three years.
The data showed a steady rise in income and spending. Real DPI, adjusted for inflation, grew by 0.5%, and real PCE rose by 0.3% due to a 0.6% increase in spending on goods and a 0.1% increase in spending on services. Healthcare, housing, and transportation services contributed to the rise in service spending, while prescription drugs led to an increase in goods spending. Overall, the data showed rising incomes, controlled inflation, and increased consumer spending. This combination suggests steady economic growth and stability, along with manageable inflationary pressures.
What Does the Data Mean for Small-Cap Stocks?
We discussed the key developments of the Fed’s latest meeting in our best Robinhood stocks article, where we mentioned that the chairman’s statement indicated that there has been some improvement in lowering inflation toward the desired 2% target. However, he emphasized the need for more data and evidence to confirm that this downward trend is consistent and sustainable. This means that the latest data might not be sufficient enough yet, but it still is a good start to making up the Fed’s mind toward rate cuts. The CME FedWatch Tool reveals that 58% of the market believes that the Fed will cut rates by 25 basis points.
Back in April, Peter Kraus, CEO of Aperture Investors told CNBC that inflation has restricted the growth of small-cap stocks and they have underperformed the large-cap stocks by 9% per annum for the last three years. While he had some recession concerns, he said that if the interest rates decline, the small-cap stocks are going to outperform. He noted that over the long term, even though the falls of the broader market and the small caps are different, the returns are usually equal.
Keeping that in mind, we look at some of the best NYSE penny stocks in our current article. While not all of them are small-cap stocks, they could certainly benefit from a decline in interest rates.
Our Methodology
For this article, we identified over 60 stocks trading under $5 with Buy or better ratings from Wall Street analysts and a market cap of over $200 million. We further narrowed down our list to 10 stocks based on multiple but different metrics such as future growth prospects, valuations, and shareholder returns. We listed the stocks in ascending or of their hedge fund sentiment which was taken from Insider Monkey’s database of over 900 elite hedge funds. We preferred the stocks that were profitable over the last twelve months. Nevertheless, some stocks in the list are yet to post profits and analysts keep an optimistic outlook for them.
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).
An individual using a laptop to access the fintech platform to manage their finances.
FinVolution Group (NYSE:FINV)
Share Price as of June 27: $4.64
Number of Hedge Fund Holders: 11
FinVolution Group (NYSE:FINV), previously known as PPDAI Group Inc., is a China-based company that runs a fintech platform. In Q1, 11 hedge funds had investments in FinVolution Group (NYSE:FINV), with positions worth $28.142 million. GLG Partners is the most dominant shareholder in the company as of Q1 with a stake worth $13.54 million. It is one of the best NYSE penny stocks to buy.
FinVolution Group’s (NYSE:FINV) strong performance in the first quarter of 2024 highlights its effective strategy and resilience across both domestic and international markets. With a clear focus on its “Local Focus, Global Outlook” approach, the company has significantly expanded its reach and served approximately 31 million borrowers across China, Indonesia, and the Philippines as of the first quarter.
During the quarter, international revenue increased to RMB595 million, up 33% year-over-year, which accounted for 19% of the total revenue of $438.4 million. In Indonesia, FinVolution Group capitalized on a favorable economic climate, characterized by GDP growth exceeding 5% in 2023 driven by robust domestic consumption and increased investment. In the first quarter alone, transaction volume in Indonesia surged by 41% year-over-year to RMB2.21 billion, with outstanding loan balances climbing 34% to RMB1.27 billion. The Philippines is another important international market for the company, where the economic outlook remains optimistic with projected GDP growth between 6% to 7% for 2024. This positive forecast aligns well with FinVolution Group’s (NYSE:FINV) growth strategy, driving substantial year-over-year transaction volume growth of RMB560 million, which increased by 194% year-over-year and 27% sequentially.
FinVolution Group’s valuation makes it a stock worthy of attention. The company is trading at an earnings multiple of 3.59x its 2024 earnings which makes it a dirt cheap stock in the fintech space. Moreover, analysts also see the stock in quite a favorable light as all seven analysts that have covered the stock keep a Buy rating on it. Their average price target shows a 39% upside to the stock from current levels on June 27.
Overall FINV ranks 7th on our list of the best NYSE penny stocks to buy. You can visit 10 Best NYSE Penny Stocks To Buy to see the other NYSE penny stocks that are on hedge funds’ radar. While we acknowledge the potential of FINV 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 timeframe. If you are looking for an AI stock that is more promising than FINV 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.
