We recently compiled a list of the 18 Best 52-Week Low Stocks to Buy Now According to Short Sellers. In this article, we are going to take a look at where Franklin Resources, Inc. (NYSE:BEN) stands against the other 52-week low stocks.
Buying low and selling high is a popular investment strategy that value investors inspired by Warren Buffett have perfected over the years. The legendary investor has consistently emphasized the importance of identifying stocks of undervalued companies with significant growth prospects and holding onto these investments for an extended period.
Some of the most undervalued stocks to buy are those trading near their 52-week lows, backed by solid underlying fundamentals. A lot of these companies have durable competitive advantages but have fallen due to an overreaction by pessimists to short-term headwinds. The companies should boost strong brands in their respective fields with high barriers to entry.
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Value investing means paying attention to more than just the stock price but by focusing on valuation. A pullback often creates buying opportunities where quality companies become available at low price-to-earnings multiples or low price-to-sales ratios relative to their industries.
Over the past 20 years, 95% of investment firms have failed to beat the S&P 500. In contrast, Buffett has averaged an annual return of 20%, nearly double the S&P 500 over the same period.
With the S&P 500 up by about 20% for the year, most stocks are trading at premium valuations above their 52-week highs. The impressive gains have come amid unfavorable market conditions, with interest rates near all-time highs of between 5.25% and 5.50%.
On the other hand, some stocks have pulled back significantly and are currently trading close to the 52-week lows, their core business hurt by the high interest rate environment. Additionally, some of the stocks have underperformed due to deteriorating macroeconomics. Concerns that the U.S. economy could plunge into recession have always hurt some of the stock’s sentiments. The U.S. Federal Reserve is expected to cut interest rates in September and these stocks might not be near their lows for long.
According to Stuart Keiser, Citi head of equity trading strategy, the high interest rate environment has left the market in a very unstable situation amid a “ tricky environment.” Likewise many investors are on edge as to whether there will be a soft or hard landing. Keiser said, in an interview on CNBC’s Fast Money:
“Basically you had a 12 to 18 month period of positive economic surprise of what I would call higher for longer growth strong rate cuts getting pushed out. Markets were able to deal with that because growth was really positive. Since late June economic data surprised negative, economic data momentum negative. The market is now trading instead of higher for longer trading, a bit of growth slowdown. That’s why you are getting this schizophrenia because as growth decelerates you get into a borderline at which the risk becomes really big that you could go hard landing instead of soft landing. So our view is that the risk reward is not what it was a couple of months back”
Amid the market outlook uncertainty, focusing on stocks near the 52-week lows is a sure way of balancing the risk reward amid the premium valuation in play. While the focus has been on artificial intelligence investment plays, stocks in various sectors are trading at discounted valuations and are sure to offer significant returns.
Our Methodology
To compile the list of the best 52-week low stocks to buy now, according to short sellers, we first screened for stocks that were trading near their 52-week lows (0-10% range) using the Finviz stock screener. Next, we looked at their short interest and picked the stocks with the lowest short interest that were the most popular among elite hedge funds. The stocks are ranked in descending order of their short interest.
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).
A close-up of an investor making a transaction, with a financial graph reflecting the market trend.
Franklin Resources, Inc. (NYSE:BEN)
52 Week Range: $20.33 – $20.72
Current Share Price: $20.34
Number of Hedge Fund Holders: 27
Short interest rate: 4.17%
Franklin Resources, Inc. (NYSE:BEN) is one of the best 52-week low stocks to buy now, according to short sellers, for diversifying an investment portfolio into the financial service sector. While operating as an asset management holding company, it offers services to individual institution’s pension plans.
Franklin Resources, Inc. (NYSE:BEN) has been under pressure, trading close to its 52-week lows. The underperformance has been attributed to the Securities and Exchange Commission launching a federal investigation of its co-chief Investment Officer (CIO) of its Western Asset Management unit, Ken Leech. Consequently, the company has announced Michael Buchanan’s promotion to the Chief Investment Officer role.
During their latest earnings discussion, Franklin Resources, Inc. (NYSE:BEN) announced an adjusted operating profit of $424.9 million, indicating a 1.3% rise compared to the last three months. It also delivered a 15% growth in assets managed over the past year, concluding the quarter with a total of $1.65 trillion.
In collaboration with other financial entities, the firm introduced the initial U.S. exchange-traded funds linked to ether, incorporating digital assets into the wider financial landscape. The firm’s quarterly dividend payout remained unchanged at $0.31 per share, marking a 3.3% increase from the same period last year. These developments represent recent progress for both Western Asset Management and Franklin Resources.
Franklin Resources, Inc. (NYSE:BEN) is currently valued at a P/E ratio of 12.88, significantly higher than an average P/E of 7 for the financial service industry. On the other hand, the company rewards investors with a 5.92% dividend yield. The number of shares outstanding shortstands at 4.17%.
During June 2024, 27 out of the 912 hedge funds profiled by Insider Monkey were the firm’s shareholders. Franklin Resources, Inc. (NYSE:BEN) ‘s biggest hedge fund investor is AQR Capital Management, as it owns$54.66 million worth of shares.
Overall BEN ranks 14th on our list of the 52-week low stocks to buy now according to short sellers. While we acknowledge the potential of BEN 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 BEN, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
