We recently compiled a list of the 7 Cheap New Stocks To Invest In Now. In this article, we are going to take a look at where GE HealthCare Technologies Inc. (NASDAQ:GEHC) stands against the other cheap new stocks.
Capital Markets Buzz Amid Fed Rate Cuts
In light of the recent Fed decision, there is growing optimism regarding increased capital markets activity. Analysts have expressed growing confidence in a soft landing for the economy despite ongoing market volatility. This perspective suggests that supportive monetary policies could create favorable conditions to enhance valuations and drive investment, making it an opportune time for firms to pursue IPOs and M&A. As borrowing costs decrease, investor interest in tech startups and growth-oriented companies is likely to rise. This trend is particularly relevant given the recent performance of the S&P 500, which has rebounded from earlier declines, indicating resilience in the market.
As we approach the end of the year, the combination of lower interest rates and positive economic data sets the stage for a potential surge in IPOs and increased market engagement. Investors may look to diversify their portfolios by exploring new opportunities in, let’s say, emerging tech firms, which could lead to heightened activity in capital markets as these companies capitalize on the favorable economic backdrop. As the current landscape presents an encouraging scenario for both established and young companies looking to enter the public market or expand through strategic partnerships, we covered Stephanie Link’s sentiments on this scenario in our article about the 10 Best Young Stocks To Buy Now. Link, Chief Investment Strategist and Portfolio Manager at Hightower, highlighted a contrasting perspective amidst market volatility and uncertainty. Here’s an excerpt from the article:
“…She believes that the Fed is skillfully guiding the economy towards a soft landing, even amidst the expected market fluctuations before the elections.
Just 3 weeks ago, the S&P 500 had dropped by 4%. Still, it rebounded by 4% the following week. It rose another 1% last week, reaching new highs, and expressed optimism about buying opportunities during any market weakness, citing better-than-expected economic growth driven by recent data, including improved retail sales and manufacturing figures, as well as a decline in weekly jobless claims to a 4-month low. This positive economic backdrop supports an estimated growth rate of 2.9%, which is expected to benefit corporate earnings.
…Link noted a broadening market trend over the past couple of months, indicating that while tech has taken the lead, other sectors such as financials, industrials, materials, and discretionary stocks are also showing strength. She advised investors to remain selective in their choices amidst ongoing volatility…”
On October 3, Tiffany McGhee, CEO and CIO at Pivotal Advisors highlighted the convergence of macro events that may spark market volatility, emphasizing the concept of “convergence” as her word of the day. She noted that this week is marked by a convergence of significant events that could lead to increased volatility in the short term. With macroeconomic factors at play, including a potential port strike and major job reports scheduled for release, Tiffany highlighted that these elements are creating what she described as a “perfect storm.”
Tiffany pointed out that the ongoing conflict in the Middle East and the recent vice presidential debate are critical factors influencing market reactions. She observed that bond prices experienced a sell-off earlier in the week but stabilized as investors sought safety amid rising geopolitical tensions. As the election approaches, she anticipates further short-term volatility due to these developments.
In terms of strategy, Tiffany encouraged investors to reassess their portfolios, particularly those with a heavy concentration in equities. With the S&P 500 up 20% year-to-date and sectors like technology and consumer discretionary having performed well, she suggested that now is an opportune time to take some profits off the table and consider reallocating those funds into different areas of the market.
Tiffany also discussed her investment pick, the mutual fund with ticker AISGS, which is currently outperforming small-cap companies. She expressed a preference for focusing on size and style rather than specific sectors at this moment. By investing in small and mid-cap stocks through active management, such as with the Aerial Fund (ARGFX), investors can capitalize on opportunities created by lower analyst coverage in these segments. This lack of information allows skilled managers to identify undervalued stocks and consistently outperform indices.
Tiffany’s insights underscore the importance of strategic asset allocation and proactive portfolio management during periods of heightened market volatility. By recognizing the convergence of macroeconomic events and adjusting investment strategies accordingly, investors can better navigate potential market fluctuations while positioning themselves for future opportunities.
Methodology
We used the Finviz stock screener to compile a list of 20 new stocks that went public recently in the past 2 years and have a forward P/E ratio under 20. We then selected the 7 cheap new stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A radiologist in a lab examining a computed tomography scan of a patient.
GE HealthCare Technologies Inc. (NASDAQ:GEHC)
Forward Price-to-Earnings Ratio: 19.8
Market Cap as of October 1: $42.86 billion
Number of Hedge Fund Holders: 49
GE HealthCare Technologies Inc. (NASDAQ:GEHC) is a medical technology company, spun-off from General Electric on January 4, 2023. It provides integrated care solutions that create actionable insight across the healthcare system and care pathway, enabling better clinical and financial outcomes. Its AI-powered imaging and diagnostic tools, like Edison True PACS, have boosted radiologist efficiency and driven revenue growth in healthcare.
As healthcare providers upgrade their equipment in areas like MRI, CT, and ultrasound, this company is poised to benefit. It’s also expanding its digital health solutions, including AI-powered analytics and cloud-based services to improve patient care and operational efficiency in an increasingly telehealth-focused environment. Strategic partnerships within the healthcare ecosystem enhance its capabilities and drive innovation further.
The company secured contracts with ~$800 million in the US market in Q2 2024, for healthcare equipment, software, and services. In July, it acquired the AI division of Intelligent Ultrasound, specializing in women’s health ultrasound AI, and partnered with AWS to develop foundational models and GenAI tools.
The rising demand for its medical imaging and monitoring technologies, especially in hospitals and outpatient settings, helped Q2 revenue grow 0.46% year-over-year. It delivered 1% organic revenue and 3% orders growth with all segments contributing. Global revenue growth was 4%, and order growth was 6% excluding China.
GE Healthcare Technologies Inc. (NASDAQ:GEHC) is expanding its market share through equipment upgrades, digital health investments, and strategic partnerships. Its focus on sustainability aligns with market trends, making it a promising investment.
Cooper Investors Global Equities Fund stated the following regarding GE HealthCare Technologies Inc. (NASDAQ:GEHC) in its Q2 2024 investor letter:
“However, we are keen to highlight other Stalwarts and Growth businesses we own that should benefit in a more profound way than hardware makers currently enjoying an initial build-out phase. To paraphrase Salesforce CEO Mark Benioff, if hardware is the picks and shovels of GenAI then data is the real gold.
Another example is GE HealthCare Technologies Inc. (NASDAQ:GEHC), a global leader in diagnostic imaging equipment across multiple modalities. AI algorithms are making image quality better, assisting image analysis via computer vision, and enabling devices to be more accessible for new users. The next stage will be data-driven; via its many points of penetration into the patient journey, GEHC is accumulating large amounts of data across pathology, genomics, and imaging. Harnessing AI tools across that data to drive better patient outcomes should enable improved sales, margins and returns from a more competitive product offering.”
Overall GEHC ranks 2nd on our list of the cheap new stocks to invest in. While we acknowledge the potential of GEHC 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 GEHC 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.