We recently compiled a list of the 12 Best Up and Coming Stocks To Buy According to Hedge Funds and in this article, we discuss Joint Stock Company Kaspi.kz (NASDAQ:KSPI), which is the best up-and-coming stock to buy now and has caught investor attention in the first quarter of its IPO.
Despite the concerns surrounding the market over the last few years, the broader market has performed exceptionally well as the S&P 500 reached new record highs crossing 5,300 points by mid-May. While the broader market has been surrounded by bearish sentiment since 2022 and even after its tremendous performance in 2023, many analysts have retracted their statements and are now expecting a positive future. For the year-end 2024, UBS and BMO expect the index to reach 5,600, Wells Fargo predicts that it will close out the year at 5,535 and even one of the most bearish analysts, Morgan Stanley’s Mike Wilson, raised the target to 5,400 from the prior 4,500.
Interest Rate Predictions
Interest rate hikes and cuts have been a major part of discussion in the markets for the last couple of years. In 2023, many analysts predicted up to six cuts in 2024 but the predictions faded over time with hotter-than-expected inflation data. At the Federal Reserve’s May 1 meeting, Chairman Jerome Powell showed hesitation in providing a specific time for any decision on rate cuts and said that the Fed needs more data before taking any step. However, the chairman did hint that the chances of hikes are highly unlikely. Some experts also believe that there may not be a rate cut this year as discussed in our previous article about best soaps and cleaning materials stocks.
According to CME’s FedWatch tool, 98.9% of the market is expecting interest rates to remain the same at the Fed’s June meeting while 1.1% believe that the Fed may raise the rates by 25 basis points (bps). Morgan Stanley predicts rate cuts to start in September at 25 basis points as they expect that inflation will begin to decline which could give the Fed enough confidence to start cutting rates. The FedWatch tool reveals that in September, 51.6% of the market isn’t expecting any rate cuts, 42.8% expects a 25 bps reduction, 5% expect rates to be cut by 50 bps and 0.6% believe that the rates will be 25 bps higher than the current levels of 5.25% to 5.5%.
Market Upside Potential Amidst Tightening Policies
Recently, we have seen another pullback in the market as the broader market has contracted by 1.5% between May 27 to 30. However, some experts still expect an upside and believe that the market is in healthy condition.
On May 29, former chief investment strategist for The Leuthold Group and Wells Capital Management, Jim Paulsen told CNBC that he is optimistic about the economy and highlighted its resilience despite previous recession predictions and challenges like inverted yield curves. He noted the strength of corporate balance sheets, overall economic health, liquidity, and positive recent earnings reports. He also acknowledged that tightening policies such as higher yields, a stronger dollar, a lower fiscal deficit to GDP ratio, modest monetary growth, and balance sheet contraction will eventually slow the economy and reduce inflation. Paulsen predicts that inflation will fall below 3%, creating favorable conditions for the market and suggesting potential for further upside. Moreover, Paulsen noted that the inflation has indeed come down if we compare it to 2022’s 9% and added that he does not think that the Fed target of 2% inflation is needed for “things to be good.”
Hedge Are Bullish on Joint Stock Company Kaspi.kz (NASDAQ:KSPI) Right After Its IPO
Our Methodology
For this article, we used the Yahoo Finance stock screener to identify over 400 stocks that have experienced revenue growth of at least 40% year-over-year and have a market cap of above $300 million. We then narrowed down our list to 12 stocks that have seen growth in hedge fund sentiment between the fourth quarter of 2023 and the first quarter of 2024, have positive analyst sentiment, and have consistent revenue growth. We listed the best up and coming stocks in ascending order of their hedge fund sentiment.
The hedge fund data was taken from Insider Monkey’s database of 919 elite hedge funds as of the first quarter of 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 best hedge funds. Our quarterly newsletter’s strategy picks 14 small and large-caps every quarter and it has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Hedge Are Bullish on Joint Stock Company Kaspi.kz (NASDAQ:KSPI) Right After Its IPO
Joint Stock Company Kaspi.kz (NASDAQ:KSPI)
Year-over-Year Revenue Growth in FY 2023: 51%
Year-over-Year Revenue Growth in FQ1 2024: 40%
Number of Hedge Fund Holders: 36
Joint Stock Company Kaspi.kz (NASDAQ:KSPI), along with its subsidiaries, offers comprehensive payments, marketplace, and fintech solutions for both consumers and merchants in Kazakhstan. The company runs a “super app” that combines payments, marketplace, and fintech services. The consumer app features e-commerce, grocery delivery, travel bookings, bill payments, QR code payments, and various government services. Joint Stock Company Kaspi.kz (NASDAQ:KSPI) launched its IPO on January 29, 2024. In the first quarter of its IPO, 26 out of 919 hedge funds tracked by Insider Monkey added the stock to their portfolio. Additionally, the company stock has gained over 35% year-to-date, as of May 30.
Joint Stock Company Kaspi.kz (NASDAQ:KSPI) has recently shown strong revenue and earnings growth, while its shares trade at a low valuation at a price-to-earnings ratio of nearly 12x, as of May 30. The company’s focus on value-added services has paid off, which contributes significantly to the marketplace’s growth. Services like classifieds, e-grocery, and tours have seen impressive uptake, with e-grocery growing by 125% year-over-year and tours generating a substantial 7% of Kaspi Travel’s gross merchandise value (GMV). The company performed well among all three of its platforms, which include payments, marketplace, and fintech. The payments platform’s total payment volume (TPV) grew by 35%, accompanied by a 25% increase in revenue and net income. Marketplace Gross Merchandise Value (GMV) surged by 62%, driving revenue growth of 108% year-over-year, with promising net income growth of 36%. Fintech also saw solid growth, with TPV up 48% and revenue up 26%, despite a slight 3% dip in net income, cushioned by high-quality volumes and reduced interest rates.
According to WSJ, 7 Wall Street analysts maintain a buy rating on Joint Stock Company Kaspi.kz (NASDAQ:KSPI) with an average price target of nearly $141.5, showing a 13.2% upside to its current levels on May 30. On May 7, New Street Research initiated coverage of the company with a buy rating and a $175 price target. The firm noted the company’s dominant position in the payments sector and said that it’s currently experiencing rapid growth driven by triple-digit sales on the top local e-commerce platform, as reported by The Fly.
Joint Stock Company Kaspi.kz (NASDAQ:KSPI) takes the eighth spot on our list of best up and coming stocks to buy. To find other up-and-coming stocks that hedge funds and analysts like, check out our free report on the 12 Best Up and Coming Stocks To Buy According to Hedge Funds.
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Disclosure. None. This article is originally published on Insider Monkey.