We recently compiled a list of the 12 Stocks Under $5 With Biggest Upside Potential. In this article, we are going to take a look at where IHS Holding Limited (NYSE:IHS) stands against other stocks under $5 with biggest upside potential.
On January 20, Bloomberg reported that relief swept through the markets as it became clear that Donald Trump would not immediately impose China-specific tariffs on his first day in office, sparking a rally in US equity futures and a decline in the dollar. According to people familiar with the plans, the Trump administration is pivoting towards a more engagement-oriented approach with Beijing, rather than pursuing another trade war. The administration also plans to issue a memorandum directing federal agencies to study existing trade policies and relationships with China, Canada, and Mexico, rather than imposing new tariffs.
This change in strategy has been welcomed by investors, who were concerned that a trade war with China could have significant negative consequences for the global economy. The relief has propelled US equity futures higher, with contracts on the S&P 500 rising 0.5%. The dollar, on the other hand, slumped, with a gauge of the dollar dropping as much as 1.1%. Additionally, Trump’s conversation with China’s leader Xi Jinping, which he described as “very good”, boosted Asian stocks on Monday. However, not all markets were positive, after Trump announced plans to invoke emergency powers to boost domestic energy production while shifting away from renewable sources.
Read Also: 12 Cheapest Stocks with Biggest Upside Potential and Top 10 Undervalued Tech Stocks to Buy According to Hedge Funds.
In an interview with CNBC on January 20, Stanley Druckenmiller, Chairman and CEO of Duquesne Family Office, a financial services company, shared his insights on the markets and the incoming administration. Druckenmiller began by describing the current state of the economy, noting that the United States is experiencing a very low unemployment rate of around 4% and a strong GDP growth rate of 3%. He mentioned that, in his 49 years of experience, the country is likely transitioning from the most anti-business administration to the opposite, which has led to a significant shift in business confidence.
According to Druckenmiller, CEOs are feeling “somewhere between relieved and giddy” about the change in administration. He cited a recent statement by Paul Ryan that discussed a 32% increase in business confidence over the last 12 months, which Druckenmiller believed was likely a record. This surge in confidence, combined with the strong economic indicators, suggests that the economy will remain robust for at least the next six months. Druckenmiller’s firm is a believer in the concept of “animal spirits,” which refers to the idea that business confidence and sentiment can have a significant impact on economic activity.
Despite the positive economic indicators, Druckenmiller noted that the earnings yield to bond yield is at its most unattractive level in 20 years. This means that the return on investment in stocks is relatively low compared to the return on bonds, which could make it challenging for the market to continue its upward trend. As a result, Druckenmiller is cautious in his predictions, citing the push and pull between a strong economy and rising bond yields. He acknowledged that every change creates opportunities for price changes, and the radical shift in administration, combined with innovation and deregulation, could lead to significant disruptions in the market.
The recent changes in trade policies and economic outlook have created a mix of challenges and opportunities for investors. While there are uncertainties, the overall sentiment in the market remains positive with room for growth.
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Our Methodology
To compile our list of the 12 stocks under $5 with biggest upside potential, we used Finviz and Yahoo stock screeners to find the 30 largest companies trading under $5 as of January 17. From that list, we narrowed our choices to the 12 stocks that analysts see the most upside to. We also included their stock price as of January 17 and their hedge fund sentiment, which was taken from Insider Monkey’s Hedge Fund database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in ascending order of analysts’ average upside potential as of January 17.
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).
IHS Holding Limited (NYSE:IHS)
Upside Potential: 125.86%
Stock Price as of January 17: $3.21
Number of Hedge Fund Investors: 14
IHS Holding Limited (NYSE:IHS) is an independent tower company in Africa that provides critical infrastructure and services to the telecommunications industry. The company operates a vast network of over 39,000 towers across multiple countries, including Nigeria, South Africa, and other key markets in Sub-Saharan Africa, Latin America, and the Middle East and North Africa (MENA) region.
IHS Holding Limited (NYSE:IHS) is concentrating on renewing and extending long-term contracts with major telecom operators. The company recently achieved a significant milestone by renewing and extending all tower contracts with MTN Nigeria through 2032. This agreement encompasses nearly 13,500 tenancies and approximately 23,800 lease amendments and ensures stable and predictable revenue streams. Furthermore, IHS Holding Limited (NYSE:IHS) has extended all six of its MTN country Master Lease Agreements (MLAs) into the next decade, covering over 70% of its Group revenue. These renewals not only bolster financial stability but also mitigate risks associated with power prices and foreign exchange fluctuations.
IHS Holding Limited (NYSE:IHS) remains committed to improving financial performance through disciplined cost control and capital expenditure (CapEx) optimization. Furthermore, the company is also leveraging artificial intelligence (AI) and advanced technologies to streamline operations and reduce costs. These efforts aim to enhance profitability and drive increased adjusted levered free cash flow.
Overall IHS ranks 6th on our list of the stocks under $5 with biggest upside potential. While we acknowledge the potential of IHS 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 time frame. If you are looking for an AI stock that is more promising than IHS 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.