We recently published a list of 10 Worst Affordable Stocks to Buy Under $10. In this article, we are going to take a look at where Banco Bradesco S.A. (NASDAQ:BBD) stands against other worst affordable stocks to buy under $10.
Will There Be a Small Cap Resurgence in 2025?
On February 18, Chris Clark, Chief Executive Officer, Co-Chief Investment Officer, and Francis Gannon Co-Chief Investment Officer, Managing Director at Royce Investment released their research on Small Cap stocks. The report explored the potential resurgence of small-cap stocks, emphasizing their relatively attractive valuations, promising earnings outlook, and the role of heightened market volatility. The experts highlighted that historically, small-cap stocks have outperformed large-cap stocks over the long term but with higher volatility. However, this advantage has eroded recently, with large-cap stocks dominating performance since 2011. Small-cap growth fared better than value during this period, but 2024 marked the eighth consecutive year of underperformance for small-caps relative to large-caps.
Royce Investment remains optimistic about a small-cap resurgence in the current year. They highlighted that one key factor supporting small-cap leadership is valuation. Small-cap stocks are currently trading at their largest discount to large-caps in over 25 years based on metrics such as enterprise value over earnings before interest and taxes. This valuation disparity is across the board including sectors like Information Technology, Industrials, Financials, and Consumer Discretionary. The report noted that while mega-cap companies may be overpriced, numerous bargains exist within the small-cap universe across diverse industries. These attractive valuations provide a compelling case for small-cap stocks to regain market leadership.
READ ALSO: 10 Best Small-Cap Stocks to Buy Before They Explode and 11 Best Extremely Profitable Stocks to Buy According to Analysts.
Moreover, earnings growth prospects further enhance the case for small caps. Consensus estimates for 2025 project an 89.3% earnings-per-share growth for the Russell 2000 index compared to 30.9% for the Russell 1000 index. The CEO and CIO of Royce Investment highlighted that while this rebound partly reflects recovery from a two-year earnings recession in small-caps, it underscores their potential for significant growth. Investors should focus on an investment approach that focuses on companies with established earnings histories or clear catalysts for future earnings growth.
The report acknowledged that external factors like tariffs and de-globalization trends may create short-term disruptions. However, the fund sees these developments as opportunities for the US-focused small-cap companies to benefit from reshoring and improved supply chain management. The firm welcomes volatility as it often distracts investors from fundamentals, creating opportunities for active managers to identify undervalued companies with strong long-term prospects.
Our Methodology
To compile the list of the 10 worst affordable stocks to buy under $10 we used the Finviz stock screener, Seeking Alpha, and Yahoo Finance. Using the screener we aggregated a list of stocks trading under $10 with a Fwd P/E under 15 and earnings growth expectations this year. Next, we cross-checked the Fwd P/E and earnings growth for each stock from Seeking Alpha and Yahoo Finance. Lastly, we selected the least popular stocks among hedge funds and listed them in descending order of the number of hedge funds that hold stakes in them, as of Q4 2024. Please note that the data was recorded on March 26, 2025.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A customer withdrawing money from an ATM, illustrating the company’s widespread availability of accounts.
Banco Bradesco S.A. (NASDAQ:BBD)
Price: $2.30
Forward P/E Ratio: 6.51
Earnings Growth This Year: 7.43%
Number of Hedge Fund Holders: 18
Banco Bradesco S.A. (NASDAQ:BBD) is one of Brazil’s largest and most diversified financial institutions, offering a wide range of banking and financial services both domestically and internationally. It is one of the worst affordable stocks to buy under $10.
In February, analysts from Goldman Sachs downgraded the stock from Buy to Sell, reducing the price target from $2.40 to $2. The firm noted that Banco Bradesco (NASDAQ:BBD)’s return on equity is expected to remain below its cost of equity until at least 2027. This indicates that Banco Bradesco is not generating sufficient profits relative to its equity costs, which is a critical metric for evaluating a company’s financial health. Moreover, the bank also lags behind its competitors, in terms of financial performance.
The analyst noted that Banco Bradesco (NASDAQ:BBD)’s profitability is “muted,” meaning it is not strong enough to support robust organic capital generation. This is particularly concerning after a year in which shareholders’ equity remained stable, indicating limited growth in shareholder value.
Overall, BBD ranks 3rd on our list of worst affordable stocks to buy under $10. While we acknowledge the potential of BBD 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 BBD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
