We recently compiled a list of the 10 Best Affordable Stocks Under $10 to Buy. In this article, we are going to take a look at where BGC Group, Inc. (NASDAQ:BGC) stands against the other affordable stocks under $10 to buy.
The Rate Cut Debate Continues
The Fed commenced its easing cycle, however, the debate stands. Investors and analysts alike are fixated on what the Fed’s path will look like before the year comes to a close. On October 16, Seema Shah, Principal Asset Management’s chief global strategist, appeared in an interview on Yahoo Finance to discuss her rate cut expectations and thesis on the equity market.
Shah emphasizes that while the jobs report was strong, the data upholds an element of seasonality and volatility. She adds that it’s important that these numbers alone are not blown out of proportion or extrapolated to predict the Fed’s cycle. While she acknowledges that labor demand has been sluggish, she believes that the trends have not been as concerning so far.
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In addition to that, while the US economy has been sluggish, it is not showing signs of decline, indicative of the fact that a normalization process is underway. Shah believes a 25 basis point cut in November and December would be the most ideal situation. She adds that the Fed’s path is pretty clear for now and uncertainty will start to come in by mid-2025.
Strong Fundamentals are Key to Equities
People have kept aside cash for quite a while now, and like other investors and analysts, Seema Shah also sheds light on the situation and hints at risk assets becoming popular. Shah shares that there is approximately $6.6 trillion sitting in money market funds right now and she does not expect all of it to move to equities. In fact, part of the money sitting in cash will be used by people to create safety nets for themselves.
She adds that investors who had moved their investments into safe spaces during a period of high interest rates are more likely to move out their cash to other investment places as interest rates start to go down. With a soft landing in sight, Shah shares stocks are in a sweet spot, especially because the upside to equities is growing.
Overall, equities boast a continued upside, not as high as 2023, but solid regardless. The upside to equities is going to be primarily driven by fundamentals, especially earnings. Moreover, during growth periods, the market broadening out to other sectors is key, which has been the case for 2024. Since fundamentals are crucial at the moment, we have compiled a list of cheap stocks with strong fundamentals and solid earnings growth expectations. Let’s take a look at the 10 best affordable stocks under $10 to buy.
Our Methodology
To come up with the 10 best affordable stocks under $10, we studied stocks on the Finviz Stock Screener with a Forward P/E of under 15 and a share price of less than $10. We then examined the hedge fund sentiment of each stock and picked the most popular ones. Our list is in ascending order of the number of hedge fund holders 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 modern office building, showcasing the industry leading finance and taxation services provided by the company.
BGC Group, Inc. (NASDAQ:BGC)
Number of Hedge Fund Holders: 33
Share Price as of October 18, 2024: $9.49
Forward P/E as of October 18, 2024: 10.20
BGC Group, Inc. (NASDAQ:BGC) is one of the best affordable stocks under $10 to buy. The financial services company provides various services including trade execution, broker-dealer services, clearing, and processing. The company offers more than 200 financial products to banks, broker-dealers, investment banks, trading firms, governments, property owners, real estate developers, and investment firms.
BGC Group, Inc. (NASDAQ:BGC) is making good use of technology to enhance its offerings. Since 1998, the company has spent over $1.7 billion on technology. These technologies are focused on meeting the complex needs of BGC’s customers and enhancing efficacy across all its verticals.
In the second quarter of 2024, the company generated revenue worth $550.8 million, up 11.7% year-over-year. The company’s revenues were driven by improving operability and growth across different segments and geographically. Most of its segments reported double digital growth in revenues, namely ECS (Energy, Commodities, and Shipping), Foreign Exchange, and Credit.
Overall, BGC Group, Inc. (NASDAQ:BGC) has significant growth potential as it expands into new high-growth markets and improves internal business efficacy. The company is an affordable stock and we say that because it is trading at a forward P/E of 10, a discount of 21% from the sector median. Analysts polled by Yahoo Finance expect the stock to grow its earnings by 13.4% this year.
O’keefe Stevens Advisory stated the following regarding BGC Group, Inc. (NASDAQ:BGC) in its Q3 2024 investor letter:
“BGC Group, Inc. (NASDAQ:BGC) – After a long-awaited arrival, the FMX Futures Exchange launched on September 24th. Years of expenses flowing through BGC’s financials without offsetting revenue are reversing. While we are keenly aware of the ramp-up period from 0 volume to market share gains provided by the CME, FMX’s compelling offerings are anticipated to gain market share slowly. In addition, per BGC’s standard practice, announced revenue and pre-tax income will come in at the high end of management’s guidance.
Uncertainty is BGC’s best friend. Entering 2024, rate cut expectations of 150bps reflected optimism around the aggressive and dramatic decline of rates. In September, a 50bps cut marked the first rate cut since 2020 and the reversal after 2.5 years of interest rate hikes. Officials target a range of 4.25-4.50% by the end of this year, which signals two quarter-point rate cuts or one half-point cut. For 2025, they expect to cut four more times, bringing their Fed Funds rate to 3.25-3.5%. We are unconvinced the higher inflation experienced in recent years is over, putting these rate-cut expectations at risk. For BGC, whether we experience 50 bps cuts or 150 bps, conflicting economic data points will continue driving record volumes. With one sell-side analyst covering the name, this stock continues to trade under the radar and remains a core holding.”
Overall BGC ranks 1st among the 10 best affordable stocks under $10 to buy. While we acknowledge the potential of BGC 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 BGC 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.