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 Bumble Inc. (NASDAQ:BMBL) 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).
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Bumble Inc. (NASDAQ:BMBL)
Number of Hedge Fund Holders: 26
Share Price as of October 18, 2024: $7.14
Forward P/E as of October 18, 2024: 7.03
Bumble Inc. (NASDAQ:BMBL) is one of the most affordable stocks under $10 to buy. Bumble Inc. is a social network company behind the popular dating application, Bumble. The platform steps away from traditional dating experiences allowing women to take the first move and feel empowered in doing so.
Users can not only find dates, but they can also find new friends on Bumble for Friends and make career moves on Bumble Bizz. In the second quarter of 2024, the company logged revenue worth $269 million, up by 3%. The Bumble App revenue increased by 5% to reach $218 million. In addition to that, paid users for the Bumble App increased by 15% to reach 2.8 million, and grew by 87,000 quarter-over-quarter. Total paying users for Bumble Inc., on the other hand, reached 4.1 million, compared to 3.6 million in Q2 2023.
Expansion and growth were major goals of the company this year. In May, Bumble Inc. (NASDAQ:BMBL) signed an agreement to acquire a group and community application, Geneva, that connects people based on shared interests. The acquisition is expected to close in the third quarter of 2024 and will boost Bumble’s position on connecting people, especially friends and communities.
Overall, Bumble Inc. (NASDAQ:BMBL) is a cheap stock that has a consistent financial performance and a growing user base. The company’s strategic moves align well with its brand image and the value it aims to bring to customers, contributing to its ranking on our list. According to the Insider Monkey database, 26 hedge funds were bullish on the stock at the close of Q2 2024.
Polen Capital’s Polen Global SMID Company Growth Strategy stated the following regarding Bumble Inc. (NASDAQ:BMBL) in its Q2 2024 investor letter:
“We exited our position in Bumble Inc. (NASDAQ:BMBL), a global leader in the mobile dating app space, due to several Flywheel violations. We initially entered this position roughly two years ago due to the founder-led management team, the robust brand of their key Bumble asset, the opportunity to expand Bumble globally, and the attractive margin and free cash flow profile. Over the last year, the founder has taken a step back from the business into an Executive Chairman role; the COO left to become CEO of another tech start-up, and a new CEO has made several material changes to the general management structure and will be introducing significant changes to the company’s core products. According to management and third-party data, the “swipe” dating apps are struggling to grow downloads in key markets and need a product refresh to reinvigorate growth, perhaps leveraging new Al technologies to enhance user experience and matching capabilities. Together, the new management team and the app “refresh” introduce a level of execution and reinvestment risk that violates our Flywheel. The company remains a leader in the dating space and highly profitable, but we believe it prudent to watch how this business evolves from the sidelines.”
Overall BMBL ranks 3rd among the 10 best affordable stocks under $10 to buy. While we acknowledge the potential of BMBL 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 BMBL 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.
