We recently compiled a list of the 10 Best Stocks Under $100 To Invest In. In this article, we are going to take a look at where Cisco Systems, Inc. (NASDAQ:CSCO) stands against the other best stocks under $100.
Wall Street experts believe that mid-cap stocks might be well-placed for a strong run-up. As per Ryan Detrick (Chief Market Strategist at Carson Group), historically, midcaps outperform once the US Fed actually initiates cutting rates. According to him, the small and mid-caps are expected to surge up to 20% over the upcoming 12 months, far exceeding the large-cap counterparts.
Furthermore, Goldman Sachs believes that mid-caps outperform large- and small-cap stocks over the 12 months after the first rate cut. As market experts continue to expect a soft landing, the investors might look for other options apart from the biggest companies.
What Happened in Q3 2024 and What to Expect in Q4 2024?
As per the earnings sight report from FactSet dated 1st November, the S&P 500 continues to report mixed results. The Q3 remained strong for risk assets and safe havens, with the US markets delivering an all-time closing high to finish Q3 and bonds posting positive returns, as per JPMorgan Asset Management. Overall, the S&P 500 gaining for 4th straight quarter (making 18 new highs), and the US Treasuries and corporate bonds rallying with the decline in yields dominated much of the movements in Q3 2024. The asset management firm also added that gold saw its biggest gain since Q1 2016 (thanks to the expectations of faster rate cuts) and China’s stimulus supported equity market returns.
What is expected for Q4 2024 now? JPM believes that positive expected earnings growth, cooling inflation, easing policies of central banks, and firm job creation should help create a strong backdrop for risk assets. Wall Street analysts believe that mid-caps might be in a position to see strong growth moving forward.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Outlook for Mid-caps
As per BofA’s Jill Carey Hall, mid-caps can be considered as the “best hedge” for the near term.
According to Hall, the mid-caps have experienced better recent guidance and revision trends and have also surpassed the small caps on average in the downturn scenarios. Mid-caps can also act as a hedge against fewer-than-expected rate cuts, considering that small caps are rate-sensitive.
According to Goldman’s Jenny Ma, the start of the rate-cut cycle remains a potential source of incremental equity demand and a boost to broader investor risk sentiment. Moreover, over the short term, mid-cap performance as compared to other segments is expected to be dependent on the strength of economic growth data, along with the pace of the easing cycle.
As per Wells Fargo, mid-cap growth stocks are technically oversold as of now. Despite this, these stocks have a significant scope to outperform. It also added that stability in their earnings, risk, liquidity, and balance sheet appear to be more attractive as compared to small caps.
With these trends in mind, let’s take a look at the 10 Best Stocks Under $100 To Invest In.
Our Methodology
To list the 10 Best Stocks Under $100 To Invest In, we first used a screener to extract stocks trading under $100. Next, we narrowed our list by selecting the ones having high hedge fund holdings. Finally, the stocks were arranged in the ascending order of their hedge fund sentiments, 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).
An index provider revealing the investment strategy and assets of a company.
Cisco Systems, Inc. (NASDAQ:CSCO)
Stock Price as of November 6: $57.87
Number of Hedge Fund Holders: 61
Cisco Systems, Inc. (NASDAQ:CSCO) is engaged in designing, manufacturing, and selling Internet Protocol-based networking and other products associated with the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China.
Wall Street believes that Cisco Systems, Inc. (NASDAQ:CSCO)’s portfolio is well-positioned to benefit from trends focused on hybrid work and hybrid cloud environments. The company offers the most comprehensive suite of capabilities throughout converging networking and security markets. Therefore, its competitive advantage stems from the customer switching costs, which should help it in the long term. Cisco Systems, Inc. (NASDAQ:CSCO) continues to place its strategic focus on AI, Cloud, and Security as key growth areas.
Experts remain optimistic about the company’s acquisition of Splunk, a move targeted at enhancing its observability and security portfolios. Cisco Systems, Inc. (NASDAQ:CSCO) has been shifting from a product-centric to a platform-centric approach, primarily in security and observability. This transition should help simplify the customer experience and might lead to higher sales opportunities.
With the networking industry seeing significant changes due to AI and cloud computing trends, Cisco Systems, Inc. (NASDAQ:CSCO)’s commitment to ethernet over InfiniBand should place it well in the evolving market landscape. AI-related networking demand, mainly from sovereign nations and cloud providers, should fuel modest multiple expansion for the company.
The London Company, an investment management company, released a Q3 2024 investor letter. Here is what the fund said:
“Exited: Cisco Systems, Inc. (NASDAQ:CSCO) – Sale reflects slowing growth prospects and risk of value-destroying M&A. Valuation of the shares is attractive, and CSCO offers a 3.3% dividend yield at the current price, which makes it a more attractive holding for our Income Equity portfolio.”
Overall, CSCO ranks 9th on our list of the best stocks under $100 to invest in. While we acknowledge the potential of CSCO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than CSCO 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.
