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 Clarivate Plc (NYSE:CLVT) 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 data analyst in front of a computer monitor, analyzing a series of financial trends.
Clarivate Plc (NYSE:CLVT)
Number of Hedge Fund Holders: 27
Share Price as of October 18, 2024: $6.70
Forward P/E as of October 18, 2024: 9.06
Clarivate Plc (NYSE:CLVT) ranks second on our list of the most affordable stocks under $10 to buy. Clarivate is an analytics company that is focused on transformative intelligence. Some of its solutions include enriched data, insights and analytics, workflow solutions, and expert services to several segments including academia, the government, intellectual property, life sciences, and healthcare.
Clarivate Plc (NYSE:CLVT) is expanding its footprint across borders and in AI. Previously in September, the company partnered with TerraSky to help customers in Japan enhance and improve their strategic IP assets. During the same month, the company forged a partnership with Relatable Healthcare, a health tech company that makes Product Relationship Management (PRM) software for medtech companies to manage workflows. The partnership ensures that Relatable’s customers can access competitive intelligence from Clarivate.
In an incredible feat to leverage AI, the company launched a generative AI-powered research assistant, Primo, on September 18. Primo facilitates seamless research for students and researchers alike by providing immediate answers to queries with sources and references.
During the second quarter of 2024, Clarivate Plc (NYSE:CLVT) logged revenue worth $650.3 million. The company is happy with its progress on the innovation front and expects these strategic changes to help it grow. Customers are also immensely satisfied with its product improvement, resulting in higher customer renewals and new customers, which is expected to drive organic growth in the second half of 2024.
Cove Street Capital Small Cap Value Fund stated the following regarding Clarivate Plc (NYSE:CLVT) in its Q2 2024 investor letter:
“We also added a position in Clarivate Plc (NYSE:CLVT), a data services provider that operates across academic research, intellectual property, and life sciences. We came to the investment from cross-work in another holding, Research Solutions (ticker: RSSS). Ultimately this company sucks in data from participants in the industry, aggregates it, and provides value added services and tools back to those industry participants. The power is in providing customers access to the aggregate. This was a private equity roll-up of a bunch of different data assets that paid too little attention to product innovation, leading to a period of stagnating growth and repeatedly missing guidance. The business of selling many tools and services on a pile of fixed cost assets (data) remains tremendous as can be seen by Clarivate’s mid-to-high 30% EBITDA margins and strong returns on invested capital. With new management and board members in place and 18 months of an “investment cycle” under their belt, we view the risk/reward of CLVT to be favorable at these levels, with a strong upside case if they can reinvigorate growth to their target levels.”
Overall CLVT ranks 2nd among the 10 best affordable stocks under $10 to buy. While we acknowledge the potential of CLVT 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 CLVT 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.