We recently compiled a list of 10 Best Stocks Under $15 To Buy Now. In this article, we will look at where Core Scientific, Inc. (NASDAQ:CORZ) ranks among the best stocks under $15.
While September is usually the toughest month for the stock market, it is delivering solid results this time. Stocks are soaring after the Federal Reserve announced a half-point cut this month to bring interest rates between 4.75% and 5%. This has led to the market racking up records again as investors look to move from riskier investments to stocks, reported CNN.
The broader market marked its 42nd record-high close in 2024 this past Thursday. The index, which has a history of September dips, is on track for a 1.3% gain this month, which will take its quarterly advance close to 5%. The Dow Jones Industrial Average surged 0.4% a day later to reach its 32nd record high for the year after investors received encouraging economic data regarding inflation, which has raised hopes for further interest rate cuts.
According to the Personal Consumption Expenditures Price Index, inflation rose 2.2% in August this year, which marked the lowest inflation rate in the United States since February 2021. Overall inflation in the country is crawling back to the Federal Reserve’s goal of a two percent annual rate. The easing of consumer prices is expected to result in further interest rate cuts to prevent a spike in unemployment rates, say economic experts. This has raised hopes among investors about the American economy returning to solid footing.
However, Fundstrat Global Advisors’ co-founder, Tom Lee, in an interview with CNBC this week cautioned against diving into stocks after interest rate cuts, citing election uncertainty.
This Fed cut cycle I think is setting the stage for markets to be really strong over the next one month or next three months. But, what the stocks do between now and let’s say election day, I think is still a lot of uncertainty. And that’s the reason why I’m a little hesitant for investors to dive in.
In the weeks leading to the cuts, Lee, who is generally bullish on the stock market, warned investors that stocks could fall 10% during the coming eight weeks amid nervousness around the presidential elections, and added that the dip should viewed as a buying opportunity.
Liz Young Thomas, the head of investment strategy at SoFi, has also acknowledged the risk of stock market volatility associated with the presidential elections. While talking to the Business Insider, she noted how thinner trading volumes between June and August, when traders are on summer vacations, drive strong market performance, and the market turns volatile when stock activity picks up after traders return to their desks in September. According to Young Thomas, a two percent shift in share prices has become the norm in September. However, during the election year, volatility peaks around mid-October instead of September, and the market returns to normalcy after the results are announced.
Methodology
We scanned Insider Monkey’s database of 912 hedge funds for the second quarter of 2024 to look for stocks with a share price of under $15 and then picked the top 10 companies with the highest number of hedge funds having stakes in them. We ranked them in ascending order of hedge fund holders in each company. In the case where two or more stocks had the same number of hedge fund holders, we used market capitalization as a tie-breaker and placed the stock having a greater market capitalization at a higher ranking.
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).
Core Scientific, Inc. (NASDAQ:CORZ)
Number of Hedge Fund Holders: 53
Share Price as of the close of September 27: $12.16
Core Scientific, Inc. (NASDAQ:CORZ) is one of the largest digital asset mining services companies in North America, with expertise in data center design and management, blockchain infrastructure, software solutions, and other related services. It is one of the best stocks under $15 to buy now, with 53 hedge funds having a stake in the company, according to Insider Monkey’s database for Q2 2024.
During Q2 2024, the company reported a revenue of $141 million, of which $111 million was generated from digital asset self-mining, while digital asset-hosted mining accounted for $25 million of the share. The company also generated $5.5 million from HPC hosting. While the revenue increased by 11.18% year-over-year, Core Scientific, Inc. (NASDAQ:CORZ) reported a net loss of $805 million, driven by the company having to make adjustments to the value of its equity due to the significant quarter-to-quarter appreciation in share price.
Core Scientific, Inc. (NASDAQ:CORZ) went through bankruptcy toward the end of 2022 and is now emerging with a revamp, as its focus shifts significantly from only being a prominent Bitcoin miner to a broader set of offerings, encompassing AI and HPC infrastructure. As part of these efforts, the company announced that it had entered into an expanded partnership with cloud provider, CoreWeave. Under the contract, Core Scientific, Inc. (NASDAQ:CORZ) will provide CoreWeave with 382 megawatts of computing infrastructure with a potential revenue of $6.7 billion over the coming 12 years.
The strategic deal with CoreWeave will likely significantly contribute to the company’s growth and valuation. Its share price has increased 25% since the announcement of the agreement in August. Street analysts have consensus on the stock’s Strong Buy rating and forecast a further 23% upside in its share price. The success of this ongoing transition to AI and HPC infrastructure, however, is heavily dependent on the timely execution of these projects. Any delays might result in lost opportunities and allow competitors to gain market share in this space.
Overall CORZ ranks 4th on our list of the best stocks under $15. While we acknowledge the potential of CORZ 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 timeframe. If you are looking for an AI stock that is more promising than CORZ 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 on Insider Monkey.