We recently compiled a list of 10 Best Stocks Under $15 To Buy Now. In this article, we will look at where Ford Motor Company (NYSE:F) 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).
Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 47
Share Price as of the close of September 27: $10.78
Ford Motor Company (NYSE:F) is an American automobile manufacturer, founded in 1903, that sells commercial vehicles and luxury cars. The company has had inconsistent, volatile returns over the last few years, especially since 2021, due to heavy losses in its EV business unit, inflated warranty costs, and an ongoing labor crisis.
The macroeconomic situation in the United States, with fears of the economy heading into recession, has set a bearish sentiment around the automobile market. Another cause of concern for the industry stems from the United Auto Workers (UAW) strike of 2023, which ended at the expense of a massive price tag to be borne by automakers. Ford anticipates additional costs worth $8.8 billion through mid-2028, with the incremental cost per vehicle rising to $900 by 2028 under the new contract, hurting the company’s EBITDA margins.
However, Ford Motor Company (NYSE:F) has had a solid year so far, fueled by strong sales of its trucks, most notably the Maverick and F-150 series, which have grown more than three times the rate of the overall hybrid segment. The slowing down of the EV market has also allowed the company to focus more on its gas-based vehicles, while simultaneously working on EV developments. In the past, the company was under the pump for its slow pace of transition in the EV sector. That pressure has now cooled off.
During Q2 2024, Ford Motor Company (NYSE:F) reported a revenue of $48 billion, representing a 6% growth year-over-year, and a sequential increase of 12% from the previous quarter. Adjusted EBIT for the quarter was at $2.8 billion, with a margin of 5.8%. The results were attributed to a higher truck volume and the strength of the company’s product portfolio.
Despite a strong quarter, some areas lagged. The Ford Model e reported a loss of $1.1 billion, due to wholesale decline and pressures on pricing in the industry. The company also sees headwinds emerging from inflationary and warranty pressures in Turkiye, which are likely to impact future earnings. These factors have resulted in some bearish sentiment around the stock.
However, the overall outlook for Ford Motor Company (NYSE:F) appears encouraging. The company has revised its full-year adjusted EBIT to $10 billion to $12 billion and has raised its free cash flow guidance from $7.5 billion to $8.5 billion, amid robust earnings during the year and lower than anticipated capital investments. Lastly, its focus on the adoption of software technology is set to drive future growth, with Ford Pro being on track for software and physical services to contribute 20% of Ford’s EBIT by 2026.
According to Insider Monkey’s database for Q2 2024, 47 hedge funds had investments in Ford Motor Company (NYSE:F), making it one of the best stocks under $15 to buy now.
Overall F ranks 8th on our list of the best stocks under $15. While we acknowledge the potential of F 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 F 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.
