We recently compiled a list of 13 Best Growth Stocks Under $10 to Buy. In this article we will look at where Geron Corporation (NASDAQ:GERN) ranks among the best growth stocks under $10 to buy.
After a summer dip, stocks recovered in Q3 2024, setting new records after the quarter. More than 60% of the 500 largest companies’ components outperformed the overall index that covers these stocks in the quarter. The index that tracks the 500 largest companies traded in the US is up more than 20% year-to-date, at record-high levels. Bonds also fared well, helped by declining inflation and the Federal Reserve’s aggressive half-percentage-point drop, which indicated a move away from combating inflation and toward promoting growth. Fed rate reductions boost small-cap companies, industries, and regional banks.
Value and small-cap companies overtook large tech in the major rotation that occurred during the general stock market rally. Subsequently, expensive large-cap growth names lost investor attention, while previously underperforming markets saw strong gains. The consolidation of technology is a positive development, according to King Lip, chief strategist at BakerAvenue Wealth Management. He states that ” “We’re not in a bear market for tech by any means. But you’ve definitely seen some evidence of rotation.”
Nonetheless, in Q3 2024, eight of the 500 largest companies’ eleven sectors outperformed the broader index of these 500 companies. According to Tajinder Dhillon, senior research analyst at LSEG, the Magnificent Seven companies are predicted to raise earnings by almost 20% in the third quarter of 2024, compared with a profit rise of 2.5% for the rest of the 500 largest companies. That disparity is predicted to diminish in 2025, with the remainder of the index expected to raise earnings by 14% for the full year against a 19% rise for the mega-cap group.
The Magnificent Seven “should not have to carry the profit rebound alone,” according to Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, in recent research, providing a soft landing scenario. ” “For the soft landing, we are in the ‘show me’ stage.”
Moreover, soft employment figures helped allay concerns about a recession and modest inflation. Even though the unemployment rate has increased, the overall economic trend points to strong, albeit sluggish, growth. The market is now even more optimistic due to the Fed’s aggressive rate decrease and the likelihood of future rate reductions.
It is anticipated by Morningstar analysts that the “great rotation” away from large-cap tech stocks would continue as Q4 approaches, presenting opportunities in undervalued industries. The financial services, real estate, energy, and healthcare industries are expected to grow as per Morningstar analysts, particularly with the current decline in interest rates.
According to Morningstar analysts, going ahead, the possibility of additional rate cuts and higher government expenditure in this election year should boost markets, but prudence is still advised because lower-income people are still being negatively impacted by continued inflationary pressures. Value stocks and industries with strong prospects for future recovery should be the main focus of investors.
Methodology:
We sifted through holdings of iShares Morningstar Small-Cap Growth ETF to form an initial list of 20 highest-weighted Growth Stocks Under $10 in the ETF. Then we selected the 13 stocks that were the most popular among hedge funds as of Q2, 2024. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. We have used the stocks’ current market cap as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
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)
Geron Corporation (NASDAQ:GERN)
Number of Hedge Fund Investors: 26
Current Market Capitalization: $2.65 billion
A biopharmaceutical company in the clinical stage, Geron Corporation (NASDAQ:GERN) is dedicated to the study and creation of cancer therapies. The company is testing Imelstat, a medication under development, to treat myelodysplastic syndromes, which are blood abnormalities, and myelofibrosis, a rare blood malignancy that affects the bone marrow. Collaboration agreements, milestones, royalties, and license agreements are how the business makes money. Geron Corporation (NASDAQ:GERN) has several rights to this medication. The company only has one business division, which is the creation of oncology treatment products. It is mainly focused on imetelstat, an anti-cancer treatment that is marketed under the Rytelo brand.
As the first telomerase treatment approved by the FDA in June, Rytelo is gaining traction; 160 patients have already started taking it, and 60% of top accounts have been approached. The medication is being quickly embraced by physicians and patients to treat lower-risk MDS, benefiting about 1,320 people in the US.
As a result of the successful U.S. launch of its first commercial product, Rytelo, the revenue generated during Q2 2024 was $882,000, representing an incredible 2,941.38% growth YoY.
The reasons behind the analyst Corinne Johnson’s Buy rating for Geron Corp are the reimbursement innovations made by Rytelo, such as the CMS permanent J-code, which encourages adoption in smaller practices. Johnson anticipates high near-term revenue potential and $1.2 billion worldwide peak sales, which further supports his belief in Rytelo’s commercial success.
In order to preserve its method of use patent, the company applied for a patent term extension that may last until August 2037. The application for marketing authorization in the European Union is one step closer to realizing the goal of commercializing the treatment and broadening its scope. Additionally, the myelofibrosis clinical trial is moving along well.
Peter Kolchinsky’s RA Capital Management is the largest stakeholder in the company from among the funds in Insider Monkey’s database. It owns 46,202,425 shares worth $195.90 million as of Q2.
Overall GERN ranks 8th on our list of Best Growth Stocks Under $10 to Buy. While we acknowledge the potential of GERN 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 GERN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published on Insider Monkey.
