We recently compiled a list of the 8 Best Large Cap Penny Stocks to Invest In. In this article, we are going to take a look at where Grab Holdings Limited (NASDAQ:GRAB) stands against the other large cap penny stocks.
On February 4, Brian Jacobsen, the chief economist at Annex Wealth Management, joined a discussion on CNBC’s ‘Power Lunch’ to analyze the impact of tariff threats on markets and supply chains. He thinks that large-cap growth is the way to play tariffs. The conversation centered around whether markets are becoming desensitized to tariff talk or if they remain vulnerable due to the ongoing uncertainty. Jacobsen suggested that the truth lies somewhere in between. Markets might be somewhat inured to tariff discussions, but until these tariffs manifest in data, specifically that which affect profit margins, their full impact remains uncertain. He emphasized that investors face a catch-22: with elevated margins across large-cap stocks like those in the S&P 500, there’s concern about whether companies can pass on price increases without compressing profit margins.
Small-cap stocks are particularly vulnerable due to weaker profit margins and less ability to absorb increased costs from tariffs. Historically, during trade tensions like those seen from 2018 to 2019, large-cap growth stocks performed well because many received exclusions from tariffs. Jacobsen speculated that this might happen again if actual tariffs are imposed. For investors navigating this complex environment, he advised sticking to investment fundamentals and focusing on long-term valuations rather than short-term market fluctuations. He emphasized considering margin pressures and adjusting growth expectations accordingly while seeking a margin of safety for investments. So while markets may show some resilience against tariff threats due to past experiences with similar uncertainties, ongoing fears about potential tariffs continue to affect supply chains and investor strategies negatively. Investors should prioritize fundamental analysis over immediate market reactions when making decisions amidst such volatility.
Methodology
We sifted through the Finviz stock screener to compile a list of the top stocks trading between a market cap of $10 billion and $200 billion and at a share price of less than $5. We then selected the 8 penny stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database, which tracks the moves of over 900 elite money managers.
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 customer enjoying the convenience of a mobile financial services transaction.
Grab Holdings Limited (NASDAQ:GRAB)
Number of Hedge Fund Holders: 39
Share Price as of February 14: $4.96
Market Cap as of February 14: $19.64 billion
Grab Holdings Limited (NASDAQ:GRAB) operates a super-app platform across Southeast Asia, which includes Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. Its ecosystem connects driver and merchant partners with consumers, which provides access to mobility, delivery, digital financial services, and enterprise solutions through a single platform.
The company’s Deliveries segment is a powerhouse of growth. In Q3 2024, Deliveries GMV (gross merchandise value) reached $2,965 million, growing by 16% year-on-year. This acceleration from 14% growth in the previous quarter underscores the segment’s strong momentum. The company’s strategic emphasis on affordability and high-value services is attracting a broader customer base. The GrabUnlimited loyalty program continues to drive engagement, with subscribers spending 4x more and exhibiting 3x higher frequency compared to non-subscribers.
Cross-selling between GrabFood and GrabMart is also effective. Mart’s growth, outpacing Food by 1.7x, is boosting overall Deliveries performance. Notably, users who utilize both Food and Mart services demonstrate a 5x higher order frequency and a 2x higher retention rate, highlighting the synergy between these offerings. Grab Holdings Limited (NASDAQ:GRAB) is also actively expanding its merchant services, including facilitating dine-in options and providing advertising solutions. These initiatives not only enhance the platform’s value proposition but also contribute to the Deliveries segment’s growth.
Overall GRAB ranks 1st on our list of the best large cap penny stocks to invest in. While we acknowledge the potential of GRAB as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GRAB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.