We recently published a list of the 10 Best Low Priced Stocks to Invest in Now. In this article, we are going to take a look at where Peloton Interactive, Inc. (NASDAQ:PTON) stands against the other best low priced stocks to invest in now.
According to a report by Charles Schwab published on December 9, the U.S. economy and stock market are entering 2025 from a position of relative strength, but the risks of volatility, particularly those related to policy, are significantly higher compared to the previous year. This uncertainty is largely driven by the policy proposals of President-elect Donald Trump, whose unconventional governing style and fluid policy positions have made forecasting their impact on domestic and global conditions extremely challenging. The report highlights that Trump’s policy proposals, which include lower taxes and reduced regulations, are generally seen as growth-positive. However, these are offset by proposals for higher tariffs on imported goods and mass deportations of illegal immigrants, which are generally considered stagflationary, at least in the short term.
In terms of the stock market, the report suggests that while equities can perform well from the beginning to the end of the year, the volatility is likely to be higher in 2025 compared to 2024. The S&P 500 is currently above its 50 and 200-day moving averages, which historically has been a positive indicator for future performance. However, the report cautions that after a year with 57 record highs, the median gain in the following year has historically been around 5.8%, suggesting a potential for a step back in performance. The report also notes that the S&P 500’s 5-year normalized P/E ratio is quite stretched, indicating a product of market enthusiasm but not necessarily a near-term risk.
For small caps, the report notes that the Russell 2000 has struggled in the current bull market due to higher interest rates and weaker profit profiles. The report suggests that profitable small caps could perform well if economic growth holds and the Fed takes a gradual approach to rate cuts, but the index as a whole might continue to face challenges if earnings growth does not improve.
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U.S. Stocks in 2025: Growth, Risks, and Opportunities
In an interview with Bloomberg on December 24, Jonathan D. Corpina, Senior Managing Partner at Meridian Equity Partners, discussed his outlook for U.S. stocks in 2025. Corpina noted that the market is finishing the year strong, supported by a resilient economy and key events such as the election and rate cuts being out of the way. He believes that the market will continue to move higher in 2025, though it will take a few quarters for the new administration to implement new policies and procedures.
Corpina also addressed investor expectations for strong double-digit earnings growth for S&P 500 companies, suggesting that while the bar is set high, it’s important to manage expectations. He emphasized that the economy remains fragile, and companies are still adjusting to the new environment and administration. He advised a cautious approach, noting that there are many uncertainties that could impact the market in the coming year. On the U.S. financial sector, Corpina is optimistic. He anticipates a lot of M&A activity and IPOs in 2025, driven by a pro-business administration.
While the U.S. economy and stock market are entering 2025 with a foundation of relative strength, the landscape remains fraught with uncertainty.
A group of people in a fitness class with connected fitness products in a studio or gym.
Our Methodology
To compile our list of the 10 best low priced stocks to invest in now, we used Finviz and Yahoo stock screeners to find the 50 largest companies trading below the price of $10 as of December 24. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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).
Peloton Interactive, Inc. (NASDAQ:PTON)
Number of Hedge Fund Investors: 35
Stock Price as of December 24: $9.36
Peloton Interactive, Inc. (NASDAQ:PTON) is a leading connected fitness company known for its premium exercise equipment, including stationary bikes and treadmills, and subscription-based digital fitness content. The company’s clients range from fitness enthusiasts to professional athletes who value convenience and immersive workout experiences. Peloton Interactive, Inc.’s (NASDAQ:PTON) flagship products include the Peloton Bike, Bike+, Tread, and various fitness accessories.
Peloton Interactive, Inc. (NASDAQ:PTON) is investing in marketing, product, and content innovation to drive long-term growth. The company is focusing on improving customer acquisition costs (CAC) and lifetime value by enhancing customer engagement through personalized plans and social features. Recent software updates, such as personalized workout plans and private teams, are designed to drive higher engagement and retention. Peloton Interactive, Inc. (NASDAQ:PTON) is also testing new app offerings, such as Strength+, and game-inspired fitness experiences to keep the content fresh and engaging. These innovations are crucial for attracting new audiences and retaining existing members.
Peloton Interactive, Inc. (NASDAQ:PTON) is exploring strategic partnerships and new market opportunities to expand its reach and enhance its offerings. The company is also testing new hardware and software features, such as the used equipment activation fee, to increase the lifetime value of customers who join through the secondary market.
Overall, PTON ranks 7th on our list of best low priced stocks to invest in now. While we acknowledge the potential of PTON to grow, 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 PTON 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.
