We recently compiled a list of 10 Best Stocks Under $15 To Buy Now. In this article, we will look at where Permian Resources Corporation (NYSE:PR) 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).
Permian Resources Corporation (NYSE:PR)
Number of Hedge Fund Holders: 51
Share Price as of the close of September 27: $13.51
Permian Resources Corporation (NYSE:PR) is an oil and gas company headquartered in Midland, Texas. It focuses on the development of crude oil and rich natural gas reserves in the US, with operations primarily focused in the Permian Basin.
During Q2 2024, the company reported a revenue of $1.25 billion, which represented a 100% year-over-year increase. Net income grew a staggering 220% from last year to a total of $235.1 million. EPS for the quarter stood at $0.38, beating forecasts of $0.36 per share. Total oil production also exceeded expectations during the quarter, measured at 153,000 barrels of oil per day and 339,000 barrels of oil equivalent per day.
The robust financial performance was attributed to D&C efficiencies that resulted in accelerated cycle times and improved performances in fields and wells. The company also noted strong results in the gas and NLG segments, driven by an increase in gas processors. Permian Resources Corporation (NYSE:PR) also reported improved cost control measures during the quarter, which brought down well costs to $830 per foot versus the full-year guidance of $860 per foot.
It is one of the best stocks under $15 to buy now, with 51 hedge funds having investments in the company as of Q2 2024, according to Insider Monkey’s database. Permian Resources Corporation (NYSE:PR) has an institutional ownership of 75%, which reflects the stock’s stability. However, this also leaves the company vulnerable to their trading decisions. Recently, there have been some instances of insiders selling a significant stake in the company, which has resulted in some bearish sentiment. This included director, Jeffrey Tepper, who sold 65,000 of his shares in the company in May this year.
Having said that, the overall sentiment around the stock remains bullish. Following the $817 million acquisition of Oxy in July, which comprises the Barilla Draw assets and 2,000 acres in Eddy County, Permian Resources Corporation (NYSE:PR) expects strong momentum to continue. It has raised its full-year guidance of oil production and now forecasts an additional production of 4,500 barrels of oil per day compared to the initial guidance in February. Considering these factors, most Street analysts are bullish on the stock and have consensus on its Strong Buy rating. They also anticipate an upside of 44% in Permian Resources Corporation (NYSE:PR)’s share price.
Overall PR ranks 5th on our list of the best stocks under $15. While we acknowledge the potential of PR 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 PR 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.
