We recently compiled a list of 10 Best Stocks Under $15 To Buy Now. In this article, we will look at where Roivant Sciences Ltd. (NASDAQ:ROIV) 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).
Roivant Sciences Ltd. (NASDAQ:ROIV)
Number of Hedge Fund Holders: 62
Share Price as of the close of September 27: $11.48
Roivant Sciences Ltd. (NASDAQ:ROIV) is a healthcare company focused on developing innovative medicines and technologies to treat patients. It is the best stock under $15 to buy now, with 62 hedge funds having investments in the company, according to Insider Monkey’s database, as of Q2 2024.
The company showcased substantial business growth and advancements in its latest earnings call for Q1 FY25. Some of the key takeaways from the quarter included $18.4 million in product revenue for VTAMA, with prescription volumes up 20% year-over-year. The company is also anticipating approvals for the launch of VTAMA in atopic dermatitis by the end of the year.
Roivant Sciences Ltd. (NASDAQ:ROIV) also enrolled for the Phase 3 study of Brepocitinib in dermatomyositis in Q2. This is a drug that treats plaque psoriasis. Results of the study are expected during the second half of the year. Moreover, the first FcRn produced by the company has also yielded solid results, generating $1.2 billion in sales in the first year after its launch, indicating strong market demand.
Considering these factors, there is a general bullish sentiment around the stock, with consensus among Street analysts on its Strong Buy rating. They also anticipate a 52% spike in its share price compared to current levels over the next few months, expecting positive results from ongoing drug studies. There is some concern that operating costs may rise with the initiation of new trials, but the company ended Q2 strongly with $5.7 billion in cash and cash equivalents, reflecting a solid financial position.
In September this year, the company struck another hot deal, announcing the sale of its Dermavant subsidiary, along with VMATA treatment, to pharma company, Organon, for $1.2 billion. This amount is likely to help free up further cash for Roivant Sciences Ltd. (NASDAQ:ROIV) to meet its operating and research expenses associated with new drug trials.
Overall ROIV ranks 1st on our list of the best stocks under $15. While we acknowledge the potential of ROIV 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 ROIV 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.