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 Wipro Limited (NYSE:WIT) 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 modern office building with a large sign displaying the companies logo.
Wipro Limited (NYSE:WIT)
Number of Hedge Fund Holders: 11
Share Price as of February 14: $3.63
Market Cap as of February 14: $37.97 billion
Wipro Limited (NYSE:WIT) is a global IT consulting and business process services company. It operates through IT Services and IT Products segments. It offers services like digital strategy, application development, cloud solutions, and business process outsourcing. The IT Services segment serves industries worldwide, while the IT Products segment focuses on the Indian market by providing third-party IT products like enterprise platforms, networking solutions, and security systems.
Its IT Services segment generated $2.63 billion in Q3 2024. This represents a slight 0.1% sequential increase, but a 0.7% decrease year-on-year. However, the company secured $3.5 billion in new bookings, which suggests stronger future performance. It’s now prioritizing large deals, closing 17 such contracts worth $1 billion in Q3. One example that illustrates this strategy is the multi-million dollar, five-year contract with Etihad Airways, announced on January 30, for IT transformation and cost optimization. Wipro Limited (NYSE:WIT) will deploy its FullStride Cloud and integrate GenAI for IT operations with support from its UAE Innovation Lab.
The company is heavily investing in AI, with 50,000 employees now certified in advanced AI, together with ongoing investments in AI tools and platforms. This commitment positions Wipro Limited (NYSE:WIT) to capitalize on the growing demand for AI-related services. For the next quarter, it forecasts IT Services revenue between $2.602 billion and $2.655 billion.
Overall WIT ranks 5th on our list of the best large cap penny stocks to invest in. While we acknowledge the potential of WIT 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 WIT 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.
