We recently compiled a list of the 10 Best Penny Stocks To Buy According to the Media. In this article, we are going to take a look at where Sabre Corporation (NASDAQ:SABR) stands against the other penny stocks.
Penny stocks are those that trade below the price of $5. These stocks represent companies with smaller market capitalization, high risk, and high volatility. Risk-tolerant investors find potential for above-average returns in penny stocks, however, investing in these stocks requires caution and care.
Expected Trends for Small Cap Stocks
On July 17, Chris Retzler, Needham’s small-cap growth portfolio manager, appeared on CNBC where he expressed optimism for the small-cap companies and suggested that we are in a cycle that will prove to be good for many small-cap companies. The Russell 2000 index jumped 3.5% higher on the July 16, hitting the highest levels since January 2022, and was up more than 10% in the previous week. This was one of the biggest rallies investors have seen in the past 4 years.
Retzler believes that small cap stocks have been waiting for a drop in inflation and interest rate cuts. With inflation easing, interest rates are expected to go down as well. He also sees the market broadening, with small companies that have underperformed benefiting from a drop in inflation.
Retzler agrees with Fundstrat’s Tom Lee’s, who sees the Russell 2000 gaining 40% by the end of summer. He believes that the liquidity of small cap companies gives them an edge as it does not take a lot of money to push the stock prices higher, and some expansions by these companies followed by lower interest rates can prove to be good for Russell 2000 companies. We have discussed Tom Lee’s views on how favorable current market conditions are for small-cap companies in 10 Best NASDAQ Penny Stocks To Invest In.
Moreover, Ryan Detrick, who is the Chief Market Strategist at Carson Group also presented his bullish thesis for small and mid-cap companies. He believes that small and mid-cap are going to lead the market in the second half of the year. While addressing the earnings capability of these companies, Detrick said small-cap companies will outperform large-cap companies in 2025 and 2026. As per estimates, S&P 600’s earnings were 4.1% in 2024, whereas S&P 500 earnings were 12.7%. However, moving forward analysts expect S&P 600’s earnings to be at 17.7% in 2025, surpassing estimates of 14.2% for the S&P 500. Detrick believes small-cap stocks now look cheap, economic conditions are favorable, and any interest rate cuts that come along the way will further benefit them.
Now that we’ve discussed what experts think about small caps, let’s now look at the 10 best penny stocks to buy according to financial media.
Our Methodology
To compile our list of the best penny stocks to buy according to media, we aggregated 50 plus penny stocks from financial media websites on the internet. We then selected the top 10 penny stocks that were the most widely held by hedge funds, as of Q1 2024. The list is in ascending order of the number of hedge funds holders in each stock.
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).
An international traveler consulting the company’s app on their smartphone, illustrating their successful online marketplace.
Sabre Corporation (NASDAQ:SABR)
Number of Hedge Fund Holders: 23
Sabre Corporation is one of the three major global travel distribution companies, which connect travel agencies and users to various hotels, flights, rental car options and other travel-related facilities. The company operates through two main segments: Travel Solutions and Hospitality Solutions. The travel solutions segment offers a B2B travel marketplace that brings together airlines, hotels, and travel agencies to make it easier for people to book and plan their travel. The segment also provides a portfolio of Software as a Service (SaaS) and other software technologies to airlines and travel suppliers to effectively manage reservation systems, commercial operations, and agency and data intelligence solutions. The Hospitality Solutions segment provides software and technology solutions to hotels and hotel chain managers so they can better serve their guests thereby making the overall hotel booking experience easier for travelers.
SABR is one of the best penny stocks to buy now and we say this because it was held by 23 hedge funds at the close of the first quarter of 2024 with stakes worth $126.147 million. The company posted a Q1 this year, with revenue increasing 5% year over year to $784 million and adjusted EBITDA increasing by 145% to $142 million. The growth in revenue and the adjusted EBITDA was mainly due to management’s adherence to its growth strategies which drove higher average booking fees, cost structure improvements, and a strong gain in air share and hotel distribution. Sabre Corporation (NASDAQ:SABR) increased its air distribution industry share by 0.6 pts year over year and grew its total distribution bookings by 2% during the same period to 98 million.
Should you invest in SABR? Here’s the conclusion: In addition to the strong performance of Sabre Corporation (NASDAQ:SABR) concerning its strategic priorities to cut cost base and achieve technological transformation, the company has been able to land successful strategic partnerships. The company has signed key deals with Etraveli Group and W2M to expand its platform with 20 new airline partners. Moreover, within the Airline IT segment, the company has secured recent agreements with Aegean Airlines and Air Serbia. These companies will adopt Sabre’s SabreSonic software platform to better manage their inventory and network. With these strategic partnerships, overall cost-cutting focused management, and technological transformation, Sabre Corporation is set to capitalize on the rebound in global traveling. On the Street, five Wall Street analysts hold a Buy opinion on SABR.
Overall SABR ranks 5th on our list of the best penny stocks to buy according to the media. You can visit 10 Best Penny Stocks To Buy According to the Media to see the other penny stocks that are on hedge funds’ radar. While we acknowledge the potential of SABR 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 SABR 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.