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 Tetra Technologies, Inc. (NYSE:TTI) 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).
A technician in a jumpsuit working on a pumping system in an oil and gas well.
Tetra Technologies, Inc. (NYSE:TTI)
Number of Hedge Fund Holders: 23
Tetra Technologies Inc. (NYSE:TTI) is an energy services company that helps oil and gas companies with the fluids and water management needed for drilling and maintaining oil and gas wells. The company operates through two main business segments, the Completion Fluids & Products Division and the Water & Flowback Services Division.
Tetra Technologies Inc. (NYSE:TTI) manufactures and sells clear brine fluids, additives, and other related products and services to oil and gas well drilling companies under its Completion Fluids & Products Division. They also produce liquid and dry calcium chloride and ultra-pure zinc bromide under the same segment and market it to battery technology companies in the United States and internationally. On the other hand, the Water & Flowback Services Division segment offers water management services including frac flow back, production well testing, and other related services to onshore oil and gas operations.
What makes Tetra Technologies Inc. unique is its ability to capitalize on offshore and deepwater activities. The company’s adjusted EBITDA grew by 11% year over year to $22.8 million in Q1 2024, mainly driven by strong Completion Fluids & Products adjusted EBITDA margins of 28.1% and 15 offshore deepwater operations that the company serviced during the quarter. The company has also been working in the TETRA CS Neptune family of novel completion fluids, which is an environment friendly and cost-effective alternative to zinc brines. The demand for high-value bromine-based Completion Fluids that include TETRA CS Neptune has increased globally. Therefore, the company has made strategic investments in the Gulf of Mexico, Brazil, and the North Sea, which will grow the company’s CS Neptune pipeline further. In addition, the company’s TETRA PureFlow ultra-pure zinc bromide, which is used for stationary battery and energy storage applications, gives Tetra Technologies Inc. a competitive edge in the global transition towards renewable energy and presents an opportunity for revenue diversification.
Is TTI presenting an attractive entry point? The stock is currently trading at 13 times its forward earnings estimates, a 65.54% discount to its 5-year average. Moreover, analysts expect the company to grow its EPS by 11.5% this year. On the Street, 6 analysts hold a Buy opinion on TTI and their 1-year median price target of $7.50 implies an upside of 99.47% from current levels.
Overall TTI ranks 4th 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 TTI 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 TTI 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.
