We recently compiled a list of the 10 Best Robinhood Stocks Under $20. In this article, we are going to take a look at where Grab Holdings Limited (NASDAQ:GRAB) stands against the other Robinhood stocks.
The market reacted favorably after the Federal Reserve’s June 11-12 meeting. The broader market marked record closes. At the June 12 press conference, Fed Chairman Jerome Powell emphasized the Fed’s focus on its dual mandate of achieving maximum employment and stable prices. While the labor market remains strong with continued job gains and low unemployment, inflation has decreased significantly from its peak but remains above the 2% target, currently at 2.7% and the Federal Open Market Committee (FOMC) believes it’s still high.
Key Developments
The Fed Chairman reported that GDP growth slowed from 3.4% in Q4 of 2023 to 1.3% in Q1 of 2024. However, underlying demand indicated by private domestic final purchases grew at 2.8%. Consumer spending has moderated but remains solid, and investment in equipment and intangibles has improved. Moreover, the labor market is balanced, with job gains averaging 218,000 per month in April and May, and the unemployment rate was at 4%. Inflation, as measured by PCE prices, rose 2.7% over the past year, while core PCE rose 2.8% and the CPI rose 3.3% in May, with the core CPI at 3.4%. Finally, the FOMC decided to keep the federal funds rate unchanged at 5.25% to 5.5% and to continue reducing securities holdings to manage inflation.
Powell emphasized a cautious approach to policy adjustments. The Chairman said that while some progress has been made toward the inflation target, more data is needed to ensure inflation is sustainably moving toward 2%. The Fed will continue to assess economic data and adjust policies as needed to support their dual mandate. He reiterated the commitment to restoring price stability to ensure long-term economic health. The Fed chair noted that the median projection for the federal funds rate by FOMC participants is 5.1% by the end of 2024 if the “economy evolves as expected.” Nevertheless, Jerome Powell highlighted that the projections are not a guarantee and will depend upon the data in the coming months.
The CME’s FedWatch tool reveals that 35.8% of the market expects the interest rates to remain the same in September, 59.2% expect a 25 basis points (bps) reduction, and 5% believe in a 50 bps rate cut. These numbers have risen significantly in favor of rate cuts since we reported them on May 31 in our article about the best up-and-coming stocks.
After a long wait, the Fed has finally hinted at potential rate cuts in September, which brings tons of opportunities in the market. Let’s take a look at some now.
Our Methodology
For this article, we used the app to identify over 100 stocks with a $2 billion market cap that were trading under $20, as of June 12. We narrowed down our list to the stocks with positive hedge fund sentiment, analyst ratings, and optimistic prospects and chose the 10 stocks with the highest number of institutional investors.
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).
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Grab Holdings Limited (NASDAQ:GRAB)
Number of Hedge Fund Holders: 37
Share Price as of June 12: $3.65
Grab Holdings Limited (NASDAQ:GRAB) is a Singapore-based company that provides Southeast Asia’s most dominant super-app through its Grab ecosystems for accessibility to mobility, delivery, and digital financial services.
In its latest quarter, Grab Holdings Limited (NASDAQ:GRAB) showcased an impressive performance with significant top-line growth and bottom-line adjusted EBITDA profitability. The company recorded its ninth consecutive quarter of adjusted EBITDA improvement, mainly credited to the strong consumer activity across Southeast Asia. It expanded its user base to a record high of 38 million monthly transacting users, with a noteworthy increase in order frequency for its on-demand services. Over the last three years, Grab Holdings Limited’s (NASDAQ:GRAB) revenue grew by 56.73% and its net losses have been decreasing significantly. Over the last 12 months, the company’s EPS has improved by nearly 81%. According to Yahoo Finance’s analyst poll, the company will reach a break-even point by the third quarter of 2024 and will yield positive earnings in 2025.
Grab Holdings Limited (NASDAQ:GRAB) dominates eight Southeast Asian countries. According to a Momentum Works report, the company accounts for 55% of the region’s total food delivery platforms gross merchandise value (GMV) and holds a bigger share in the ride-hailing market. WSJ reports that Grab Holdings Limited (NASDAQ:GRAB) covers 63.5% of Indonesia’s ride-hailing market and 47.8% of food delivery. While it is trading at a price-to-sales ratio of 5.8x, which doesn’t make it look cheap compared to its peer average of 1.6x, the company holds a prominent position in emerging markets where it is expected to grow further. Moreover, analysts expect the company to grow its sales by 18% in 2024.
Moreover, Grab Holdings Limited (NASDAQ:GRAB) is hedge funds’ favorite penny stock as 37 hedge funds held stakes in the company in the first quarter, with positions worth $612.785 million. As of the first quarter, Tiger Global Management LLC is the most prominent shareholder of the company. The firm increased its stake by 31% to 66.80 million shares worth nearly $210 million. In addition to hedge funds, analysts also keep a bullish view of the company. Based on the consensus of 25 analysts, Grab Holdings Limited (NASDAQ:GRAB) has a strong buy rating with an average analyst price target of $4.77, showing a 30.7% upside to current levels on June 12.
Overall GRAB ranks 10th on our list of the best Robinhood stocks to buy. You can visit 10 Best Robinhood Stocks Under $20 to see the other Robinhood stocks that are on hedge funds’ radar. While we acknowledge the potential of GRAB 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 GRAB 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.