We recently compiled a list of the 8 Best Stocks Under $50 To Invest In Now. In this article, we are going to take a look at where Intel Corporation (NASDAQ:INTC) stands against the other stocks under $50.
As we navigate through 2024, the economic landscape presents a mix of challenges and opportunities for investors. Recent economic indicators suggest a cautious yet resilient consumer base, even as the Federal Reserve has issued its first interest rate cut since 2020. The current financial environment reflects a deliberate balancing act by the Fed, aimed at achieving a “soft landing” for the economy—taming inflation without triggering a recession. This approach has significant implications for the stock market, particularly for stocks priced under $50, which often represent a combination of risk and reward for discerning investors.
According to Gregory Daco, Chief Economist at EY-Parthenon, the U.S. economy is showing signs of gradual downshift. Both consumers and businesses are displaying a more prudent approach to spending, influenced by a tightening labor market and rising costs. The latest data revealed a moderate job growth of 142,000 in August, but this was overshadowed by significant downward revisions in payroll figures, indicating a potential softening of employment conditions. Despite these headwinds, Daco remains optimistic, projecting that real GDP growth will average 2.7% in 2024, easing to 1.8% in 2025.
In terms of consumer behavior, the retail sector has shown resilience, with spending continuing, albeit at a more cautious pace. Daco notes that while consumers are not significantly retracting their expenditures, slower growth in disposable income could lead to more restrained spending patterns moving into 2025. He forecasts consumer spending growth to decelerate, averaging 2.5% in the fourth quarter of 2024 before dipping to 2% in 2025.
Inflation is another key factor influencing the economic outlook. The August Consumer Price Index (CPI) report indicated a noticeable acceleration in disinflation, with the headline CPI inflation decreasing to 2.5% year-over-year—the lowest rate since February 2021. This trend, however, must be interpreted cautiously, as core CPI inflation remained stable at 3.2%, signaling persistent inflationary pressures in certain sectors, notably housing. Nevertheless, Daco anticipates a continuing decline in both headline and core inflation, projecting rates of 2.2% and 2.9%, respectively, by the fourth quarter of 2024.
The Fed’s recent decision to cut interest rates by 50 basis points reflects its commitment to recalibrating monetary policy without resorting to drastic measures that could harm growth. Powell’s remarks underscore a careful approach to policy adjustments, with expectations of additional rate cuts in November and December. Overall, this easing cycle is expected to facilitate a more sustainable economic trajectory heading into 2025.
As the broader economic picture unfolds, the S&P 500 index has performed remarkably well, currently up approximately 20% year-to-date and approaching record highs. This surge is indicative of market sentiment that is cautiously optimistic about the potential for a soft landing. However, analysts have expressed concerns that current stock valuations might be overestimating economic stability, particularly in light of recent weaker-than-expected jobs reports.
Looking ahead, investors are particularly focused on upcoming labor market data, which will play a crucial role in shaping perceptions of the economy’s trajectory. The forthcoming employment report is critical, as it could either bolster confidence in the market’s current valuation or prompt a reevaluation of growth expectations. With a significant portion of the market priced for a “Goldilocks scenario”—where growth continues without significant inflation—the stakes are high for upcoming economic indicators.
Investors looking for value must consider a range of factors, including company fundamentals, market positioning, and broader economic trends. The careful selection of stocks in this category could not only mitigate risks associated with volatility but also capitalize on potential growth as the economic landscape stabilizes.
In summary, as we delve into the best stocks under $50 to invest in now, it is essential to keep an eye on the evolving economic indicators and consumer behavior. These elements will play a crucial role in determining which stocks can deliver value in an environment characterized by cautious spending, shifting monetary policy, and varying inflation rates.
Our Methodology
For this article, we identified 20 stocks trading on the NYSE and NASDAQ for under $50 per share as of September 27. Next, we examined Insider Monkey’s data on 912 hedge funds as of Q2 2024. We narrowed down our list to 8 stocks most widely held by institutional investors and ranked them in ascending order of the number of hedge funds that have stakes in them as of Q2 of 2024.
At Insider Monkey we are obsessed with 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 technician soldering components for a semiconductor board.
Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Share Price as of September 27: $23.91
Intel Corporation (NASDAQ:INTC) is a leading player in the semiconductor industry, known for its innovative technologies and robust product portfolio. Despite reporting earnings per share (EPS) of just $0.02 for Q2 2024, falling short of the expected $0.1008, the company is poised for significant long-term growth driven by strategic investments and operational efficiencies. The current number of hedge fund holders stands at 75 as of Q2 2024, slightly down from 77 in the previous quarter, reflecting a stable investor interest in the company amidst market volatility.
Intel Corporation (NASDAQ:INTC) management, led by CEO Pat Gelsinger, has outlined a proactive approach to improving profitability and capital efficiency. The company aims to achieve over $10 billion in cost savings by 2025 through a combination of operational adjustments and a significant reduction in spending, which is expected to lower operating expenses (OpEx) to approximately $20 billion in 2024. This cost-reduction strategy is vital as Intel transitions to a new operating model that separates financial reporting for its products and foundry services, allowing for greater transparency and focused resource allocation.
Moreover, Intel Corporation (NASDAQ:INTC) strategic investments in artificial intelligence (AI) and advanced semiconductor technologies position it well for future growth. The introduction of the AI PC category is set to accelerate market demand, with expectations that AI PCs will comprise more than 50% of the market by 2026. The upcoming launch of Panther Lake, Intel’s first client CPU using the 18A process, is anticipated to further enhance performance and profitability.
Financial metrics support a bullish outlook as well. Intel’s targeted capital expenditures (CapEx) for 2024 are expected to range between $25 billion and $27 billion, reflecting a 20% reduction from previous plans. This smart capital strategy will not only drive cost efficiencies but also pave the way for sustained growth in revenue and market share. Additionally, the anticipated launch of Xeon 6 and the innovative Gaudi 3 accelerator will strengthen Intel Corporation (NASDAQ:INTC) competitive position in the data center and AI markets.
In summary, while Intel’s short-term earnings miss may raise concerns, the company’s aggressive restructuring efforts, substantial cost-saving measures, and strategic focus on high-growth markets present a compelling investment case. The fundamentals of the business, coupled with a commitment to long-term shareholder value, indicate that Intel Corporation (NASDAQ:INTC) is well-positioned to navigate challenges and capture future opportunities.
Overall INTC ranks 3rd on our list of the best stocks to buy under $50. While we acknowledge the potential of INTC as an investment, our conviction lies in the belief that some 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 INTC 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.