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 Teva Pharmaceutical Industries Limited (NYSE:TEVA) 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 close-up shot of various types of medicines on a table, illustrating the specialty and generic products offered by the pharmaceutical company.
Teva Pharmaceutical Industries Limited (NYSE:TEVA)
Number of Hedge Fund Holders: 68
Share Price as of September 27: $17.46
Teva Pharmaceutical Industries Limited (NYSE:TEVA) is a prominent player in the global pharmaceutical industry, specializing in both specialty and generic medicines. As of Q2 2024, the company is held by 68 hedge funds, up from 58 in the previous quarter, reflecting growing institutional interest. Teva recently reported strong financial results, surpassing earnings expectations with a non-GAAP EPS of $0.61 against an anticipated $0.57.
The company’s Q2 2024 revenue increased to $4.2 billion, representing 11% year-over-year growth. This robust performance was driven by Teva’s effective execution of its growth strategy, focusing on its four key pillars: delivering on growth engines, stepping up innovation, sustaining its generics powerhouse, and optimizing its business. The adjusted EBITDA for the quarter stood at $1.2 billion, reflecting a 4% rise, while non-GAAP EPS increased by 9%. The solid earnings performance has led Teva to raise its full-year guidance across revenue, EBITDA, and EPS, which is a positive indicator of its financial health.
Teva Pharmaceutical Industries Limited (NYSE:TEVA) revenue growth was broad-based, with all business segments contributing. AUSTEDO, a leading product for the company, recorded 32% revenue growth, generating $407 million. Driven by higher demand and successful product extensions, AUSTEDO’s momentum enabled Teva to increase its annual revenue target for the drug from $1.5 billion to $1.6 billion. AJOVY, another key drug, grew 12% in the European and international markets, reflecting the strength of the company’s innovative portfolio.
The generics segment, a cornerstone of Teva Pharmaceutical Industries Limited (NYSE:TEVA) business, saw a remarkable 14% growth, underscoring its competitive positioning in this space. This performance was supported by new product launches, especially the introduction of SIMLANDI, Teva Pharmaceutical Industries Limited (NYSE:TEVA) biosimilar to Humira, which has gained strong traction since its launch. Additionally, the approval of a biosimilar to Stelara, set for a February 2025 release, adds to Teva Pharmaceutical Industries Limited (NYSE:TEVA) future revenue potential.
Teva Pharmaceutical Industries Limited (NYSE:TEVA) expanding pipeline, which includes promising candidates like Olanzapine and anti-TL1A, indicates a strong outlook for continued innovation and market share gains. With its strategic focus and strong financials, Teva Pharmaceutical Industries Limited (NYSE:TEVA) is well-positioned to deliver sustained value to shareholders, making it one of the best stocks under $50 to invest in now.
Sound Shore Management made the following comment about Teva Pharmaceutical Industries Limited (NYSE:TEVA) in its Q3 2023 investor letter:
“Away from power, drug maker Teva Pharmaceutical Industries Limited (NYSE:TEVA), a new holding, also performed well during the quarter. Teva develops, manufactures and markets generic and specialty drugs focused on neurological and respiratory diseases, as well as oncology. Following a period of poor capital allocation decisions in prior years, we were able to invest at a very attractive valuation. We now believe management has positioned the company for renewed growth, driven by its most promising branded drug pipeline in years. The investment is off to a good start and the stock gained after second quarter results topped consensus.”
Overall TEVA ranks 6th on our list of the best stocks to buy under $50. While we acknowledge the potential of TEVA 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 TEVA 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.
