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 Arcadium Lithium plc (NYSE:ALTM) 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 chemist in a laboratory mixing specialty chemicals and materials for research.
Arcadium Lithium plc (NYSE:ALTM)
Number of Hedge Fund Holders: 21
Arcadium Lithium plc (NYSE:ALTM) is a leading global lithium-producing company that was formed after the merger of Allekm and Livent, two major lithium-producing companies, in 2023. The company is involved in the extraction of lithium via hard-rock mining, brine extraction, and Direct Lithium Extraction (DLE). The company also produces battery-grade lithium hydroxide, lithium carbonate and other specialty lithium products, which have essential applications in electric vehicles, primary batteries, greases, pharmaceuticals, polymers, and aerospace.
Arcadium Lithium plc (NYSE:ALTM) posted a successful first quarter achieving $261 million in revenue and $109 million in adjusted EBITDA, reflecting strong performance despite production challenges. The company is also on track to improve its cost savings. Management expects cost savings of $60 to $80 million in 2024, mainly through a reduction in workforce and operating expenses. What truly sets Arcadium Lithium plc apart from its competitors is its robust portfolio of lithium products emerging from the merger of two established lithium players.
Arcadium Lithium plc (NYSE:ALTM) is on track to capitalize on the increase in demand for lithium arising from electric vehicles. Global sales of EVs were up by 20% during the first quarter, moreover, as per the IEA’s figures, the number of EVs sold in the first quarter of 2024 alone was equal to the total number of EVs sold in 2020. With almost three-quarters of Arcadium Lithium plc’s (NYSE:ALTM) total revenue coming from its lithium hydroxide and lithium carbonate businesses, the global nature of its operations puts it in a sweet spot to capitalize on the growing demand for lithium products. ALTM is an investors’ favorite and was held by 21 hedge funds in Q1 2024, with total stakes worth $66.786 million. Analysts are also bullish on the stock and see a 50% upside from current levels.
Overall ALTM ranks 6th 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 ALTM 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 ALTM 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.