In this article, we will look at the 8 Cheap Penny Stocks to Buy Right Now. Let’s look at where Banco Bradesco S.A. (BBD) stands against other cheap penny stocks.
The economy of the United States has stabilized, with inflation continuously cooling down and the risk of recession overruled. The Federal Reserve cut interest rates on September 18, slashing them by half a point as a start to its first easing cycle in four years. The Federal Reserve statement said:
“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.”
However, Fed Chair Jerome Powell announced on September 30 that the recent aggressive half-percentage point interest rate cuts should not be interpreted as a sign that future rate cuts would also be as aggressive. Instead, they are likely to be smaller. Talking to the National Association for Business Economics, he said:
“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course. The risks are two-sided, and we will continue to make our decisions meeting by meeting.”
Powell expressed confidence in the country’s economic strength, claiming that inflation is expected to continue cooling. He also indicated that if the economic data shows consistency in the coming days, two more rate cuts would likely materialize in 2024. These, however, are expected to come in smaller quarter percentage point increments. This trend goes against market expectations for more aggressive cuts and easing.
During a Q&A session after his speech in Nashville, Tennessee, he said that:
“This is not a committee that feels like it’s in a hurry to cut rates quickly. If the economy performs as expected, that would mean two more rate cuts this year, a total of 50 [basis points] more.”
Sustainable Growth Expected in Small Caps Amidst Market Shifts
On July 26, Nathan Moser, Managing Director and Senior Portfolio Manager at Impax Asset Management, discussed some long-term possibilities for small-cap stocks on Schwab Network. Talking about the recent changes in small stocks, he discussed the positive shift and noted that the recent rise in small caps appears more sustainable after years of struggle. This trend is primarily driven by strong inflows into ETFs and passive investment vehicles.
Despite short-term volatility, Mooser believes the market’s current move could last for years. He thus encouraged buying on market dips, while highlighting the need to focus on profitable, high-quality companies due to the potential risks typically associated with lower-quality stocks in small caps.
Our Methodology
We first consulted stock screeners from Finviz and Yahoo Finance to create an initial list of 15 publicly traded penny stocks with forward P/E ratios of less than 15 as of October 1, 2024. From this list, we selected the 8 stocks with the highest number of hedge funds holders as of Q2 2024, and used that as our ranking metric. The stocks we identified are profitable, have positive EPS growth, and are expected to remain profitable in the future as well.
Why are we interested in 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).
8 Cheap Penny Stocks to Buy Right Now
Banco Bradesco S.A. (NYSE:BBD)
Share Price: $2.69
Forward P/E: 8.54
EPS Growth This Year: 9.40%
Number of Hedge Fund Holders: 20
Formerly known as Banco Brasileiro de Descontos SA, Banco Bradesco (NYSE:BBD) is a public company based in Brazil that engages in the Banking Services Industry Group. It operates as a wide-ranging commercial bank in terms of credit operations, total assets, and the volume of funding and deposits. It boasts a broad range of banking and financial services and products for key national and international institutions, companies, and individuals in Brazil and abroad.
The bank is on the path to solid and safe profitability growth. It expanded its portfolio in all segments, including the wholesale bank. Overall, Banco Bradesco (NYSE:BBD) is growing in line with the market, experiencing improvement in NPL in all segments. It also posted growth in the coverage ratio, and its operating expenses are growing in line with its expectations, accelerating its footprint with discipline.
The bank is experiencing growth in SMEs, MEs, foreign trade, real estate, and working capital. This growth trajectory ensures a good balance for the company in the coming quarters, highlighting its strong operational model. It also demonstrates its capability of commercial attraction, as it is improving its portfolio management by deploying new models.
Banco Bradesco (NYSE:BBD) is likely to continue performing well in the second half of 2024, primarily due to its new modeling system, the intensive use of machine learning, process improvement, credit card management, and an increase in personnel. It is also delivering more expanded use of generative AI in its operations, streamlining processes by helping interactions with employees and clients in several segments.
Overall, BBD ranks first among the 8 cheap penny stocks to buy right now. While we acknowledge the potential of BBD 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 BBD 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.