Maham Fatima
We recently published a list of 8 Best Inexpensive Stocks To Invest In Now. In this article, we are going to take a look at where Alibaba Group Holding Ltd. (NYSE:BABA) stands against the other best inexpensive stocks to invest in now.
Are Experts Already Looking Into 2025?
The recent market surge has raised concerns about potential market overvaluation. While the market has experienced significant gains, there are growing concerns about the allocation of capital and the potential for inflationary pressures. The market has witnessed a significant upward trend following the Fed’s rate cut, with major indices reaching new all-time highs. This surge reflects a combination of factors, including increased investor confidence and optimism about the economic outlook.
Investors are advised to carefully consider their investment strategies amidst the current market dynamics. While small-cap stocks offer potential growth opportunities, it is crucial to evaluate the broader market trends and potential risks. By understanding the market dynamics, investors can navigate the current landscape and make informed decisions to achieve their financial goals.
On top of economic uncertainty, the upcoming elections also drive analysts to become overly cautious as the market becomes more volatile in the short term due to confused investor sentiments. Tom Lee, Fundstrat Global Advisors managing partner and head of research recently appeared on CNBC and recommended investing in small-cap stocks and equities over bonds, as they offer better growth potential, as long as the election uncertainty remains. We went over his opinion in greater detail in our article about the 10 Best Young Stocks To Buy Now, here’s an excerpt from it:
“….Tom Lee explained that the Fed’s actions have initiated an easing cycle, which historically tends to yield positive outcomes for the market 3-6 months down the line. However, he cautioned that stock performance in the immediate future remains uncertain due to ongoing repositioning ahead of the upcoming election in 40 days.
….He noted that many wealth managers and family offices are hesitant to commit capital until after Election Day, preferring to wait until that event is behind them. He expressed optimism about a potential surge in stock prices following the election, stating that November and December typically see strong rallies in election years, especially when markets have already gained more than 10% in the first half of the year.
….He highlighted an upcoming Core Personal Consumption Expenditures (PCE) report expected on Friday, which could confirm that inflation is no longer a pressing concern…Regarding a comment on recent target adjustments for the S&P 500, mentioning Brian Belski’s increase of his target to the highest on Wall Street, Lee acknowledged the potential upside in the next 3-6 months, expressing skepticism about setting aggressive targets like 6,000 for the S&P 500 at this time due to current valuations not being particularly low and having already experienced significant gains.”
As more and more analysts suggest space for further rate cuts, Vance Howard, CEO and Portfolio Manager at Howard Capital Management predicts a rate cut in early 2025 due to falling inflation and historical trends.
Appearing on CNBC on September 25, Vance Howard discussed the outlook for the market and the economy as we approach Q1 2025. He confidently stated that another significant rate cut is likely, driven by data indicating a need for it, particularly as inflation begins to decline. Howard pointed out that historically, after the first rate cut, markets tend to rise, with a perfect record of being higher 7 out of 7 times following such cuts. He also noted that if the S&P 500 has already gained 10% in the first half of the year, there is an 83% chance of continued upward movement in the second half. Therefore, he advised investors to remain optimistic and not be overly distracted by current market noise.
When asked about strategies for setting up portfolios in light of potential market volatility, Howard emphasized the importance of focusing on certain sectors. He highlighted utilities and real estate as promising areas, benefiting from falling interest rates. Howard expressed that reaching an all-time high in the market is a strong bullish signal and encouraged investors to buy on pullbacks.
Regarding specific sectors to watch, Howard identified financials as likely to strengthen following rate cuts. He explained that while financial stocks might initially dip after a rate cut, they typically rebound and continue to rise. Furthermore, he recommended staying invested in technology stocks.
Howard’s insights could potentially help investors navigate through potential market changes heading into 2025. By focusing on resilient sectors like utilities, real estate, and technology while considering strategic investments in convertible bonds and financials, investors may position themselves well for future gains.
Methodology
We used the Finviz stock screener to compile a list of 20 stocks with a forward P/E ratio under 20. We then selected the 8 best inexpensive stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
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