We recently compiled a list of 10 oversold growth stocks to invest in. In this article, we’ll take a look at how XP Inc. (NASDAQ:XP) stands compared to other oversold growth stocks.
As investors focus on consumer spending to gauge the broader health of the U.S. economy, current data suggests recession fears are overdone. UBS believes that the excess savings accumulated during the COVID-19 pandemic have now been exhausted, and rising interest rate levels appear to be primarily affecting housing market activity. However, as the US Federal Reserve moves further into its policy easing cycle, lower interest rates are expected to relieve some of the downward pressure on the overall economy.
S&P Global said a risk-averse mood has clouded the outlook for U.S. stock market investors for the fourth month in a row. That said, the latest results from the firm’s Investment Manager Index Survey show that overall risk sentiment has shown some improvement from September’s 16-month low.
Forecast for Q4 2024
The stock recently hit its 44th all-time high, according to JPMorgan. Technology (+2.5%) continues to dominate the overall market, with the aluminum roadshow showing improved demand across the country. Although we cannot rely on past performance, given the seasonality, we believe Q4 2024 will be a tailwind for the overall US market. Overall, consumers increase their retail spending during the holiday season and “Santa Claus” gatherings. However, the bank believes three global events could impact asset returns in Q4 2024. These include geopolitical tensions, Chinese policy stimulus, and the US election.
Amid geopolitical tensions, gold, which typically generates positive returns in the fourth quarter of 2024, could serve as a safe-haven asset. Since the beginning of this quarter, oil prices have also increased. Therefore, both oil and gold can hedge your portfolio. Second, the large bank believes that further gains in onshore and offshore equities and products could occur in the near term if China’s further policy support exceeds the market’s expected RMB2-4 trillion replenishment bond issuance. I think there is. When it comes to elections, typical seasonality is likely to continue. Volatility may increase.
Outlook for growth stocks
Market experts expect growth stocks to outperform if the global interest rate cycle reverses. This is because lower interest rates help promote liquidity for growing companies.
According to Comerica Wealth Management, market conditions of lower interest rates and higher profits are supporting stock prices. Additionally, expectations for interest rate cuts led investors to focus on interest rate-sensitive listed companies (including growth stocks), leading to a change in investment appetite. Therefore, B. Riley Wealth Management believes dividend stocks, communications, and consumer staples are some of the sectors likely to benefit.
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our methodology
To compile a list of 10 oversold growth stocks to invest in, we used the Finviz screener to identify stocks that have declined significantly on a year-to-date basis and have forward P/E ratios of less than 15x. After obtaining a list of 25-30 stocks, we narrowed it down to the following 10 stocks with high hedge fund ownership as of Q2 2024: Finally, we ranked the stocks in descending order of hedge fund sentiment.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
A financial expert who examines price fluctuations on the securities company’s trading floor.
XP Inc. (NASDAQ:XP)
Forecast PER (as of October 14): 10.91x
YD based decline rate: ~31%
Number of hedge fund holders: 22 people
XP Inc. (NASDAQ:XP) provides financial products and services in Brazil.
XP Inc. (NASDAQ:XP) remains focused on growth vehicles including retail investments, insurance, retirement plans, foreign exchange, global investments, digital accounts, and corporate and small business customers. In its recent earnings call, the company emphasized that its restructuring remains underway with a focus on providing guidance and ensuring disciplined capital allocation. This reorganization is also aimed at improving profitability and shareholder returns.
XP Inc. (NASDAQ:XP) continues to improve benefits for credit card customers and control costs, resulting in higher gross margins. The company’s total customer assets in the second quarter of 2024 were R$1.2 trillion, an increase of 14% year-on-year and 2% sequentially. Year-on-year growth was supported by net inflows of R$113 billion and market appreciation of R$30 billion. Total revenue for the second quarter of 2024 amounted to R$4.5 billion, an increase of 5% sequentially and 21% year-on-year. This was primarily due to both retail and corporate and issuer services revenues increasing year over year.
XP Inc. (NASDAQ:XP) continues to improve its credit card offering and plans to reach an additional 3 million customers. Going forward, the company’s focus on growth levers across various sectors and corporate restructuring expected to be completed by the end of the year are expected to act as tailwinds.
XP Inc. (NASDAQ:XP) expects revenue and net income to improve in the second half of 2024 compared to the first half of 2024. According to Wall Street, the average price target for the company’s stock is $23.00.
Overall XP ranks #9 on our list of oversold growth stocks to invest in. While we recognize the potential of XP as an investment, we also believe that some highly undervalued AI stocks have great potential for higher returns. within a shorter time frame. If you’re looking for highly undervalued AI stocks that have better prospects than XP but trade at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: A $30 trillion opportunity: Morgan Stanley and Jim Cramer say NVIDIA has ‘become a wasteland’, 15 humanoid robot stocks to buy
Disclosure: None. This article was originally published on Insider Monkey.
