We recently published a list of 8 stocks under $20 to invest in right now. In this article, we’ll take a look at how Albertsons Companies, Inc. (NYSE:ACI) stands compared to other sub-$20 stocks to invest in now.
Is it possible to do a soft landing?
There has been a lot of discussion lately about economics and markets. Although the economy was performing well, with the US Federal Reserve cutting interest rates and analysts expecting the market to maintain its bullish outlook, recent geopolitical developments have caused investors to There are doubts again.
We recently featured an article on 10 Stocks Under $10 with High Potential and talked about how the market is expected to move if the geopolitical situation escalates. Tom Lee, managing partner and head of research at Fundstrat Global Advisors, said he would buy on the edge if the market rose that high, and said he is not sure how the market will fare after such tensions. He also presented a bullish theory on whether stocks tend to perform well. Here is an excerpt from the article:
Tom Lee, Managing Partner and Head of Research at Fundstrat Global Advisors, appeared on CNBC to discuss how the stock market is faring in the current geopolitically tense environment. Mr. Lee has long been bullish on small-cap stocks, but he remains cautious about the initial bump in the small-cap market’s rise. He remained bullish, forecasting a year-end target of 6,000 for the S&P 500, although he acknowledged that future events, such as geopolitical tensions in the Middle East, could increase volatility in the near term.
He stressed that current market conditions are difficult, with headline risks stemming from a possible port strike that could impact the economy. Lee suggested that any significant decline would be a good buying opportunity, as he believes the long-term outlook remains positive despite the temporary setback.
Talk about how the market fared during past wars. Lee pointed out that historically, market reactions to geopolitical conflicts have often been more positive than expected. He cited past conflicts where buying during early recessions has proven beneficial, with the exception of the recent Russia-Ukraine war, which went awry due to simultaneous Federal Reserve tightening. ”
Larry Adam, chief investment officer at Raymond James, said the current market is very much a soft landing given the progress the market has made. Adam recently appeared in an interview on CNBC and talked about how lower interest rates could benefit small-cap stocks, especially the Russell 2000. He believes the bull market will continue while the economy gradually moves towards a soft landing.
story continues
For small-cap stocks, about 56% of funding comes from the short end of the curve. The short end of the curve refers to short-term interest rates on the yield curve, typically representing yields on bonds with shorter maturities, such as two-year or five-year U.S. Treasuries. Larger companies, on the other hand, receive only 26% of funding from these ends of the curve. Therefore, Adam believes that the Fed will continue to lower interest rates, which will help small-cap stocks meet their funding needs.
He also noted that the Fed is expected to cut rates twice this year and four more next year. Another reason he likes small-cap stocks is because the economy is headed for a soft landing. Adam emphasized that we have already seen that small-cap stocks outperformed large-cap stocks as a result of rate cuts. Historically, when the economy takes a soft landing, small-cap stocks usually fare better than the rest of the market.
Additionally, Adam likes technology, healthcare, and industrials in both small-cap and large-cap categories, while mentioning his favorite sectors. In rationalizing the interest in these sectors, he said that the returns in these sectors are one of the salient positive factors. Technology is the only large-cap stock that has seen an upward revision. Additionally, the cash flow generated by these sectors is used to buy back stock, pay dividends, and increase future growth.
our methodology
We used the Finviz stock screener and Insider Monkey’s institutional database to curate a list of 8 stocks under $20 that you can invest in right now. We used a screener to narrow down the list to stocks trading below the $20 price (recorded on October 4th). Once we created a list of stocks under $20, we ranked them based on the number of hedge fund holders as of Q2 2024. The list is ranked in ascending order based on the number of hedge funds.
Why do we care what hedge funds do? 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 ).
Albertsons Companies, Inc. (ACI): Dominates the grocery market with strong retail presence
Fresh food section of a modern grocery store.
Albertsons Companies, Inc. (NYSE:ACI)
Stock price: $18.50
Number of hedge fund holders: 59 people
Albertsons Companies, Inc. (NYSE:ACI) is one of the largest food and drug retailers in the United States. The company operates more than 2,269 stores in 34 states under the Albertsons, Safeway and Vons brand names. This strong presence makes the company a major player in the grocery store market. Additionally, the company operates 1,725 pharmacies, more than 400 fuel centers and approximately 1,330 in-store coffee shops.
Albertsons Companies, Inc. (NYSE:ACI) also has a strong online presence managed through its website and mobile apps, allowing customers to shop online and select delivery services. The stock is trading under $20 and is owned by 59 hedge funds according to Insider Monkey’s database, making it one of the best stocks under $20 to invest in right now.
In the most recent quarter (Q1 FY2024), management demonstrated continued focus on customer lifetime strategy. This strategy focuses on growing loyalty members. This strategy has worked well for the company. Albertsons Companies, Inc. (NYSE:ACI) was able to grow its loyalty membership by 15% year-over-year to 41.4 million.
Additionally, the company continued to perform well in the digital sector, with sales increasing 23% year-on-year. Same-store sales also increased 1.4%, indicating an overall positive performance across all metrics. As a result, the company’s net income reached $241 million.
With a continued focus on increasing loyalty members, the company is expected to remain on a growth trajectory in fiscal 2024, making it an attractive investment for those looking for stocks trading below $20. It will be an opportunity.
Overall, ACI ranks #1 on our list of 8 Stocks Under $20 to Invest Now. While we acknowledge that ACI has growth potential, we believe AI stocks are more likely to deliver higher returns and do so in a shorter time frame. If you’re looking for promising AI stocks trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: 15 humanoid robot stocks to buy, according to Morgan Stanley and Jim Cramer, says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
