In this article, we will take a look at the 15 best cheap stocks to buy for 2024. If you’d like to skip our overview of investing and some recent financial news, then please take a look at the 5 Best Cheap Stocks To Buy For 2024.
While the Federal Reserve may take its time in reducing interest rates, as investors have likely observed in recent weeks, the economy continues to expand, and inflation remains far from the levels seen in late 2022. The beginning of the year 2024 prompts reflection, leading some investors to reassess their portfolios. Last year, the S&P 500 and the NASDAQ Composite surged by 24% and 43%, respectively, offering passive investors tracking index funds a significant gain as the year drew to a close. Now, the question on everyone’s mind is whether the markets will maintain their strong performance from 2023 or potentially reach new highs.
Of course, recent economic indicators indicate that the US economy specifically continues to display resilience and is performing better than expected, dispelling fears of a recession. The Commerce Department’s report on economic growth reveals that the US economy grew by 3.1% year-over-year in the fourth quarter of 2023, propelled by strong consumer spending in sectors such as healthcare, dining out, and automobiles. Furthermore, according to Economic Intelligence’s consumer goods and retail outlook report for 2024, global retail sales are forecasted to increase by 6.7% during the year. This growth is attributed to a 2% rise in volume, which is partially offset by a slowdown in inflation.
On another front, the first month of this year saw job growth experience a notably robust increase, underscoring the resilience of the U.S. labor market and its potential to drive broader economic expansion. According to the Labor Department’s Bureau of Labor Statistics, nonfarm payrolls expanded by 353,000 during the month, surpassing the Dow Jones estimate of 185,000. Additionally, wage growth exhibited strength, with average hourly earnings rising by 0.6%, doubling the monthly estimate. On a year-over-year basis, wages surged by 4.5%, surpassing the forecast of 4.1%. However, despite this positive trend in wage growth, average hours worked experienced a slight decline, falling to 34.1 hours, down 0.2 hours for the month.
Supported by the strength observed in the labor market, financial analysts anticipate that the positive growth trends observed towards the end of 2023 provide further flexibility for the central bank to take action in reducing interest rates. Ellen Zentner of Morgan Stanley reiterated these views, suggesting that the Federal Reserve is unlikely to decrease rates until the middle of this year, particularly in light of inflation data exceeding expectations. Zentner also noted that spending among affluent households in the United States remains robust, as there have been no significant layoffs among white-collar workers thus far.
In such a market scenario, prospective investors aiming to enter the stock market may consider exploring relatively cheap stocks with promising growth prospects in the foreseeable future. This category may include companies like Hewlett Packard Enterprise Company (NYSE:HPE), CVS Health Corporation (NYSE:CVS), and General Motors Company (NYSE:GM), among others listed below.
Photo by Vitaly Taranov on Unsplash
Our Methodology
For our list of best cheap stocks to buy for 2024, we shortlisted 15 stocks based on their forward P/E ratios (as of April 20). We made use of stock screeners to list down stocks that have favorable forward P/E ratios compared to their trailing P/E ratios. Typically, a stock exhibiting a lower forward price-to-earnings ratio compared to the trailing price-to-earnings ratio indicates that analysts are expecting earnings for the stock to increase.
For the best cheap stocks, we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
15. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 36
Forward P/E Ratio as of April 20: 9.42
Based in Minneapolis, Minnesota, and incorporated in Delaware, U.S. Bancorp (NYSE:USB) is a prominent American bank holding company. It operates as the parent company of U.S. Bank National Association and ranks among the largest banking institutions in the United States.
Insider Monkey examined 933 hedge fund holdings for the fourth quarter of 2023 and discovered that 36 of them had acquired and held shares of U.S. Bancorp (NYSE:USB). The largest shareholder of U.S. Bancorp (NYSE:USB) during that period was Andreas Halvorsen’s Viking Global, which possessed 9.56 million shares valued at $414.17 million.
Much like Hewlett Packard Enterprise Company (NYSE:HPE), CVS Health Corporation (NYSE:CVS), and General Motors Company (NYSE:GM), U.S. Bancorp (NYSE:USB) ranks as one of the best cheap stocks to invest in.
14. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 40
Forward P/E Ratio as of April 20: 6.58
Based in Dearborn, Michigan, Ford Motor Company (NYSE:F) is a prominent American multinational automobile manufacturer, renowned for its production of automobiles and commercial vehicles under the Ford brand, along with luxury vehicles marketed under the distinguished Lincoln brand.
As of the conclusion of last year’s fourth quarter, Insider Monkey’s tracking of 933 hedge funds revealed that 40 had acquired shares of Ford Motor Company (NYSE:F). Notably, Fisher Asset Management, led by Ken Fisher, emerged as the largest stakeholder, with a substantial $721 million investment in the company.
13. Barrick Gold Corp (NYSE:GOLD)
Number of Hedge Fund Holders: 43
Forward P/E Ratio as of April 20: 13.25
Barrick Gold Corp (NYSE:GOLD) is positioned seventh on our roster of top foreign dividend stocks. This leading international gold mining enterprise, headquartered in Toronto, Canada, holds a substantial footprint in the global mining sector. Barrick Gold is principally involved in the exploration, development, and operation of gold mines. Presently, it offers a quarterly dividend of $0.10 per share.
According to Insider Monkey’s fourth-quarter database, 43 hedge funds held long positions in Barrick Gold Corporation (NYSE:GOLD), up from 36 funds in the previous quarter. First Eagle Investment Management, led by Jean-Marie Eveillard, emerged as the largest stakeholder of the company, possessing 44.6 million shares valued at $808.2 million.
Old West Management made the following comment about Barrick Gold Corporation (NYSE:GOLD) in its Q4 2022 investor letter:
“Barrick Gold Corporation (NYSE:GOLD) is the second largest gold miner in the world, with operations in the U.S., Canada, Africa, South America and more. Barrick is also a major copper producer. Former Goldman Sachs executive John Thornton took control of the company in 2012 and quickly realized he wanted someone with a mining background to run the company. Mark Bristow, at that time CEO of Randgold, was considered one of the best gold mining executives in the world. Thornton wanted Bristow so badly Barrick bought Randgold in 2018. Bristow, who is South African, had extensive experience operating mines throughout Africa, and in fact would fly his own single engine plane to visit mines. He has his PhD in Geology, and he has flourished running Barrick the past five years.
Barrick is estimated to have $1.6 billion of net income this year on $11.5 billion of revenue. Net Income has been growing 15% per year. The stock trades at $19.00 per share which is 16 times forward earnings, and the stock has a 3.15% dividend yield. Barrick has a fortress balance sheet with $5.7 billion in cash and $5 billion of long term debt, which is only one time EBITDA.”
12. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 50
Forward P/E Ratio as of April 20: 8.18
Hewlett Packard Enterprise Company (NYSE:HPE) delivers data solutions worldwide through its Compute, HPC & AI, Storage, Intelligent Edge, Financial Services, and Corporate Investments segments. Its product portfolio encompasses servers, storage products, edge systems, networking solutions, and associated services.
As per Insider Monkey’s fourth-quarter database, 50 hedge funds expressed optimism about Hewlett Packard Enterprise Company (NYSE:HPE), compared to 47 funds in the previous quarter. AQR Capital Management, led by Cliff Asness, holds the largest stake in the company, with 14.6 million shares valued at $248 million.
11. Capital One Financial Corporation (NYSE:COF)
Number of Hedge Fund Holders: 51
Forward P/E Ratio as of April 20: 8.87
Capital One Financial Corporation (NYSE:COF) operates as a financial services holding company, offering a diverse range of financial products and services. Its offerings include checking accounts, money market deposits, savings, and time deposits.
On February 29, investment advisory firm UBS maintained a Neutral rating on Capital One Financial Corporation (NYSE:COF) stock while increasing the price target to $140 from $132.
Among the hedge funds tracked by Insider Monkey, Fisher Asset Management, based in Camas, Texas, emerges as a prominent shareholder in Capital One Financial Corporation (NYSE:COF), holding 9.5 million shares valued at more than $1.2 billion.
Sound Shore Management made the following regarding Capital One Financial Corporation (NYSE:COF) in its fourth quarter 2023 investor letter:
“Long-term holding Capital One Financial Corporation (NYSE:COF) was also one of our better performers this quarter. The company boasts a diversified deposits base with about 80% FDIC insured, well above industry average. It is the only major bank 100% in the cloud, which enables better underwriting and quicker response to changes in the environment. This technology also helps reduce operating and fraud cost while freeing up cash flow for reinvestment in marketing to grow products (Venture X card) and build its brand. Periods of stress, like we saw in the banking sector during March, are a reminder of the underwriting acumen and high quality deposits of Capital One. We added to our position after the fallout, knowing that the company’s seasoned management team had steered capably through previous cycles. Today, as credit card delinquencies have risen to more normal levels, Capital One is already reporting a slowing in delinquency growth. Conversely, some peers saw prior underwriting missteps begin to surface in 2023. Currently trading at 9 times 2024 consensus earnings and around book value, we remain enthusiastic about the investment.”
10. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 63
Forward P/E Ratio as of April 20: 8.60
Verizon Communications Inc. (NYSE:VZ), headquartered in New York, is a leading provider of integrated telecommunications services, offering a diverse portfolio of communication, technology, information, and entertainment products and services.
During the fourth quarter of the previous year, 63 out of the 933 hedge funds tracked by Insider Monkey held shares of Verizon Communications Inc. (NYSE:VZ). Among these hedge funds, Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke, and John Campbell, emerged as the largest investor with a stake valued at $948 million.
Ariel Global Fund stated the following regarding Verizon Communications Inc. (NYSE:VZ) in its fourth quarter 2023 investor letter:
“Global communications and technology leader, Verizon Communications Inc. (NYSE:VZ) also traded higher in the period following solid earnings results, highlighted by postpaid consumer net additions and an upward revision to free cash flow guidance. From a competitive and financial standpoint, we view Verizon to be among one of the best positioned telecoms in the world. The company’s solid long-term fundamentals are underscored by its predictable, recurring revenue streams and ~7% dividend yield. At current levels, Verizon is trading near an all-time low valuation presenting a compelling total return story for patient investors.”
9. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 66
Forward P/E Ratio as of April 20: 7.15
AT&T Inc. (NYSE:T) stands as one of the largest wireless carriers in the United States, offering a wide array of telecommunication and technology services, including Virtual Private Networks, AT&T Dedicated Internet, and Ethernet. The company boasts a wireless network that covers over 99% of Americans, as per its website.
On February 1, J.P. Morgan revised its rating on AT&T Inc. (NYSE:T), foreseeing sustained and long-term growth prospects, especially in the wireless and broadband sectors. Analyst Richard Choe of J.P. Morgan expressed confidence in the additional opportunities arising from this expansion within existing markets. Consequently, Choe upgraded AT&T Inc. (NYSE:T) from Neutral to Overweight and adjusted the year-end price target to $21 from $18.
As of the end of Q4 2023, Insider Monkey’s database indicated that 66 hedge funds had stakes in AT&T Inc. (NYSE:T), up from 52 in the previous quarter. The total value of these stakes amounted to nearly $3 billion. Miller Value Partners held approximately $9.26 million in AT&T Inc. (NYSE:T) shares as of the fourth quarter of 2023.
8. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 67
Forward P/E Ratio as of April 20: 7.61
CVS Health Corporation (NYSE:CVS) is a prominent player in the healthcare sector, managing a vast network of retail pharmacies and clinics nationwide. Operating under well-known brands like CVS Pharmacy, CVS Caremark, and Aetna, the company offers a wide range of healthcare services.
On March 15, Piper Sandler raised the price target for CVS Health Corporation (NYSE:CVS) to $94 from $93 while maintaining an Overweight rating on the shares. The analyst expressed confidence in the company’s CY24 medical loss ratio guidance.
In Q4 of 2023, hedge fund sentiment toward CVS Health Corporation (NYSE:CVS) was positive, with 67 hedge funds holding positions in the stock. These positions were valued at $2.36 billion, marking an increase from the previous quarter when 64 funds held positions worth $1.85 billion.
7. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 68
Forward P/E Ratio as of April 20: 13.40
Headquartered in Stamford, Connecticut, Philip Morris International Inc. (NYSE:PM) operates within the tobacco industry as a consumer staples company. It specializes in offering cigarettes and smoke-free products, including heat-not-burn, vapor, and oral nicotine products under the IQOS and ZYN brands.
On March 7, the company declared a quarterly dividend of $1.30 per share, consistent with its previous dividend payout. With a track record of increasing dividends for 14 consecutive years, Philip Morris International Inc. (NYSE:PM) is regarded as one of the top dividend stocks for passive income seekers. As of April 20, the stock’s dividend yield stood at 5.55%.
At the close of the last quarter of the previous year, 68 out of the 933 hedge funds monitored by Insider Monkey held shares in Philip Morris International Inc. (NYSE:PM). Fundsmith LLP, managed by Terry Smith, emerged as the largest shareholder with a $1.4 billion investment in the company.
6. KKR & Co. Inc. (NYSE:KKR)
Number of Hedge Fund Holders: 68
Forward P/E Ratio as of April 20: 15.28
KKR & Co. Inc. (NYSE:KKR), also known as Kohlberg Kravis Roberts & Co., is a prominent American investment firm with a global presence. It specializes in managing various alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and hedge funds through strategic partnerships.
By the conclusion of December 2023, 68 out of the 933 hedge funds analyzed by Insider Monkey had acquired shares in KKR & Co. Inc. (NYSE:KKR). Notably, Natixis Global Asset Management’s Harris Associates emerged as the largest shareholder, boasting a $1.7 billion investment in the company.
Alphyn Capital Management stated the following regarding KKR & Co. Inc. (NYSE:KKR) in its first quarter 2024 investor letter:
“While KKR & Co. Inc. (NYSE:KKR)’s business has always been somewhat involved and complex to understand, its share price has performed strongly over the past couple of years as the company has proven its ability to drive earnings growth, approximately doubling it every five years, mainly by earning fees on growing assets under management, generating performance fees on client investments, and generating solid returns using its balance sheet.
The company’s structure as a publicly listed partnership made it difficult for some institutions to own and inconvenient for retail investors as it required filing a K1 tax return. The company converted to a C-Corp in 2018, paving the way for potential inclusion in the S&P 500…” (Click here to read the full text)
Much like Hewlett Packard Enterprise Company (NYSE:HPE), CVS Health Corporation (NYSE:CVS), and General Motors Company (NYSE:GM), KKR & Co. Inc. (NYSE:KKR) ranks as one of the best cheap stocks to buy for 2024.
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Disclosure: None. 15 Best Cheap Stocks To Buy For 2024 is originally published on Insider Monkey.