We recently compiled a list of the 10 Worst Middle East and Africa Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where Mobileye (NASDAQ:MBLY) stands against the other Middle East and Africa stocks.
Moderate Growth Amidst Challenges
According to the IMF’s Middle East and North Africa Economic Update from April 2024, the MENA region is expected to see moderate growth of 2.7% in 2024, up from 1.9% in 2023. Both oil-importing and oil-exporting countries in the region are projected to grow at similar rates, with the gap between the Gulf Cooperation Council (GCC) economies and developing oil importers (excluding Egypt) expected to be around 1%. The region’s GDP per capita is forecasted to increase by only 1.3% in 2024, primarily driven by the GCC nations. However, ongoing conflicts continue to weigh on the region’s economic activity, especially in Palestine. Gaza’s economy, for instance, saw an 86% decline in Q4 2023 compared to the same period in 2022. Trade disruptions, notably through the Suez Canal, have also affected regional and global commerce.
Over the last decade, many MENA economies have faced rising debt-to-GDP ratios, particularly among oil-importing countries, which struggle to reduce these ratios due to high oil prices. The inability to lower debt through inflation, exacerbated by exchange rate fluctuations and off-budget factors (stock-flow adjustments), underscores the need for greater debt transparency. In contrast, oil-exporting nations tend to see smaller increases in debt-to-GDP ratios during periods of high GDP growth, and in some cases, a decrease.
Meanwhile, private equity (PE) and venture capital (VC) investments have gained momentum in the Middle East and Africa, reflecting a shift in investment trends. Data from Preqin and the Dubai International Financial Centre (DIFC) reveals that about 65% of regional investors plan to maintain or increase their exposure to private equity in 2024, with 56% expressing similar interest in venture capital.
Despite the challenges posed by geopolitical tensions, venture capital continues to play a crucial role in the region’s investment landscape. Investors remain optimistic, with many reporting that their PE and VC investments have met or exceeded expectations. Key sectors attracting interest include fintech, technology, healthcare, and infrastructure.
As the region navigates the complexities of economic growth, debt management, and investment trends, it’s clear that there are both challenges and opportunities on the horizon. Investors remain optimistic about the region’s potential, however, it’s essential for policymakers to prioritize debt transparency, economic diversification, and infrastructure development to unlock the full potential of the MENA region’s economies. With that in context, let’s take a look at the 10 worst Middle East and Africa stocks to buy according to short sellers.
Our Methodology
For this article, we used a Finviz stock screener to find 20 large companies in the Middle East and Africa, by market cap. From that list, we shortlisted companies that have the highest percentage of shares outstanding that were sold short. The list is sorted in ascending order of their short interest. We also mentioned the hedge fund sentiment around each stock.
Why do we care about what hedge funds do? 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).
A driverless vehicle navigating city traffic, equipped with ADAS and safety features.
Mobileye (NASDAQ:MBLY)
Short Interest as % of Shares Outstanding: 12.57%
Number of Hedge Fund Investors in Q2 2024: 28
Mobileye (NASDAQ:MBLY), headquartered in Israel, specializes in advanced driver-assistance systems (ADAS) and autonomous driving technologies. The company is majority-owned by Intel, and its vision-based systems are integrated into millions of vehicles from over 50 automakers, including Ford, General Motors, Honda, Nissan, BMW, Audi, and Volkswagen, helping to enhance both safety and driving efficiency.
In Q2, Mobileye (NASDAQ:MBLY) saw an impressive 84% quarter-over-quarter increase in revenue, reaching $439 million. However, the company decreased its full-year outlook to $1.7 billion, compared to previous estimates of $1.83 billion, due to market weakness in China. Despite this, the company remains optimistic about its long-term growth, with strong volume expectations for 2025 and beyond, particularly from Western and Chinese original equipment manufacturers (OEMs) as they roll out Mobileye’s (NASDAQ:MBLY) advanced system, known as SuperVision.
Mobileye (NASDAQ:MBLY) is well-positioned to benefit from the shift toward more advanced, higher-priced systems. The company has identified key drivers for long-term growth in the ADAS market, with systems like EyeQ6, a custom hardware and software solution for ADAS and autonomous systems, expected to boost average selling prices and drive significant growth. Additionally, Mobileye’s (NASDAQ:MBLY) Road Experience Management (REM) system enhances real-time road data collection, improving the safety and effectiveness of autonomous driving. The company’s Responsibility Sensitive Safety (RSS) model and True Redundancy approach offer greater reliability in autonomous systems compared to competitors who focus solely on camera-based solutions. By incorporating radar and lidar systems, Mobileye (NASDAQ:MBLY) lidar systems deliver more accurate, higher-value solutions.
According to a report by Markets and Markets, the global ADAS market to grow from 334 million units in 2024 to 655 million units by 2030, at a CAGR of 11.9%. Given Mobileye’s (NASDAQ:MBLY) cutting-edge systems, expanding customer base, and strong market presence, the company is poised for significant upside potential. While 12.57% of the company’s shares are shorted, 28 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $455.40 million.
Overall MBLY ranks 4th on our list of the worst Middle East and Africa stocks to buy according to short sellers. While we acknowledge the potential of MBLY 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 MBLY 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.