We recently compiled a list of 10 Best Stocks Under $15 To Buy Now. In this article, we will look at where Southwestern Energy Company (NYSE:SWN) ranks among the best stocks under $15.
While September is usually the toughest month for the stock market, it is delivering solid results this time. Stocks are soaring after the Federal Reserve announced a half-point cut this month to bring interest rates between 4.75% and 5%. This has led to the market racking up records again as investors look to move from riskier investments to stocks, reported CNN.
The broader market marked its 42nd record-high close in 2024 this past Thursday. The index, which has a history of September dips, is on track for a 1.3% gain this month, which will take its quarterly advance close to 5%. The Dow Jones Industrial Average surged 0.4% a day later to reach its 32nd record high for the year after investors received encouraging economic data regarding inflation, which has raised hopes for further interest rate cuts.
According to the Personal Consumption Expenditures Price Index, inflation rose 2.2% in August this year, which marked the lowest inflation rate in the United States since February 2021. Overall inflation in the country is crawling back to the Federal Reserve’s goal of a two percent annual rate. The easing of consumer prices is expected to result in further interest rate cuts to prevent a spike in unemployment rates, say economic experts. This has raised hopes among investors about the American economy returning to solid footing.
However, Fundstrat Global Advisors’ co-founder, Tom Lee, in an interview with CNBC this week cautioned against diving into stocks after interest rate cuts, citing election uncertainty.
This Fed cut cycle I think is setting the stage for markets to be really strong over the next one month or next three months. But, what the stocks do between now and let’s say election day, I think is still a lot of uncertainty. And that’s the reason why I’m a little hesitant for investors to dive in.
In the weeks leading to the cuts, Lee, who is generally bullish on the stock market, warned investors that stocks could fall 10% during the coming eight weeks amid nervousness around the presidential elections, and added that the dip should viewed as a buying opportunity.
Liz Young Thomas, the head of investment strategy at SoFi, has also acknowledged the risk of stock market volatility associated with the presidential elections. While talking to the Business Insider, she noted how thinner trading volumes between June and August, when traders are on summer vacations, drive strong market performance, and the market turns volatile when stock activity picks up after traders return to their desks in September. According to Young Thomas, a two percent shift in share prices has become the norm in September. However, during the election year, volatility peaks around mid-October instead of September, and the market returns to normalcy after the results are announced.
Methodology
We scanned Insider Monkey’s database of 912 hedge funds for the second quarter of 2024 to look for stocks with a share price of under $15 and then picked the top 10 companies with the highest number of hedge funds having stakes in them. We ranked them in ascending order of hedge fund holders in each company. In the case where two or more stocks had the same number of hedge fund holders, we used market capitalization as a tie-breaker and placed the stock having a greater market capitalization at a higher ranking.
Why are we interested in the stocks that hedge funds pile into? 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).
Southwestern Energy Company (NYSE:SWN)
Number of Hedge Fund Holders: 49
Share Price as of the close of September 27: $7.15
Southwestern Energy Company (NYSE:SWN) is a natural gas exploration and production company headquartered in Spring, Texas. The company’s operations are focused on the development of unconventional natural gas reservoirs in the Appalachian Basin and Haynesville Shale.
During Q2 2024, the company reported operational revenues of $1.08 billion, with an EPS of $0.10 which beat analysts’ estimates by a penny. This was the third in the last four quarters in which the gas giant surpassed earnings expectations. According to analysts, the stronger-than-expected results were likely driven by higher oil and gas price realization.
Production metrics for Southwestern Energy Company (NYSE:SWN) were also noteworthy, with total net production reaching 379 Bcfe, which reflected a day output of 4.2 Bcfe. This included gas production of 3.6 Bcf per day and 101 MBbls per day of liquids. The company also made $430 million in capital investments that went into the drilling of 30 wells, completion of 23 wells, and the placement of 22 wells for sale.
Southwestern Energy Company (NYSE:SWN) had a total debt of $4.2 billion with a net debt to adjusted EBITDA (non-GAAP) of 2.1x at the end of the second quarter, which hinted at a manageable leverage profile. Moreover, 49 hedge funds have investments in the company, according to Insider Monkey’s database, as of Q2 2024, making it one of the best stocks under $15 to buy now.
Chesapeake Energy has been eying an acquisition of Southwestern Energy for some while now. It has already been delayed once this year after the U.S. Federal Trade Commission requested for further information from the two companies. According to a recent report in Reuters, the $7 billion acquisition is now expected to happen in Q4. Street analysts expect an 11.61% upside in the Southwestern’s current share price and have maintained consensus on its Hold rating.
Overall SWN ranks 6th on our list of the best stocks under $15. While we acknowledge the potential of SWN 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 SWN 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 on Insider Monkey.