We recently compiled a list of 7 Best NASDAQ Stocks Under $5. In this article, we will look at where Esperion Therapeutics, Inc. (NASDAQ:ESPR) ranks among the best NASDAQ stocks under $5.
Job Market Cools Yet Economists Remain Optimistic About Stability
A Yahoo Finance report on September 28 reveals that consumers are beginning to feel the effects of a cooling labor market, according to the latest Consumer Confidence Index, which shows a narrowing gap between those finding jobs plentiful and those finding them hard to get.
Economist Stephanie Guichard noted that this shift is not unexpected given the recent rise in the unemployment rate to 4.2% and a drop in job openings. While the labor market has cooled compared to 2022, Guichard suggested that it remains strong, with consumers reacting to the change from a previously “super hot” market.
Despite the labor market’s slowdown, Fed Chair Jerome Powell expressed confidence in the economy, noting its solid growth, decreasing inflation, and strong labor market. While economists acknowledge signs of a slowdown, they agree the labor market isn’t in bad shape yet.
Key Driver of the Economy
AI was the key driver for the economy and helped recover the market after the huge market downturns of 2022. In one of our February articles, 11 Cheap AI Stocks to Buy in 2024, we discussed how the AI stocks kept the broader market afloat. Here is an excerpt from the article:
“The AI stocks also performed quite well in 2023 and are still trending in 2024. The Magnificent 7 stocks outperformed the rest of the S&P 493 heavily in the year, and analysts like Goldman Sachs’ David Kostin are positive that the gains will continue in 2024. The seven big tech stocks, including Meta Platforms, NVIDIA, which were the top performers of the group, collectively gained around 75% during the previous year compared to 12% gains for the rest of the 493 stocks in the S&P 500 index.”
While we are seeing a broadening out in the market from the tech stocks that benefitted due to the AI theme, the industry’s strong momentum is still expected to be at a steady pace, especially after the rate cuts. While AI technology fueled tech sector growth, it is also helping other sectors grow significantly.
In a September 27 interview with CNBC, Bain & Company’s head of global technology practice, Anne Hoecker discussed the growing use of generative AI in businesses and noted that while it is still in the early stages, significant progress is being made.
AI is driving notable cost savings, such as 20-30% in customer service and call centers, 30-50% in content creation and marketing, and improvements in software development and back-office functions.
Companies are transitioning from small pilot projects to scaling larger initiatives that will further improve productivity. Hoecker identified key drivers behind the anticipated billion-dollar AI market, including hyper scalers, enterprise-level AI models, and AI integration into everyday software products.
Although concerns about AI replacing jobs persist, Hoecker suggested that AI will also create new opportunities and roles as businesses innovate, with a focus on upskilling workers and building the necessary digital infrastructure to support these advancements.
Our Methodology
For this article, we used the Yahoo Finance stock screener to identify nearly 80 stocks listed on NASDAQ with over 20% year-over-year revenue growth and share price under $5 as of September 27. Next, we narrowed our list to 7 stocks most widely held by institutional investors. The stocks are listed in ascending order of their hedge fund sentiment.
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).
Esperion Therapeutics, Inc. (NASDAQ:ESPR)
Stock Price as of September 27: $1.68
Number of Hedge Fund Holders: 26
One of the best NASDAQ stocks under $5 on our list, Esperion Therapeutics, Inc. (NASDAQ:ESPR) is dedicated to developing innovative medications aimed at improving the health outcomes of patients facing cardiovascular and cardiometabolic diseases.
The company has successfully launched several products, including NEXLETOL and NEXLIZET. These once-daily oral medications target primary hyperlipidemia in adults with conditions like heterozygous familial hypercholesterolemia and atherosclerotic cardiovascular disease.
They provide an effective alternative for patients who need further lowering of LDL cholesterol levels. Additional products in the lineup include NILEMDO, an ATP Citrate Lyase (ACL) inhibitor that reduces LDL cholesterol by impacting cholesterol biosynthesis, and NUSTENDI, another combination medication aimed at managing elevated LDL-C.
At a stake value of $98.59 million, 26 hedge funds tracked by Insider Monkey held positions in Esperion Therapeutics (NASDAQ:ESPR) in the second quarter. As of Q2, Millennium Management is the top shareholder in the company and has a position worth $14.46 million.
Esperion Therapeutics (NASDAQ:ESPR) recent financial results indicate a significant upward trend in revenue, which reflects the company’s expanding market presence and product acceptance.
For the second quarter, it reported total revenue of $73.8 million, an impressive increase of 186% compared to $25.8 million during the same period in 2023. For the first half of the year, revenues soared to $211.6 million, a remarkable 322% rise from the previous year’s $50.1 million.
The growth is largely attributed to collaboration revenues, which surged by approximately 727% and 1138% for the three and six months ended June 30, 2024, respectively. The increase was driven by revenue from a Settlement Agreement with DSE, along with heightened product sales to international partners.
The company maintains its operational expense guidance for 2024 and projects expenses between $225 million and $245 million, which includes $20 million in non-cash stock compensation. The disciplined financial management, combined with rapidly growing revenues, positions the company for sustained growth.
Overall ESPR ranks 3rd on our list of the best NASDAQ stocks under$5. While we acknowledge the potential of ESPR 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 ESPR 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.