We recently compiled a list of the 10 Best Affordable Stocks Under $10 to Buy. In this article, we are going to take a look at where ADT Inc. (NYSE:ADT) stands against the other affordable stocks under $10 to buy.
The Rate Cut Debate Continues
The Fed commenced its easing cycle, however, the debate stands. Investors and analysts alike are fixated on what the Fed’s path will look like before the year comes to a close. On October 16, Seema Shah, Principal Asset Management’s chief global strategist, appeared in an interview on Yahoo Finance to discuss her rate cut expectations and thesis on the equity market.
Shah emphasizes that while the jobs report was strong, the data upholds an element of seasonality and volatility. She adds that it’s important that these numbers alone are not blown out of proportion or extrapolated to predict the Fed’s cycle. While she acknowledges that labor demand has been sluggish, she believes that the trends have not been as concerning so far.
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In addition to that, while the US economy has been sluggish, it is not showing signs of decline, indicative of the fact that a normalization process is underway. Shah believes a 25 basis point cut in November and December would be the most ideal situation. She adds that the Fed’s path is pretty clear for now and uncertainty will start to come in by mid-2025.
Strong Fundamentals are Key to Equities
People have kept aside cash for quite a while now, and like other investors and analysts, Seema Shah also sheds light on the situation and hints at risk assets becoming popular. Shah shares that there is approximately $6.6 trillion sitting in money market funds right now and she does not expect all of it to move to equities. In fact, part of the money sitting in cash will be used by people to create safety nets for themselves.
She adds that investors who had moved their investments into safe spaces during a period of high interest rates are more likely to move out their cash to other investment places as interest rates start to go down. With a soft landing in sight, Shah shares stocks are in a sweet spot, especially because the upside to equities is growing.
Overall, equities boast a continued upside, not as high as 2023, but solid regardless. The upside to equities is going to be primarily driven by fundamentals, especially earnings. Moreover, during growth periods, the market broadening out to other sectors is key, which has been the case for 2024. Since fundamentals are crucial at the moment, we have compiled a list of cheap stocks with strong fundamentals and solid earnings growth expectations. Let’s take a look at the 10 best affordable stocks under $10 to buy.
Our Methodology
To come up with the 10 best affordable stocks under $10, we studied stocks on the Finviz Stock Screener with a Forward P/E of under 15 and a share price of less than $10. We then examined the hedge fund sentiment of each stock and picked the most popular ones. Our list is in ascending order of the number of hedge fund holders as of Q2 2024.
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).
A technician demonstrating a security solution for a corporate office.
ADT Inc. (NYSE:ADT)
Number of Hedge Fund Holders: 23
Share Price as of October 18, 2024: $7.02
Forward P/E as of October 18, 2024: 10.49
ADT Inc. (NYSE:ADT) is a security company that ranks sixth on our list of the most affordable stocks under $10 to buy now. The company provides security products to residential customers and small businesses. Some of its products include fire protection, alarm security, video cameras, life safety detectors, and smart home products.
The company has been operational for 150 years and has consistently worked to improve the safety of 6 million customers in over 150 locations in the United States. ADT Inc. (NYSE:ADT) has also been working to drive innovation. In September, the company partnered with Z-Wave Alliance, a wireless communication protocol that allows smart home devices to function together smoothly. The partnership promises integrated and reliable user-friendly products for customers.
In the second quarter of 2024, the company generated $1.2 billion in revenue, up by 3%. The company had strong financial results in the first half 2024, with continued revenue growth and cash flow improvement. ADT Inc. (NYSE:ADT) also expects to increase investment in innovation and provide premium smart home solutions.
Overall, ADT Inc. (NYSE:ADT) is a cheap stock. The company is trading at a discount of 40% from its sector median. Analysts polled by Yahoo Finance expect its earnings to grow by 33.3% this year. ADT is a buy and we attribute that to its unique product portfolio with an extensive focus on innovation.
Ariel Investments stated the following regarding ADT Inc. (NYSE:ADT) in its Q2 2024 investor letter:
“Leading provider of automated security solutions ADT Inc. (NYSE:ADT) also traded up in the quarter. A top- and bottom-line earnings beat, highlighted by strong growth within the consumer and small business segment, low attrition, an improving payback period and margin expansion aided shares. Meanwhile, ADT sold its commercial business and is winding down its solar business to focus on profitability in the residential sector and pay down debt. We continue to believe ADT’s industry-leading brand and national presence, coupled with its Google and State Farm strategic partnerships, position it to be a prime beneficiary of growing demand for smart home technologies, including fully monitored residential security.”
Overall ADT ranks 6th among the 10 best affordable stocks under $10 to buy. While we acknowledge the potential of ADT 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 time frame. If you are looking for an AI stock that is more promising than ADT 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.