We recently compiled a list of the 8 Best Stocks Under $50 To Invest In Now. In this article, we are going to take a look at where Pfizer Inc. (NYSE:PFE) stands against the other stocks under $50.
As we navigate through 2024, the economic landscape presents a mix of challenges and opportunities for investors. Recent economic indicators suggest a cautious yet resilient consumer base, even as the Federal Reserve has issued its first interest rate cut since 2020. The current financial environment reflects a deliberate balancing act by the Fed, aimed at achieving a “soft landing” for the economy—taming inflation without triggering a recession. This approach has significant implications for the stock market, particularly for stocks priced under $50, which often represent a combination of risk and reward for discerning investors.
According to Gregory Daco, Chief Economist at EY-Parthenon, the U.S. economy is showing signs of gradual downshift. Both consumers and businesses are displaying a more prudent approach to spending, influenced by a tightening labor market and rising costs. The latest data revealed a moderate job growth of 142,000 in August, but this was overshadowed by significant downward revisions in payroll figures, indicating a potential softening of employment conditions. Despite these headwinds, Daco remains optimistic, projecting that real GDP growth will average 2.7% in 2024, easing to 1.8% in 2025.
In terms of consumer behavior, the retail sector has shown resilience, with spending continuing, albeit at a more cautious pace. Daco notes that while consumers are not significantly retracting their expenditures, slower growth in disposable income could lead to more restrained spending patterns moving into 2025. He forecasts consumer spending growth to decelerate, averaging 2.5% in the fourth quarter of 2024 before dipping to 2% in 2025.
Inflation is another key factor influencing the economic outlook. The August Consumer Price Index (CPI) report indicated a noticeable acceleration in disinflation, with the headline CPI inflation decreasing to 2.5% year-over-year—the lowest rate since February 2021. This trend, however, must be interpreted cautiously, as core CPI inflation remained stable at 3.2%, signaling persistent inflationary pressures in certain sectors, notably housing. Nevertheless, Daco anticipates a continuing decline in both headline and core inflation, projecting rates of 2.2% and 2.9%, respectively, by the fourth quarter of 2024.
The Fed’s recent decision to cut interest rates by 50 basis points reflects its commitment to recalibrating monetary policy without resorting to drastic measures that could harm growth. Powell’s remarks underscore a careful approach to policy adjustments, with expectations of additional rate cuts in November and December. Overall, this easing cycle is expected to facilitate a more sustainable economic trajectory heading into 2025.
As the broader economic picture unfolds, the S&P 500 index has performed remarkably well, currently up approximately 20% year-to-date and approaching record highs. This surge is indicative of market sentiment that is cautiously optimistic about the potential for a soft landing. However, analysts have expressed concerns that current stock valuations might be overestimating economic stability, particularly in light of recent weaker-than-expected jobs reports.
Looking ahead, investors are particularly focused on upcoming labor market data, which will play a crucial role in shaping perceptions of the economy’s trajectory. The forthcoming employment report is critical, as it could either bolster confidence in the market’s current valuation or prompt a reevaluation of growth expectations. With a significant portion of the market priced for a “Goldilocks scenario”—where growth continues without significant inflation—the stakes are high for upcoming economic indicators.
Investors looking for value must consider a range of factors, including company fundamentals, market positioning, and broader economic trends. The careful selection of stocks in this category could not only mitigate risks associated with volatility but also capitalize on potential growth as the economic landscape stabilizes.
In summary, as we delve into the best stocks under $50 to invest in now, it is essential to keep an eye on the evolving economic indicators and consumer behavior. These elements will play a crucial role in determining which stocks can deliver value in an environment characterized by cautious spending, shifting monetary policy, and varying inflation rates.
Our Methodology
For this article, we identified 20 stocks trading on the NYSE and NASDAQ for under $50 per share as of September 27. Next, we examined Insider Monkey’s data on 912 hedge funds as of Q2 2024. We narrowed down our list to 8 stocks most widely held by institutional investors and ranked them in ascending order of the number of hedge funds that have stakes in them as of Q2 of 2024.
At Insider Monkey we are obsessed with 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 medical technician wearing protective gloves and a mask mixing a biopharmaceutical solution.
Number of Hedge Fund Holders: 84
Share Price as of September 27: $29.09
Pfizer Inc. (NYSE:PFE) is a global leader in the pharmaceutical industry, renowned for its commitment to developing innovative medicines and vaccines that address critical health needs. Pfizer Inc. (NYSE:PFE) has demonstrated strong performance in its recent Q2 2024 earnings call, reporting earnings per share (EPS) of $0.60, surpassing expectations of $0.458. This marks a pivotal moment for the company, as it achieves year-over-year revenue growth for the first time since Q4 2022, highlighting its recovery from the pandemic-induced peaks in COVID-related revenues. With a solid foundation built on a diverse product portfolio and strategic acquisitions, Pfizer is well-positioned to sustain this momentum.
The company continues to advance its strategic priorities, particularly in oncology, where it is integrating Seagen’s transformative antibody-drug conjugates (ADCs) to expand its offerings. The successful performance of key oncology products, including Padcev and Xtandi, is expected to drive revenue growth. Additionally, the FDA’s full approval of Tivdak and the approval of Talzenna in combination with Xtandi reinforce Pfizer’s commitment to providing innovative cancer treatments. This focus is underscored by Pfizer Inc. (NYSE:PFE) goal of delivering eight or more blockbuster medicines by 2030, a target supported by a robust pipeline that includes promising candidates for obesity treatment and next-generation vaccines.
Pfizer Inc. (NYSE:PFE) financial metrics are equally compelling. The company reported a healthy balance sheet with significant cash flow, allowing for sustained investments in R&D while maintaining a commitment to shareholder value through dividend growth. As of Q2 2024, there are 84 hedge fund holders of Pfizer Inc. (NYSE:PFE), an increase from 77 in the previous quarter, indicating growing institutional confidence in the stock.
With its strategic emphasis on expanding its oncology leadership, robust pipeline innovations, and commitment to shareholder returns, Pfizer Inc. (NYSE:PFE) presents a compelling investment opportunity. The company’s disciplined execution and strong financial performance suggest that it is well-equipped to navigate the evolving pharmaceutical landscape and capitalize on emerging market needs. Investors looking for stability combined with growth potential should consider adding Pfizer Inc. (NYSE:PFE) to their portfolios, especially as it remains undervalued under $50, making it one of the best stocks to invest in now.
Overall PFE ranks 2nd on our list of the best stocks to buy under $50. While we acknowledge the potential of PFE as an investment, our conviction lies in the belief that some 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 PFE 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.
