Benzinga - by Zacks, Benzinga Contributor.
Warren Buffett once said, "You pay a very high price in the stock market for a cheery consensus." Yet, the higher the price one pays for a stock, the lower the return one can expect. Successful investing is about buying stocks cheap and then have others agree with you. True to form, investors have always looked to buy shares at a low price and sell them high, which is the very definition of making money in the stock market.
Over the past year and a half, the markets have been rebounding from the vagaries of 2022, primarily based on tech recovery built on AI optimism. For first-time investors or ones who want an entry point into the market without putting a lot at stake, the time feels right. Inflation, which was stubbornly high in 2024, also eased in April, thereby uplifting the mood in the stock markets.
Inflation in April rose less than expected, signaling a downward trend. Per the Bureau of Labor Statistics, the Consumer Price Index increased 0.3% over March. Annually, CPI rose 3.4%, following a 3.5% rise in March. This marks the first month of slowing annual data since January 2024, after peaking at 9.1% in June 2022.
Core CPI, which does not take into account food and energy costs and is usually considered a better indicator of underlying inflation, also gained 0.3% in April. Core CPI increased 3.6%, the lowest year-over-year gain since April 2021, down from 3.8% in March.
Also, market participants are currently pricing in at least two rate cuts in 2024, with the first one in September. Crucially, retail sales were flat in April, suggesting cooling domestic demand, which aligns with the Fed's goal of weakening demand to control price pressures. This means investors are going to have spare change at their disposal, and they might be looking for cheap stocks to invest in. Also, with the market rebounding and sustaining that momentum for the time being, buying cheap stocks with good prospects might lead to a fast price rise if the choices are judicious.
Our Choices We have, thus, selected four stocks below the $20 dollar price-point for this purpose. These stocks below flaunt a Zacks Rank #1 (Strong Buy) or #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Gold Fields Limited (NYSE: GFI) is a gold producer with reserves and resources spread across globally.
Gold Fields' expected earnings growth rate for the current year is 50.5%. The Zacks Consensus Estimate for its current-year earnings has improved 21.7% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of B. It is currently priced at a lucrative $16.80.
Canada Goose Holdings Inc. (NYSE: GOOS) is a manufacturer of performance luxury apparel for men, women, youth, children and babies worldwide.
Canada Goose's expected earnings growth rate for the current year is 13.7%. The Zacks Consensus Estimate for its current-year earnings has improved 6.4% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A. It is currently priced at a lucrative $13.12.
Paymentus Holdings, Inc. (NYSE: PAY) is a cloud-based payment technology and solutions company.
Paymentus' expected earnings growth rate for the current year is 18.8%. The Zacks Consensus Estimate for its current-year earnings has improved 8.6% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of B. It is currently priced at a lucrative $18.61.
Hamilton Insurance Group, Ltd. (NYSE: HG) is an underwriting specialty insurance and reinsurance company.
Hamilton Insurance's expected earnings growth rate for the current year is 40.6%. The Zacks Consensus Estimate for its current-year earnings has improved 29.4% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A. It is currently priced at a lucrative $16.46.
Bottom Line We often see stocks that do not promise much today but get a bump in share price tomorrow. Alternately, some promising stocks do not win over the stock market in the long run. Therefore, the decision of zeroing in on which cheap stock to opt for becomes a significant one. We believe that the stocks mentioned above have strong growth prospects and will allow investors to generate handsome returns in a short space of time.
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