We recently compiled a list of 7 cheap new stocks to invest in now. In this article, we’ll take a look at how Kenvue Inc. (NYSE:KVUE) stands compared to other cheap new stocks.
Capital markets are in turmoil due to Fed interest rate cuts
Recent Fed decisions have sparked optimism about increased capital market activity. Analysts have expressed increasing confidence that the economy will have a soft landing despite continued market volatility. This perspective suggests that supportive monetary policy can boost valuations and create favorable conditions for investment, creating opportunities for companies to pursue IPOs and M&A. Investor interest in high-tech startups and growth-oriented companies may increase as borrowing costs fall. This is especially true considering the recent performance of the S&P 500. The S&P 500 has recovered from its previous decline, demonstrating the market’s resilience.
As the end of the year approaches, a combination of lower interest rates and positive economic data could lead to a surge in IPOs and increased market engagement. Investors may seek to diversify their portfolios by exploring new opportunities in emerging technology companies, for example, as these companies take advantage of a favorable economic backdrop, leading to increased capital market activity. This may lead to The current situation presents an encouraging scenario for both established and young companies looking to enter the public markets or expand through strategic alliances, so read Stephanie Link’s take on this scenario by reading What Young Companies Should Buy Now? It was featured in an article about the top 10 stocks. Link, chief investment strategist and portfolio manager at Hightower, highlighted contrasting perspectives amid market volatility and uncertainty. Here is an excerpt from the article:
“…she believes the Fed is skillfully guiding the economy to a soft landing despite expected market volatility ahead of the election.
Just three weeks ago, the S&P 500 was down 4%. Still, it rebounded 4% the following week. It rose another 1% last week, hitting a new all-time high, as the market slumped, citing better-than-expected economic growth on recent data, including improved retail sales and manufacturing statistics, and lower sales. expressed optimism about purchasing opportunities during the period. Weekly jobless claims fell to a four-month low. This positive economic backdrop supports an estimated growth rate of 2.9% and is expected to be positive for corporate earnings.
…Link cited growing market trends over the past few months, noting that while technology is taking the lead, other sectors such as financials, industrials, materials and discretionary stocks are also showing strength. He pointed out that it shows. She advised investors to be careful in their choices amid continued volatility…”
the story continues
On October 3, Pivotal Advisors CEO and CIO Tiffany McGee emphasized the convergence of macro events that can cause market volatility, emphasizing the concept of “convergence” as the word of the day. did. He noted that this week has seen a concentration of significant events that could lead to increased volatility in the short term. Tiffany stressed that macroeconomic factors are at play, including the possibility of a port strike and major employment figures due to be released.These factors are creating what he describes as a “perfect storm”. .
Tiffany pointed to the ongoing conflict in the Middle East and the recent vice presidential debate as key factors influencing market reaction. He said bond prices experienced a sharp decline earlier in the week but stabilized as investors sought safety amid rising geopolitical tensions. She expects these developments to create further instability in the short term as the election approaches.
From a strategic perspective, Tiffany encouraged investors to reevaluate their portfolios, especially those focused on stocks. With the S&P 500 index up 20% year-to-date and sectors such as technology and consumer staples performing well, now is a good time to consider stripping away some of your gains and reallocating those funds to other areas of the market. He suggested that.
Tiffany also talked about the mutual fund he chose to invest in, under the ticker AISGS, which is currently outperforming small-cap stocks. She expressed that she would like to focus on scale and style rather than specific areas at this time. By investing in small- and mid-cap stocks through active management such as Aerial Fund (ARGFX), investors can take advantage of the opportunities created by lower analyst coverage in these segments. This lack of information allows skilled managers to identify undervalued stocks and consistently outperform the index.
Tiffany’s insights highlight the importance of strategic asset allocation and active portfolio management during times of increased market volatility. Recognizing the convergence of macroeconomic events and adjusting investment strategies accordingly can help investors navigate potential market fluctuations while positioning themselves for future opportunities.
methodology
We used the Finviz stock screener to create a list of 20 stocks that have recently gone public over the past two years and have a forward P/E ratio below 20. We then selected seven undervalued new stocks that are most popular among elite hedgers. Funds and analysts were bullish. Stocks are ranked by the number of hedge funds that own the stock as of Q2 2024.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 points (Learn more here Please take a look).
A pharmacist at a local store stocking the shelves with products from a consumer health company.
Kenvue Inc. (NYSE:KVUE)
Forward price/earnings ratio: 18.83
Market capitalization as of October 1st: $44.3 billion
Number of hedge fund holders: 58 people
Kenvue Inc. (NYSE:KVUE) is a consumer health company, formerly the consumer health care division of Johnson & Johnson. The company operates in three divisions. The self-care department offers cough, cold, allergy, pain care, digestive health, smoking cessation, and eye care products. The Skin Health & Beauty department offers face and body care, hair and sun protection products. The Essential Health division offers oral and infant, women’s health and wound care products.
Self-care growth slowed, but the downturn in the Chinese market affected Dr. Ci:Labo. Tylenol performed well due to new products and market share growth. Despite increased marketing investments, Essential Health and Listerine posted strong organic growth of 7.6% and 10%, respectively. The company expanded its store presence, increased media, and drove overall growth. Allergy sales recovered in June.
Overall, Q2 2024 revenue decreased 0.27% year over year. Organic growth in the second quarter was 1.5%. Value realization contributed 2.1% to growth. Self-care and skin health and beauty sales volume decreased slightly, down 0.6% year-over-year.
The company has a strong financial position, including $1 billion in cash and equivalents, a gross margin of 60%, and an operating margin of 17.8%. Following the second quarter results, management raised its full-year sales outlook to the upper end of 3%. Consumer staples stocks like the company have held up well amid recession concerns and are well-positioned for future growth, with future growth likely to be fueled by increased beauty spending.
Oakmark Funds said the following about Kenvue Inc. (NYSE:KVUE) in its Q1 2024 investor letter:
“Kenvue Inc. (NYSE:KVUE) became the largest independent consumer health company following its separation from Johnson & Johnson in May 2023. High-profile brands share leadership in their respective categories across generations, but Kenvue’s first year as a public company has seen a number of lawsuits and market share in specific categories. The losses made things questionable. As a result, Kenvue’s earnings were only 16.5x, giving the company a significant discount to the market and other consumer health and packaged products companies. We now have the opportunity to reinvest these savings into product development and marketing enhancements, which should help us grow and improve our brand value.”
Overall, KVUE ranks #1 on our list of cheap new stocks to invest in. While we recognize KVUE’s potential as an investment, we believe AI stocks have great potential to deliver high returns and do so in a shorter time frame. . If you’re looking for an AI stock that has more promise than KVUE but trades at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: 15 humanoid robot stocks to buy, according to Morgan Stanley and Jim Cramer, says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
