In this article, we look at 8 cheap penny stocks to buy right now. See how Lument Finance Trust, Inc. (LFT) stacks up against other cheap penny stocks.
The U.S. economy is stable, inflation continues to decline, and the risk of recession has been overcome. On September 18, the Federal Reserve began its first easing cycle in four years by lowering interest rates by half a percentage point. A statement from the Federal Reserve said:
“The Committee has increased confidence that inflation is on a sustained path toward 2 percent, and judges that the risks to employment and achieving the inflation target are approximately balanced.”
However, Fed Chairman Jerome Powell announced on September 30 that the recent aggressive 0.5 percentage point rate cut should not be interpreted as a sign of similarly aggressive rate cuts in the future. Instead, the size may be smaller. In an interview with the National Business Economics Association, he said:
“Going forward, if the economy develops broadly as expected, policy will move toward a more neutral stance over time. But we are not on a predetermined course. There are risks on both sides. We will continue to make decisions meeting by meeting.”
Chairman Powell expressed confidence in the country’s economic strength, with inflation expected to continue to decline. He also said two more rate cuts are likely in 2024 if economic data shows consistency over the coming days. However, the rate cuts are expected to be smaller by a quarter of a percentage point. This trend runs counter to market expectations for more aggressive reductions and mitigation.
During a question and answer session after his speech in Nashville, Tennessee, he said:
“This is not a committee that feels like it’s in a hurry to cut rates right away. If the economy performs as expected, there will be two more rate cuts this year, totaling an additional 50 (basis points). That will happen.”
Sustainable growth of small-cap stocks is expected amid market fluctuations
On July 26, Impax Asset Management Managing Director and Senior Portfolio Manager Nathan Moser spoke about the long-term potential of small-cap stocks on the Schwab Network. He spoke about recent changes in small-cap stocks, discussed positive changes, and pointed out that after years of struggle, the recent rally in small-cap stocks appears to be more sustainable. This trend is primarily driven by strong inflows into ETFs and passive investment vehicles.
Despite the short-term volatility, Mooser believes the market’s current movements could continue for years. For this reason, while encouraging buying during market downturns, he emphasized the need to focus on profitable, high-quality companies due to the potential risks typically associated with small-cap, low-quality stocks. .
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our methodology
We first consulted the stock reviewers at Finviz and Yahoo Finance to create an initial list of 15 publicly traded penny stocks with a forward P/E ratio of less than 15 as of October 1, 2024. From this list, we selected the eight most expensive stocks. We aggregated the number of hedge fund holders as of Q2 2024 and used it as a ranking metric. The stocks we’ve identified are highly profitable, have positive EPS growth, and are expected to remain profitable in the future.
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 percentage points (Learn more ).
8 cheap penny stocks to buy right now
8 cheap penny stocks to buy right now
Lument Finance Trust, Inc. (NYSE:LFT)
Stock price: $2.52
Expected PER: 6.33
This year’s EPS growth rate: 53.80%
Number of hedge fund holders: 5 people
Lument Finance Trust (NYSE:LFT) is a real estate investment trust that invests in, originates, finances, and manages commercial real estate debt investment portfolios. Its primary focus is interim variable rate CRE mortgages, with an emphasis on middle-market multifamily assets. We also invest in other CRE-related investments, including preferred stock, mezzanine loans, commercial mortgage-backed securities, construction loans, fixed-rate loans, and other CRE debt products.
The Company’s mortgage investment portfolio consists of approximately 88 senior secured variable rate loans with an aggregate outstanding principal amount of approximately $1.4 billion. Lument Investment Management, LLC externally manages the Company. Lument Finance Trust (NYSE:LFT) maintains a competitive advantage through its expertise in originating, underwriting and actively managing multifamily mortgage investments. It also boasts strong sponsorship from the broader Lument and ORIX platforms, positioning it as a value proposition in today’s public markets. Despite the current difficult environment, the company raised its common dividend by $0.01 in June. This represents a sequential increase of 14% compared to the first quarter.
Additionally, by the end of 2023, we were fully capitalized on strong credit, primarily for multifamily properties. Since then, the company has focused on actively managing its loan investment portfolio.
The company differentiates itself from its peers by focusing on middle-market multifamily credit, allowing it to provide stable and sustainable dividends to shareholders and preserve equity. According to the firm, multifamily housing, particularly mid-market multifamily housing, is expected to remain a well-performing asset class over the long term, despite some softening in multifamily fundamentals.
Lument Finance (NYSE:LFT) continues to maintain a strong liquidity position with approximately $65 million in unrestricted cash on its balance sheet. The continued rise in short-term interest rates has enabled the company to generate attractive returns from its cash balances. By intentionally adopting a defensive cash position, Lument Finance (NYSE:LFT) has gained flexibility to manage the more difficult credits in its portfolio.
Overall, LFT ranks #6 among 8 Cheap Penny Stocks to Buy Now. While we recognize the potential of LFT as an investment, we believe AI stocks have a better chance of delivering higher returns over shorter time periods. If you’re looking for AI stocks that are more promising than LFT but are trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: A $30 trillion opportunity: 15 humanoid robot stocks to buy as NVIDIA has ‘become a wasteland’, according to Morgan Stanley and Jim Cramer.
Disclosure: None. This article was originally published on Insider Monkey.
