In this piece, we will take a look at the 11 cheap hot stocks to buy now. If you want to skip our overview of the stock market and recent developments, then take a look at 5 Cheap Hot Stocks To Buy Now.
The stock market of today is significantly more complex than the market of the 20th century. Every day, thousands of shares change hands and the amount of data that this generates cannot be sufficiently analyzed without using computers. Analyzing stock movements on a non fundamental basis is called technical trading and it relies on a variety of different factors such as price momentum, moving averages, and sentiment levels gauged through indicators.
Another approach to analyzing stocks is by taking a look at their fundamentals. These are financial metrics that show a company's balance sheet strengths and weaknesses, and one of the most commonly used fundamental indicators is the price to earnings ratio. The P/E ratio checks the premium that investors are paying for a firm over its profit, and it uses either current, rolling, or forecast earnings for any company. A company whose P/E ratio is higher than the industry average is considered a growth stock and one with a lower P/E ratio is called a value or a cheap stock.
Combining the fundamental and technical indicators in share trading shows whether market sentiment tracks a firm's financial ratings. Stocks that are fundamentally sound, namely through profitability indicators, and are seeing investor interest through price momentum might be in for some good performance down the road. This is because investors might know something about these stocks that is not common knowledge, and making the right call at such moments can often lead to profits through share price appreciation.
Shifting gears, right now, the stock market is digesting a fresh rating upgrade for the U.S. from the rating agency Moody's Corporation (NYSE:MCO). In a blockbuster ratings downgrade, the firm shared in November that the U.S. continues to run the risk of high fiscal deficits and as a result, its credit outlook is now Negative. At the heart of this change that has sparked criticism from several quarters, including the White House, are historically high interest rates. Moody's believes that these rates, when combined with excessive government spending and a lack of clarity on the U.S. government's ability to raise revenue places U.S. debt affordability at risk. However, the ratings agency also remains optimistic about the American economy, adding that this is America's greatest asset which can also help it with debt affordability down the road. According to Moody's, additional U.S. GDP growth surprises over the future can improve America's debt affordability, and the central role played by the U.S. dollar and U.S. Treasuries in the global financial system lends the U.S. with one of a kind financial advantages.
For Wall Street, the ratings downgrade didn't create much turmoil. After all, investors have become accustomed to far worse news over the course of the past 18 months or so, since they have seen the Federal Reserve increase interest rates by 75 basis points multiple times, deal with the collapse of several large American banks, and see the labor market refuse to yield and continue to grow. Therefore, it's clear that right now, the biggest driving force for the stock market remains the Federal Reserve, and it is Fed Chair Jerome Powell and his team that will decide where stocks go next.
On this front, the central bank's interest rate decision due in December will likely take into account U.S. consumer spending data and retail sales data that is due in mid November. This data will come during the holiday season, and it will show just how resilient consumers are in the face of high credit costs due to high interest rates. Throughout its recent interest rate hiking cycle, the Fed has remained careful to not permanently damage the U.S. economy. Instead, it has continued to raise hopes for a 'soft landing', which is just Fed speak for the economy slowing down but not tipping into a recession.
With these details in mind, let's take a look at some cheap hot stocks to buy now. Some notable stocks in this list are Petróleo Brasileiro S.A. - Petrobras (NYSE:PBR), Gulfport Energy Corporation (NYSE:GPOR), and Warrior Met Coal, Inc. (NYSE:HCC).
11 Cheap Hot Stocks To Buy Now
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Our Methodology
To compile our list of the cheap hot stocks to buy, we started off by making a list of all stocks that have a market capitalization greater than $300 million. Then, they were further narrowed down by selecting those companies whose share price is above the 50 day and 200 day moving averages. The list was further narrowed down by selecting only those stocks whose RSI readings do not indicate overbought levels. Finally, for the list of cheap, hot stocks to buy, we picked the stocks with the lowest P/E ratios which are as follows.
11 Cheap Hot Stocks To Buy Now
11. Harmony Gold Mining Company Limited (NYSE:HMY)
Latest TTM Price To Earnings Ratio: 10.64
Harmony Gold Mining Company Limited (NYSE:HMY) is a South African mining company that explores for gold, uranium, and other materials. One of South Africa's biggest gold companies, its shares are rated Hold on average and analysts have set an average share price target of $4.47.
By the end of this year's second quarter, 14 out of the 910 hedge funds part of Insider Monkey's database had bought Harmony Gold Mining Company Limited (NYSE:HMY)'s shares. David Iben's Kopernik Global Investors is the biggest investor among these, as it owns 15.5 million shares that are worth $65.4 million.
Along with Gulfport Energy Corporation (NYSE:GPOR), Petróleo Brasileiro S.A. - Petrobras (NYSE:PBR), and Warrior Met Coal, Inc. (NYSE:HCC), Harmony Gold Mining Company Limited (NYSE:HMY) is a top cheap hot stock to buy.
Western Midstream Partners, LP (NYSE:WES) is a limited partnership that stores, processes and transports natural gas, crude oil, and associated products. The firm had a solid third quarter as it set new production records which have made it forecast up to $2 billion in operating income for 2023.
As of June 2023, six out of the 910 hedge funds polled by Insider Monkey were the firm's investors. Western Midstream Partners, LP (NYSE:WES)'s largest hedge fund shareholder is Henry Breck's Heronetta Management courtesy of its $5.7 million investment.
Eni S.p.A. (NYSE:E) is an Italian energy company headquartered in Rome, Italy. The firm is currently seeking to amplify its presence in the renewable energy sector by selling stakes in its business division to generate capital and increase energy production.
Out of the 910 hedge funds holdings surveyed by Insider Monkey for their June quarter of 2023 investments, seven were Eni S.p.A. (NYSE:E)'s shareholders. Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital owns the biggest stake among these, which is worth $69 million.
Diamondback Energy, Inc. (NASDAQ:FANG) is a small American energy company that develops petroleum exploration assets. It's one of the few stocks on our list with a significant percentage of institutional investors, with the latest data showing that more than 90% of its shares are owned by institutional investors.
As of Q2 2023 end, 44 among the 910 hedge funds profiled by Insider Monkey had held a stake in the company. Diamondback Energy, Inc. (NASDAQ:FANG)'s largest hedge fund shareholder is Donald Yacktman's Yacktman Asset Management as it owns 1.4 million shares that are worth $190 million.
DHT Holdings, Inc. (NYSE:DHT) is an ocean oil transportation company with more than twenty vessels in its fleet. The firm's shares haven't seen much love from analysts as of late, as both Stifel and Jefferies have rated the stock as Hold. DHT Holdings, Inc. (NYSE:DHT)'s third quarter earnings saw management share that its fleet efficiency enabled higher revenue generation from routes when compared to industry averages.
After digging through 910 hedge fund portfolios for their second quarter of 2023 shareholdings, Insider Monkey discovered 22 DHT Holdings, Inc. (NYSE:DHT) investors. Out of these, the firm's biggest investor is Jim Simons' Renaissance Technologies as it owns $33.8 million worth of shares.
Shell plc (NYSE:SHEL) is a mega oil giant that is one of the biggest companies of its kind in the world. It's also among the few stocks on our list that have secured an average Strong Buy rating from analysts, with the average share price target being $74.13.
During Q2 2023, 43 out of the 910 hedge funds part of Insider Monkey's database had bought and invested in the company's shares. Shell plc (NYSE:SHEL)'s largest shareholder among these is Ken Fisher's Fisher Asset Management as it owns 21.9 million shares that are worth $1.3 billion.
Petróleo Brasileiro S.A. - Petrobras (NYSE:PBR), Shell plc (NYSE:SHEL), Gulfport Energy Corporation (NYSE:GPOR), and Warrior Met Coal, Inc. (NYSE:HCC) are some cheap hot stocks.
