In this piece, we will take a look at the 12 best single digit stocks to invest in. If you want to skip our coverage of affordable stocks and how they, like all other stocks such as small cap and large cap stocks, benefit and suffer from the broader macroeconomic environment, then you can take a look at the 5 Best Single Digit Stocks To Invest In.
Stocks can broadly be classified into three categories based on their market capitalization. Each of these represents firms whose shares operate with different dynamics within the broader market climate. The three primary stock categories are small, mid, and large caps, with the passage of time that has seen trillion dollar valuations the likes of NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL) has also created new categories commonly called mega cap stocks.
Similarly, the proliferation of computing products across the financial industry has made stock trading easier, leading to thousands of firms in categories such as micro and nano cap stocks. These stocks, which include firms whose shares trade in the single digits, are on the more 'affordable' end of the spectrum in literal terms. Single digit stocks are a small upgrade over the broader category of well known stocks that are called penny stocks. Typically, these stocks refer to firms whose shares trade below $5, and when we consider the general benefits and drawbacks of investing, single digit stocks, and penny stocks follow the same rules.
Both offer a higher potential for larger percentage returns via share price appreciation. Similarly, since penny stocks and single digit stocks belong to companies that receive little media coverage, the potential of scammers exploiting unwitting investors is high. This is because during the initial stage of a 'pump' during a typical scam, the shares of a single digit or penny stock appreciate much faster than the media can respond to determine if the performance is driven by underlying fundamentals or other legitimate tailwinds. Then, as more investors pile on, should the price drop, then most people end up losing their money.
However, where there's risk there's a reward, and one key advantage that single digit stocks have over penny stocks is that since they also include firms whose shares trade between $5 and $10, the opportunities from profiting also increase with the growing comfort of a heftier share price. Additionally, another key benefit that is rather exclusive to single digit stocks is that they can often involve the shares of well established and sizeable foreign entities who also make their American Depository Receipts (ADRs) available for trading on American stock markets.
This trend is present predominantly in the banking sector, with foreign or ex-US banks such as Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG), Lloyds Banking Group plc (NYSE:LYG), and Banco Santander, S.A. (NYSE:SAN) being apt examples. Each of these is a major player in the financial systems of their countries, with a role similar to U.S. banking giants such as JPMorgan Chase & Co. (NYSE:JPM) and The Goldman Sachs Group, Inc. (NYSE:GS).
Therefore, investing in single digit stocks offers a chance of stability as well as profit taking. Continuing with our example of single digit banking stocks, MUFJ's shares are up by a respectable 16% year to date, despite the fact that Japan's economy, like other developed peers such as the United Kingdom and Germany, is not performing well. Similarly, even though Britain is officially in recession territory, Lloyd's stock has shed just 6% over the past twelve months and had the shares not dropped in January, then just like the British economy, the stock would also be nearly flat in growth terms.
Before we head to our list of the best single digit stocks, it's important to also keep in mind recent stock market and economic news. With NVIDIA Corporation (NASDAQ:NVDA)'s blockbuster earnings out of the way, investors will now focus on interest rates and U.S. GDP growth - both of which are quite interlinked. Starting with the latter, S&P Global Inc. (NYSE:SPGI), ahead of its flagship S&P 500 crossing the coveted 5,000 point barrier and setting a new record, also upgraded its forecasts for U.S. economic growth in 2024. The ratings agency now believes that the American economy will grow by 2.4% in 2024, for a significant upward revision over the previous estimate of 1.5%. As this would hint on its own, the Federal Reserve's latest meeting minutes also show that the central bank is worried about cutting rates too soon rather than too late.
So, with single digit stocks offering the promise of returns and stability, we decided to look at what stocks hedge funds are buying. Some notable picks are Southwestern Energy Company (NYSE:SWN), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Transocean Ltd. (NYSE:RIG).
12 Best Single Digit Stocks To Invest In
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Our Methodology
To make our list of the best single digit stocks to buy, we ranked the 60 most valuable single digit stocks in terms of market capitalization by the number of hedge funds that had bought the shares as of December 2023. Out of these, the single digit stocks with the highest number of hedge fund investors were chosen.
For these best single digit stocks, we have also mentioned hedge fund sentiment. Hedge funds' top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That's why we pay very close attention to this often-ignored indicator.
Garrett Motion Inc. (NASDAQ:GTX) is an American car parts manufacturer that sells performance products like turbos for cars and air compressors for industrial use. It marks a slow start to our list of the best single digit stocks by having beaten analyst EPS estimates in only one of its four latest quarters.
Insider Monkey dug through 933 hedge funds for their fourth quarter of 2023 shareholdings to find out that 32 had invested in the firm. The largest Garrett Motion Inc. (NASDAQ:GTX) shareholder in our database is Howard Marks's Oaktree Capital Management courtesy of its $426 million stake.
Along with, Warner Bros. Discovery, Inc. (NASDAQ:WBD), Southwestern Energy Company (NYSE:SWN)and Transocean Ltd. (NYSE:RIG), Garrett Motion Inc. (NASDAQ:GTX) is a top single digit stock that hedge funds are piling into.
Marqeta, Inc. (NASDAQ:MQ) is an American software company that provides financial technology products to help users to issue cards and run other functions. Amidst a tumultuous run on the earnings front that has seen the firm miss estimates several times, the shares received a boost in February 2024 when Bank of America upgraded them to Buy from Neutral and cited the potential for Marqeta, Inc. (NASDAQ:MQ)'s top line to grow by 20%.
By the end of 2023's December quarter, 32 out of the 933 hedge funds profiled by Insider Monkey had bought a stake in Marqeta, Inc. (NASDAQ:MQ). Jim Simons' Renaissance Technologies was the firm's biggest hedge fund shareholder since it owned $76 million worth of shares.
Newell Brands Inc. (NASDAQ:NWL) is a diversified consumer goods firm that sells products like coffee and cleaning items. Unlike Marqeta, whose shares soared in 2024, Newell Brands Inc. (NASDAQ:NWL)'s fell to record lows in February 2024 after its full year earnings guidance disappointed investors.
As of December 2023 end, 33 out of the 933 hedge funds covered by Insider Monkey's research had held a stake in the firm. Newell Brands Inc. (NASDAQ:NWL)'s largest stakeholder among these is Richard S. Pzena's Pzena Investment Management due to its $469 million investment.
Clarivate Plc (NYSE:CLVT) is a sizeable British technology company that allows researchers and others to consolidate, analyze, and work with their data. A key stock to watch amidst the current AI wave, its shares are rated Buy on average but the average analyst share price target offers no upside.
For their fourth quarter of 2023 shareholdings, 33 out of the 933 hedge funds tracked by Insider Monkey had bought and owned Clarivate Plc (NYSE:CLVT)'s shares. Leonard Green's Leonard Green & Partners was the biggest investor since it owned $1 billion worth of shares.
BGC Group, Inc. (NASDAQ:BGC) is an American brokerage that deals in a wide variety of investment products and securities. It's one of the more interesting stocks on our list of the best single digit stocks since while the shares soared after BGC Group, Inc. (NASDAQ:BGC) announced record earnings results in February 2024, they ended up reversing all the gains a week later.
During December 2023, 34 out of the 933 hedge funds covered by Insider Monkey's research held a stake in BGC Group, Inc. (NASDAQ:BGC).
Kinross Gold Corporation (NYSE:KGC) is a Canadian gold company with operations in the U.S., Canada, and other countries. With gold seeing increased demand all over the world over the past twelve months, Kinross Gold Corporation (NYSE:KGC) has done well on the earnings front by having beaten analyst EPS estimates in all four of its latest quarters.
By the end of 2023's final quarter, 36 out of the 933 hedge funds profiled by Insider Monkey were the firm's shareholders. Kinross Gold Corporation (NYSE:KGC)'s largest hedge fund stakeholder is Jim Simons' Renaissance Technologies due to its $178 million stake.
Grab Holdings Limited (NASDAQ:GRAB) is a Singaporean software company whose app provides users with a unified platform to order goods, and rides, and avail of other services. Even though the firm sought to woo investors with a share repurchase program, its full year 2023 earnings report still led to a sizeable share price drop due to a $2.75 billion 2024 revenue guidance that fell short of analyst estimates.
After digging through 933 hedge fund portfolios for last year's fourth quarter, Insider Monkey found that 37 had bought and owned Grab Holdings Limited (NASDAQ:GRAB)'s shares. Chase Coleman and Feroze Dewan's Tiger Global Management LLC was the biggest investor since it owned $172 million worth of shares.
Southwestern Energy Company (NYSE:SWN), Grab Holdings Limited (NASDAQ:GRAB)Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Transocean Ltd. (NYSE:RIG) are some top hedge fund single digit stock picks.
