We recently compiled a list of the 10 Best Low Priced Stocks to Invest in Now.In this article, we are going to take a look at where Ambev S.A. (NYSE:ABEV) stands against the other low priced stocks.
As per American Century Investments, global small-cap stocks might be well-placed to benefit from changes in the macroeconomic factors in 2025. Inflation, elevated interest rates, and fears of recession impacted smaller companies in recent years, resulting in the significant underperformance of small-caps as compared to the large-caps. This trend was seen in 2024, with large caps dominating through the first half. However, sentiments shifted at mid-year when some momentum was seen in small caps.
What Lies Ahead?
The small caps picked up an additional tailwind post the US elections, says American Century Investments. The investors expected stocks, mainly small-caps, to benefit from Trump’s approach to taxes, tariffs, and regulations. The expectations for continued cuts by the US Fed and several other central banks have resulted in favorable conditions for small-caps. Trump’s approach towards tariffs can result in large companies bringing their supply chains closer. The small-caps can benefit from higher capital spending associated with reshoring and nearshoring.
The growth of AI is anticipated to continue to increase demand for data centers and energy. Even though the Mag 7 companies have managed to get more attention, American Century Investments believes that this trend can also support small-caps in multiple categories. The beneficiaries might include data center operators and providers of energy-efficient cooling solutions. While M&A and IPO activity witnessed a fall in 2022 and 2023, reduced rates and a favorable US regulatory environment can result in more deals in 2025. The investment firm expects that deregulation might fuel capital markets activity, supporting banks and boutique investment firms.
BNP Paribas Asset Management expects that earnings will fuel the next leg higher for small-cap stocks. The analysts are expecting strong earnings growth i.e., by 42% in 2025 and by 36% in 2026 in comparison to just 6% in 2024. This is ahead of the historical earnings growth rate of 15%. For decades after China was admitted to the World Trade Organisation (WTO) in 2001, US companies were focused on outsourcing production to lower-cost nations (like China) to drive profits.
The asset management firm now expects this trend to reverse over the coming years. During COVID-19, having supply chains and manufacturing far from home resulted in significant difficulties for US firms. Therefore, they are now looking to ‘re-shore’ production. Also, elevated geopolitical tensions and protectionism remain other catalysts, supported by financial support from the US federal government’s CHIPS Act as well as the Infrastructure Investment and Jobs Act.
Our Methodology
To list the 10 Best Low Priced Stocks to Invest in Now, we used a screener and shortlisted the stocks trading at less than $10. Next, we chose the ones that were popular among hedge funds. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
Is Ambev S.A. (ABEV) Among the Firms Buck Broader Market Optimism?
A close-up on several cans of freshly brewed beer in a commercial brewery.
Ambev S.A. (NYSE:ABEV) is engaged in the production, distribution, and sale of beer, draft beer, carbonated soft drinks, malt and food, other alcoholic beverages, and non-alcoholic and non-carbonated products. The company’s demonstrated ability to implement effective pricing strategies offers a strong case for future revenue growth. Therefore, the pricing power can be leveraged to drive revenue growth even in challenging market conditions. Furthermore, with continuous improvement in economic conditions and increases in consumer spending, Ambev S.A. (NYSE:ABEV) might be well-placed to capitalize on its premium brands.
The company can potentially roll out higher-margin products or implement tiered pricing strategies in a bid to capture different market segments. Through continuous refinement of its pricing approach according to market dynamics and consumer behavior, Ambev S.A. (NYSE:ABEV) can optimize its revenue mix and fuel sustainable growth. The company continues to focus on delivering another year of top-line and bottom-line growth and gross and EBITDA margin expansion (because of costs and expenses discipline). The continued focus on product innovation, market expansion, and operational efficiencies can help Ambev S.A. (NYSE:ABEV) fuel sustainable growth.
Overall ABEV ranks 8th on our list of the best low priced stocks to invest in now. While we acknowledge the potential of ABEV as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than ABEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
