We recently published a list of 10 Best Single Digit Stocks To Buy Now. In this article, we are going to take a look at where Bumble Inc. (NASDAQ:BMBL) stands against other best single digit stocks to buy now.
The US markets had a blockbuster 2024, led by a strong show by the technology sector. The broader market grew by over 23% during the year after rising 24% in 2023. Two consecutive years of over 20% gains marked the market’s best performance in nearly three decades.
Stocks have benefited from a resilient American economy that steered clear of recession. Waning inflation and interest rate cuts also bolstered investor sentiment throughout last year. Research analysts anticipate continued growth in 2025 amid strong economic data and anticipation of a business-friendly Trump administration.
In a note on December 30, Wedbush Securities analyst, Dan Ives, said that he expects tech stocks to surge 25% this year with the incoming Trump administration focusing on slashing unnecessary regulations.
Todd Rosenbluth, the head of research at VettaFi, believes 2025 could be the year for small-cap stocks with solid underlying fundamentals. He expects ETFs specializing in small-caps to make gains as investors broaden their market exposure as interest rates ease.
Rosenbluth shared the following remarks while talking to CNBC in late November.
“Small caps are going to become more in favor in 2025. They started to perk up since the election and heading into the election as interest rates have been coming down.”
Fundstrat’s Tom Lee also shares similar sentiments. In an interview in November, he said that small-cap stocks could soar in the coming years under the new administration, driving monster returns.
“I do think there’s still a lot of upside. So I think small-caps could, over the next couple of years, outperform by more than 100%.”
On the other hand, some Wall Street analysts are cautious about the new year and have warned of potential downsides, with the incoming administration promising new tariffs. Following his election victory, President-elect Trump vowed to impose steep tariffs on imports from Canada, China, and Mexico, which could increase costs for manufacturers. Ongoing geopolitical tensions in different parts of the world could also hurt the stock market.
Jurrien Timmer, Director of Global Macro for Fidelity Management & Research Company wrote the following in a note on December 18.
“Personally, I am bullish on stocks for 2025, though with valuations high and the bull market maturing, I don’t think investors should expect quite such spectacular returns next year as we have seen this past year. And I think there are important risks from inflation, and the market’s concentration, to be aware of.”
Methodology
For this article, we sifted through screeners to get a list of stocks priced greater than $1 and less than $10, with a low forward price-earnings ratio (<15) and institutional ownership of over 70%. From there, we selected the 10 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024.
The 10 best single digit stocks to buy now have been ranked in ascending order based on the number of hedge funds holding stakes in them. Where two or more stocks were tied on hedge fund sentiment, we used a higher market cap as a tiebreaker between them. Please note that all data is as of the close of day on Friday, December 27, 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Bumble Inc. (BMBL) The Best Single Digit Stock To Buy Now?
A close up of two hands creating a social media post on Bumble Inc. app.
Bumble Inc. (NASDAQ:BMBL) provides online dating and social networking applications, servicing North America, Europe, and several other countries in different regions. It operates five apps – Bumble, Bumble for Friends, Badoo, Fruitz, and Official.
In April 2024, Bumble rolled out a new feature called ‘opening moves’, opening the doors for men to initiate conversations on the platform. This moved away from the decade-old model that allowed women to make the first move so that they could have more power over their dating lives. Analysts view the move as part of efforts by dating apps to maintain their relevance as an increasing number of singles feel burnt out on online dating platforms.
Under the new feature, female users can set a prompt for male daters to respond to start a conversation. The app’s new relaunch also includes badges that let users state their dating intentions by indicating whether, for instance, they are looking for a ‘life partner’ or a ‘casual relationship’.
Bumble Inc. (NASDAQ:BMBL) has also been focused on growth and expansion. Later in the year in May, the company announced that it had signed an agreement to acquire Geneva, an online platform for people to connect based on their shared interests. The move will help the company diversify its focus from one-to-one connections to groups and communities.
Bumble Inc. (NASDAQ:BMBL) continues to deliver on key financial objectives. During its Q3 2024 earnings call on November 6, the company reported a total revenue of $274 million, down 1% from last year, largely due to an unfavorable impact from FX of approximately $1 million. Total paying users grew 11% to 4.3 million. Adjusted EBITDA improved to $82.6 million, or 30.2% of revenue, from $75.3 million, or 27.3% of revenue, during the same period in 2023.
Bumble is also generating solid cash flow. It ended the quarter with $252 million in cash and cash equivalents and generated a free cash flow of $92 million. The strong balance sheet has enabled the company to return significant cash to its shareholders this quarter. It has repurchased $120 million in stock since August.
BMBL is one of the best single digit stocks to buy now, with 31 hedge funds having a stake in the company, as per Insider Monkey’s database for Q3 2024.
Overall, BMBL ranks 10th on our list of best single digit stocks to buy now. While we acknowledge the potential of human capital technology companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BMBL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
