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We recently published a list of 12 Most Undervalued Stocks to Invest in for Under $20. In this article, we are going to take a look at where Invesco Ltd. (NYSE:IVZ) stands against other most undervalued stocks to invest in for under $20.
As we know, nearly all sectors in the S&P 500 index saw gains in 2024, a year dominated by AI enthusiasm and a strong US economy. According to FactSet, the S&P 500 is anticipated to report earnings growth of 11.7% for Q4 2024, marking the highest YoY growth rate reported by the index since Q4 2021. According to an update (as of January 17), the Q4 2024 earnings season for the S&P 500 has seen a strong start. FactSet added that both, the percentage of S&P 500 companies publishing positive earnings surprises and the magnitude of earnings surprises, appear to be above recent averages.
As per Morningstar, the growth drivers identified last year that supported the broader market in 2024 are now receding. The rate of monetary policy easing has been slowing, inflation has been sticky, long-term rates are increasing and the broader US economy continues to slow. Amidst these uncertainties, what lies ahead?
S&P 500 to End at 6,200-6,300 in 2025, Says Goldman
Goldman Sachs’ investment strategy group anticipates the S&P 500 to end between 6,200-6,300 by year-end, demonstrating a total return of ~7% – 8%. The companies’ earnings growth is expected to be the critical driver of the S&P 500’s 2025 return, and Goldman forecasts that the index’s EPS will increase by ~10% to $265 this year. When this earnings growth gets combined with a 1.3% dividend yield and some sort of compression in the P/E ratio, the firm’s base case this year demonstrates high-single-digit total returns and the S&P 500 target range of 6,200 – 6,300.
What to Expect in 2025?
As per Goldman Sachs, the US stocks have faced pressures as of now in January, due to factors including higher Treasury bond yields, after strong performance in 2024 pushed S&P 500 index at elevated valuations. As per the group, the yield on the 10-Y treasury note is expected to conclude the year lower compared to the current level. The firm recommends to remain invested in the US stock market, even though the broader market is historically expensive.
As per Goldman, the US stock market often delivers gains when there are economic expansions. The investment strategy group of the bank has placed 80% odds on the fact that the US economy will continue to expand in the current year. While the elevated valuation can expose the market to downside risks, the investment firm believes that the US equities will outperform intermediate-duration U.S. bonds and cash considering its economic growth forecast of 2.3%.
Our Methodology
To list the 12 Most Undervalued Stocks to Invest in for Under $20, we used a screener to find stocks that are under $20 and have a forward P/E of less than 15x, as of January 17. We also mentioned hedge fund sentiment around each stock, as of Q3 2024. The stocks were ranked in ascending order of their hedge fund sentiment.
At Insider Monkey we are obsessed with 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 Invesco Ltd. (IVZ) Most Undervalued Stock To Invest In For Under $20?
A close-up of a financial executive looking intently at their laptop screen, with a wall of financial charts in the background.
Invesco Ltd. (NYSE:IVZ) is a publicly owned investment manager. Morgan Stanley increased the firm’s price target to $19 from $18, keeping an “Equal-Weight” rating. The firm upped Q4 EPS estimates by 0.7% on average for the asset manager group, courtesy of the higher asset under management (AUM) levels due to better markets and flows. Elsewhere, TD Cowen analysts maintained their “Buy” rating on the shares of Invesco Ltd. (NYSE:IVZ), demonstrating the stronger-than-expected AUM figures.
The company reported preliminary month-end AUM of $1,846.0 billion as of December 31, 2024. Invesco Ltd. (NYSE:IVZ) delivered net long-term inflows of $12.6 billion in the month, equating to an annualized organic growth rate (AOGR) of ~11%, crushing the estimates of 3.4%. Notably, non-management fee-earning net inflows came in at $1.3 billion and money market net inflows stood at $12.0 billion. TD Cowen believes that the strong AUM figures were due to healthy inflows in both Long-Term and Global Liquidity assets.
TD Cowen went on to add that the volume of these inflows could have a mixed impact on fee rates. That being said, the magnitude of the inflows can positively influence Invesco Ltd. (NYSE:IVZ)’s revenue and adjusted operating income outlooks. Furthermore, the company’s broad and diversified investment capabilities place it well for future growth opportunities.
Overall, IVZ ranks 8th on our list of most undervalued stocks to invest in for under $20. While we acknowledge the potential of IVZ 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 time frame. If you are looking for a deeply undervalued AI stock that is more promising than IVZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
