We are experiencing some temporary issues. The market data on this page is currently delayed. Please bear with us as we address this and restore your personalized lists.
Unlock stock picks and a broker-level newsfeed that powers Wall Street.
We recently published a list of 10 Worst Affordable Stocks to Buy Under $10. In this article, we are going to take a look at where Itaú Unibanco Holding S.A. (NYSE:ITUB) stands against other worst affordable stocks to buy under $10.
Will There Be a Small Cap Resurgence in 2025?
On February 18, Chris Clark, Chief Executive Officer, Co-Chief Investment Officer, and Francis Gannon Co-Chief Investment Officer, Managing Director at Royce Investment released their research on Small Cap stocks. The report explored the potential resurgence of small-cap stocks, emphasizing their relatively attractive valuations, promising earnings outlook, and the role of heightened market volatility. The experts highlighted that historically, small-cap stocks have outperformed large-cap stocks over the long term but with higher volatility. However, this advantage has eroded recently, with large-cap stocks dominating performance since 2011. Small-cap growth fared better than value during this period, but 2024 marked the eighth consecutive year of underperformance for small-caps relative to large-caps.
Royce Investment remains optimistic about a small-cap resurgence in the current year. They highlighted that one key factor supporting small-cap leadership is valuation. Small-cap stocks are currently trading at their largest discount to large-caps in over 25 years based on metrics such as enterprise value over earnings before interest and taxes. This valuation disparity is across the board including sectors like Information Technology, Industrials, Financials, and Consumer Discretionary. The report noted that while mega-cap companies may be overpriced, numerous bargains exist within the small-cap universe across diverse industries. These attractive valuations provide a compelling case for small-cap stocks to regain market leadership.
Moreover, earnings growth prospects further enhance the case for small caps. Consensus estimates for 2025 project an 89.3% earnings-per-share growth for the Russell 2000 index compared to 30.9% for the Russell 1000 index. The CEO and CIO of Royce Investment highlighted that while this rebound partly reflects recovery from a two-year earnings recession in small-caps, it underscores their potential for significant growth. Investors should focus on an investment approach that focuses on companies with established earnings histories or clear catalysts for future earnings growth.
The report acknowledged that external factors like tariffs and de-globalization trends may create short-term disruptions. However, the fund sees these developments as opportunities for the US-focused small-cap companies to benefit from reshoring and improved supply chain management. The firm welcomes volatility as it often distracts investors from fundamentals, creating opportunities for active managers to identify undervalued companies with strong long-term prospects.
Our Methodology
To compile the list of the 10 worst affordable stocks to buy under $10 we used the Finviz stock screener, Seeking Alpha, and Yahoo Finance. Using the screener we aggregated a list of stocks trading under $10 with a Fwd P/E under 15 and earnings growth expectations this year. Next, we cross-checked the Fwd P/E and earnings growth for each stock from Seeking Alpha and Yahoo Finance. Lastly, we selected the least popular stocks among hedge funds and listed them in descending order of the number of hedge funds that hold stakes in them, as of Q4 2024. Please note that the data was recorded on March 26, 2025.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is Itaú Unibanco Holding S.A. (NYSE:ITUB) the Worst Affordable Stocks to Buy Under $10?
An executive in a suit walking through a lobby of *Regional Bank* building.
Itaú Unibanco Holding S.A. (NYSE:ITUB) is a Brazil-based financial institution that provides a wide range of banking and nonbanking services. It operates through three main business segments including Retail Banking, Wholesale Banking, and Activities with the Market and Corporations.
Itaú Unibanco Holding SA (NYSE:ITUB) is making significant strides in modernizing its operations and embracing new technologies to enhance its long-term performance and competitiveness. The company has made substantial progress in its modernization and cloud migration initiatives. These efforts have yielded impressive results, with a 99% reduction in high-impact incidents reported in the Q4 2024 earnings call. In addition, the company is heavily investing in data science and AI capabilities such as employing more than 470 data scientists and implementing more than 390 generative AI initiatives.
As part of its strategic initiatives, Itaú Unibanco Holding S.A. (NYSE:ITUB) is implementing the “One Itaú” project, which aims to consolidate its digital presence. The company aims to migrate 15 million single-product users to the company’s primary app. It plans to complete the migration of the remaining clients throughout 2025. The stock was held by 23 hedge funds in Q4 2024 and ranks as one of the worst affordable stocks to buy under $10.
Overall, ITUB ranks 6th on our list of worst affordable stocks to buy under $10. While we acknowledge the potential of ITUB as an investment, 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 ITUB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
