We recently published a list of 10 Best Low Priced Stocks to Invest in For the Long Term. In this article, we are going to take a look at where Snap Inc. (NYSE:SNAP) stands against other best low priced stocks to invest in for the long term.
As per AllianceBernstein, tariffs and trade wars have impacted investors of late. While some asset classes were spared, the US small-cap stocks have been hard hit. Over the past 6 months, the Russell 2000 Index has witnessed a decline of over ~10%. That being said, the investment firm opines that equity markets continue to show signs of broadening, which can work in favor of small-caps over time. The small-caps have underperformed in part since they are perceived as being more economically sensitive as compared to their larger-company counterparts.
What Lies Ahead?
The current circumstances are unique, says AllianceBernstein. Trade tensions can have a more significant impact on the broader US economy, but robust companies can still see earnings growth. The small-cap investors can also take a sigh of relief from the broadening market. The investment firm highlighted that, over the previous 30 years, small-cap performance remained particularly robust over the last 2 cycles of unwinding large-cap growth concentration, i.e., when markets start to broaden.
The 10 largest stocks accounted for over half the market capitalization of the Russell 1000 Growth Index by 2024 end, exhibiting a record high in the market concentration. Despite the trend reflecting the signs of unwinding, the concentration remains much higher as compared to the previous peaks. As per AllianceBernstein, small-caps are well-placed to benefit from the declining market concentration.
AllianceBernstein opines that, while broadening markets have resulted in improved small-cap returns, timing the turn can be a difficult task. Typically, economic recoveries have fueled such transitions. In a bid to capitalize on the broadening market with an uncertain beginning, the firm believes that the best approach is to emphasize higher-quality companies. High-quality stocks tend to see reduced drawdowns when there is a contraction in the economy, and more upside when it sees expansion.
The firm also opines that small-cap stocks trade at extremely depressed valuations as compared to the larger companies, based on P/E ratios. Notably, the geopolitical tensions and macroeconomic worries have impacted the small companies. Without considering the company fundamentals, the investors have discounted potential hazards for such companies. Investing in firms exhibiting resilient business models can benefit along the road to recovery.
Our Methodology
To list the 10 Best Low Priced Stocks to Invest in For the Long Term, we sifted through financial media reports to make a list of 40 potential long term stocks. We focused on companies with a market cap of at least $2 billion with a share price below $10. We further refined our list to include stocks that had bullish analyst sentiment. We also mentioned the hedge fund sentiment around each stock, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiment.
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 Snap Inc. (SNAP) the Best Low Priced Stock to Invest in For the Long Term?
A young adult family using a Camera to record moments of their daily life.
Snap Inc. (NYSE:SNAP) operates as a technology company. Analyst John Blackledge from TD Cowen maintained a “Hold” rating on the company’s stock and gave a price objective of $9.00. The analyst’s rating is backed by a combination of factors, which include the company’s recent financial performance and future outlook. While Snap Inc. (NYSE:SNAP)’s management is optimistic regarding the long-term growth with the help of improvements in the ad platform and diversification of revenue sources, they have highlighted a cautious approach regarding investment over the near term, added Blackledge.
In Q1 2025, Snap Inc. (NYSE:SNAP)’s quarterly revenue rose 14% YoY due to the progress it made with its direct-response advertising solutions, continued momentum in driving performance for small and medium-sized businesses, and the growth of its Snapchat+ subscription business. Snap Inc. (NYSE:SNAP)’s continued investment in AR technology places it as a leader in the emerging field. With AR becoming more mainstream, the company’s early-mover advantage can result in strong growth opportunities. Easy Lens, an AI-powered tool simplifying Lens creation, went into early testing in mid-December and has been utilised to create more than 10,000 Lenses, garnering more than 2 billion impressions.
RiverPark Advisors, an investment advisory firm and sponsor of the RiverPark family of mutual funds, released its Q3 2024 investor letter. Here is what the fund said:
“Snap Inc. (NYSE:SNAP): SNAP was a top detractor in the third quarter following a second quarter earnings report that fell short of high expectations. While the company reported strong Daily Active User (DAU) growth (432 million +10% year-over-year) and time spent watching content on the app (+25% year-over-year), revenue of $1.24 billion was below the midpoint of the company’s guidance and slightly below investor expectations. Management pointed to weakness in their Brand Advertising vertical, specifically highlighting demand for retail, technology, and entertainment advertising for slowing through the quarter. SNAP did exceed EBITDA expectations by $15 million due to better operating leverage, but guided third quarter EBITDA below expectations as the company plans to make some targeted investments around AI infrastructure.
Overall, SNAP ranks 3rd on our list of best low priced stocks to invest in for the long term. While we acknowledge the potential of SNAP 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. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than SNAP but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
