You may not need a treasure trove to dive into the stock market waters. There are numerous titans in the market whose shares can be yours for under $50. While a solitary share of Meta Platforms dazzles at $500, a neat package of 10 other stocks could be yours for a song at $50. These “cheap” stocks not only boast low prices but also sport undervaluations relative to their companions, making them hidden gems that merit attention.
The markets are scaling historic heights, with many stocks basking in the glow of substantial profits over the past year and a half. However, there are hidden contenders lurking in the shadows of low prices, waiting for the right catalyst to propel them into the limelight. Analysts have their eye on the potential winners among these bargain stocks. Here are the top three under-$50 stocks that are captivating Wall Street in April 2024.
The Birkenstock Boom (BIRK)
There is a new spring in the step of German footwear maven Birkenstock Holding (NYSE:BIRK), a company distinguished by its iconic sandals. After its debut on the stock exchange last fall, BIRK’s shares have sprinted 25% ahead to reach $45 per share, marking it as one of the most successful IPOs in recent memory. Founded in 1774, the company’s financials are starting to tell a tale of success. In February, Birkenstock stunned Wall Street with its fourth-quarter 2023 results, surpassing expectations with a 22% year-over-year revenue surge.
The company credited the upswing to increased pricing strategies and robust demand in the United States. Birkenstock reported a profit of 17 million euros ($18.46 million USD) post exceptional items, eclipsing analysts’ estimates. Forecasts are optimistic for Birkenstock as it gains traction and accelerates sales, not just in the U.S. but across Europe and in the burgeoning market of China. Diversification into direct sales channels has been fruitful, with direct-to-consumer sales constituting 53% of total revenue.
Fording Ahead (F)
Analysts are cheering for Ford Motor Co. (NYSE:F) as the company leaves last fall’s United Auto Workers strike in the rearview mirror. Since January, F stock has revved up by 11%, offering shares below $14. Ford’s stock valuation appears enticing at just 12 times future earnings estimates, enhanced by a handsome quarterly dividend of 15 cents per share, translating to a robust yield of 4.43%. Known for its sporadic special dividends, Ford recently doled out an 18 cents per share special dividend alongside its regular first-quarter dividend.
Embracing a strategic gear shift, Ford’s executives have decided to decelerate electric vehicle production in favor of gas-electric hybrids, currently in higher demand. This market pivot has benefited the automaker, as evidenced by the rally in F stock since the announcement. Postponing or cancelling $12 billion in electric vehicle investment due to market dynamics and production challenges, Ford is focusing on the profitability of its gas-powered vehicles.
American Airlines’ Ascendance (AAL)
American Airlines Group (NASDAQ:AAL) is another treat for bargain hunters, with shares available for less than $14. As the world’s largest carrier, American Airlines is in the process of rebounding from the pandemic’s toll. AAL’s stock sits at a 60% discount from its pre-Covid-19 levels in 2019, presenting an irresistible value proposition at just 11 times future earnings forecasts. Although lacking a dividend, AAL remains an attractive buy-the-dip opportunity for investors.
Globally, travel demand has surpassed pre-pandemic levels, with projected travelers in 2024 set to reach a record 4.7 billion, compared to 4.5 billion in 2019. American Airlines leads the pack in annual passenger volume and is proving its mettle through strong earnings performance, propelling AAL stock higher and beckoning investors to consider a stake.
Joel Baglole’s insatiable curiosity about the financial realm has fostered his journalism career spanning two decades—five years spent as a staff reporter at The Wall Street Journal and bylines in prominent publications like The Washington Post and Toronto Star. He also dabbles in financial wisdom dissemination through The Motley Fool and Investopedia.