7 cheap, rising stocks to invest in

In this article, we discuss the 7 cheap, emerging stocks to invest in, as well as the likely impact of the Federal Reserve's recent interest rate cuts

The Fed's recent interest rate cuts have been a major catalyst for the market, adding additional momentum to an already strong performance. The market started the day with another all-time high on September 26th and it appears the cuts have had a positive impact on market sentiment and activity.

Still, some experts still say investors are acting with caution as the schedule moves closer to the U.S. election. Jonathan Steinberg, CEO of Wisdomtree, recently joined CNBC “Money Mover” Discussing the impact of the Fed's actions on market flows, he noted that while the 50 basis point rate cut could reduce the risk of recession, a significant amount of money would still be left behind.

Steinberg explained that due to uncertainty about the upcoming election and its potential impact on the economy, many investors are cautious and keeping their money in safe places such as money market funds. The candidates' different policies make it difficult to predict market trends, so people wait for election results before making big investment decisions.

Expert opinions on the choice

As the elections get closer, the mood among the candidates becomes more mixed as it seems to be very close. While many have strong opinions about their favorite candidates, economists and market experts may disagree.

In our article These are the 7 best revenue growth stocks to buy, according to analysts. We discussed Professor Jeremy Siegel's opinion on the Fed's interest rate cuts and the upcoming election. Here is an excerpt from the article:

“In a discussion of the presidential candidates' economic policies, Professor Siegel criticized both sides as extreme and said their policies were unlikely to be implemented. He said there would be a divided government that would limit drastic changes. He stressed that while some policy measures could be proposed, actual governance would lead to compromise rather than comprehensive reforms.”

While Professor Siegel remained neutral and criticized both sides, Harvard professor and former chair of the Council of Economic Advisers Jason Furman appears to lean more toward the Democratic Party. However, he also criticized both candidates' economic plans in an interview on CNBC on September 20th Squawk box.

Insights from Jason Furman on Fed policy

In discussing the Fed's rate-cutting policy, Furman noted that while he would have preferred a smaller 25-point cut, he does not believe the Fed has inside knowledge of serious economic risks.

He believes this move is just a sign of caution in the face of rising unemployment. Regarding the unemployment situation, he said he was “a little nervous too, just not quite as nervous as 50 basis points.”

Furman acknowledged that inflation has fallen but noted that risks remain, such as potential wage-related inflation and the possibility of a recession. He appreciated the Fed's gradual approach, which allows adjustments to future interest rate decisions if necessary.

With that we look at the 7 cheap, rising stocks to invest in.

7 cheap, rising stocks to invest in

Our methodology

For this article, we used stock screeners to identify over 30 stocks that have seen their share price rise more than 10% in the last month and have a forward price-to-earnings ratio of less than 15 as of September 27th. We've narrowed our list down to 7 stocks most commonly held by institutional investors. The 7 cheap emerging stocks are listed in ascending order of hedge fund sentiment, drawn from Insider Monkey's database of over 900 elite hedge funds.

Why do we care about the stocks hedge funds invest in? The reason is simple: Our research shows that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (see more details here).

7 cheap, rising stocks to invest in

7. United Airlines Holdings, Inc. (NASDAQ:UAL)

FWD-PE ratio: 6.02

1-month share price performance: 36.00%

Number of hedge fund owners: 56

United Airlines Holdings, Inc. (NASDAQ:UAL) is a major provider of air transportation services around the world. With a vast network spanning North America, Asia, Europe, Africa, the Pacific, the Middle East and Latin America, the company transports both passengers and cargo across its mainline and regional fleets.

In addition, the company provides a variety of services including catering, ground handling, flight training and maintenance to third parties, further diversifying its operations. It's ranked No. 7 on our list of cheap, emerging stocks to invest in.

In the second quarter, the airline reached a remarkable milestone by carrying 44.4 million passengers, the highest number for this period in the company's history. It shows a strong recovery in air travel demand and a well-executed operational strategy.

In a single day during the quarter, the company set a new record by processing 565,000 travelers, demonstrating its ability to handle large volumes while maintaining service quality. Additionally, its international capacity was 35% larger than that of its closest U.S. competitor, a reflection of its strong market position and extensive global reach.

In a significant step to improve the passenger experience, United Airlines (NASDAQ:UAL) entered into a groundbreaking agreement with SpaceX in September to provide Starlink's high-speed Wi-Fi service on its aircraft.

The partnership represents the largest deal of its kind in the aviation industry and allows the company to offer its travelers a fast and reliable internet connection for free. The new service allows passengers to access live TV, streaming, social media, shopping and gaming in-flight, transforming the in-flight experience.

With plans to add Starlink connectivity to over 1,000 aircraft, the company is poised to become an industry leader in providing unparalleled onboard internet access. Testing is expected to begin in early 2025, with the first passenger flights using Starlink service expected to take place later this year.

According to our database, 56 hedge funds held shares in United Airlines (NASDAQ:UAL) in the second quarter, with positions worth $1.468 billion. PAR Capital Management is the company's largest shareholder, holding a stake valued at $221.843 million in the second quarter.

6. JD.com, Inc. (NASDAQ:JD)

FWD-PE ratio: 10.04

1-month share price performance: 51.40%

Number of hedge fund owners: 59

JD.com, Inc. (NASDAQ:JD) is a leading technology and services provider in China focused on supply chain solutions. The company offers a wide range of products including computers, communication devices, consumer electronics and home appliances.

In addition to these categories, general merchandise such as groceries, beverages, fresh produce, baby and maternity items, as well as furniture and home goods are offered. The platform serves consumers directly and provides third-party merchant marketplace services, marketing solutions and omnichannel strategies for both customers and offline merchants.

In addition, JD.com (NASDAQ:JD) is engaged in online healthcare services and manages its own logistics facilities, improving the efficiency of its operations. The company takes its place among our cheap, emerging stocks to invest in.

In the second quarter, the company reported revenue of more than $4 billion and earnings of $1.13 per share for the period ending in June. Although sales showed only modest year-over-year growth, they still exceeded expectations.

More importantly, profits significantly beat analysts' forecasts, nearly doubling compared to the same quarter in 2023. This shows the company's ability to improve profitability even in a difficult retail environment.

Interestingly, while online retail remains JD.com's (NASDAQ:JD) primary source of revenue, its logistics segment is emerging as the growth driver, posting the highest revenue and profit increases in the second quarter.

In addition, the company announced in August a massive $5 billion share repurchase program that is scheduled to begin in September 2024 and last for three years. It allows the company to repurchase shares in a flexible manner and use various strategies such as open market purchases and private negotiations depending on market conditions. The decision signals confidence in the company's long-term prospects and its commitment to delivering value to shareholders.

Ariel Investments stated the following about JD.com, Inc. (NASDAQ:JD) in its first quarter 2024 investor letter:

“We initiated a position in China-based technology-focused e-commerce company JD.com, Inc. (NASDAQ:JD). Due to its unique first-party model and unparalleled fulfillment service powered by JD Logistics, the brand has long been known throughout the region as a premier online shopping channel. But a difficult macroeconomic environment drove stocks lower as buyers began looking for bargains. In response, the company invested significantly in further developing its third-party merchant platform to improve product variety and price competitiveness for consumers. We believe these measures will lead to improved product mix, stronger sales growth and margin expansion in the future.”