Astute investors should keep close tabs on these stocks under $50 to buy and hold forever.
- Trade Desk (TTD): Trade Desk enjoys a stable balance sheet to ride out turmoil.
- Fastenal (FAST): Fastenal enjoys excellent profitability metrics.
- Simulations Plus (SLP): Simulations Plus features stability and strong profits.
- Semtech (SMTC): Semtech is stable and noticeably undervalued.
- Kulicke and Soffa Industries (KLIC): KLIC features strengths across the board.
- Trex (TREX): Trex enjoys excellent income-statement metrics.
- New York Times (NYT): New York Times is a zero-debt underappreciated idea.
With the major equity indices presently swimming in red ink, on paper, it’s not hard to find stocks under $50 to buy and hold forever. After all, several market ideas find themselves below parity for the year, often via a double-digit magnitude. Still, the exercise is a bit more complex because of the Federal Reserve and its monetary tightening policy pivot.
Fundamentally, I recently discussed the monetary backdrop at the current juncture. “In the trailing five years since September 2022, the real M2 money stock expanded over 30%. Put another way, money was ‘cheap’ (or inflationary), so it incentivized business growth. However, in the trailing year, M2 declined over 5%, making money ‘expensive’ (deflationary).”
Translation? The best stocks under $50 to buy and hold forever must be relevant and fiscally resilient.
Using the investment resource Gurufocus, I extracted several market ideas that at minimum feature higher-than-average stability in the balance sheet. As well, these best stocks under $50 to buy may bring other qualities, such as fundamental relevance or other financially attractive metrics.
|TTD||Trade Desk Inc||$47.76|
|SLP||Simulations Plus Inc||$48.19|
|KLIC||Kulicke and Soffa||$45.50|
|NYT||New York Times Company||$34.92|
Stocks Under $50 to Buy and Hold: Trade Desk (TTD)
Based in California, Trade Desk (NASDAQ:TTD) represents a multinational technology company that specializes in real-time programmatic marketing automation technologies, products and services. As of this writing, TTD dropped nearly 47% on a year-to-date (YTD) basis. In the trailing month, shares dropped over 12% of equity value. A name among the stocks under $50 to buy and hold? Perhaps not, you might be thinking.
At the same time, investors should focus on forward developments. For instance, major content entertainment streaming platforms recently reported significant subscriber growth.
To be fair, concerns exist regarding the sustainability of this growth in the quarters ahead. However, with consumer sentiment strained due to macroeconomic headwinds – but with people still desiring entertainment – Trade Desk may enjoy demand inflows due to spiked interest in programmatic ad services.
Moving onto the financial snapshot, Trade Desk will likely benefit from its strong balance sheet. Its Altman Z-Score is nearly 8 points, reflecting extremely low bankruptcy risk. With the global markets emphasizing stability over expansion potential, TTD represents one of the stocks under $50 to buy.
Headquartered in Winona, Minnesota, Fastenal (NASDAQ:FAST) bills itself as a supply chain solutions company. Other publications label Fastenal as an industrial distributor. Shares traded around $48.88 yesterday, barely making the numerical threshold for stocks under $50 to buy. Since the start of the year, FAST slipped over 17%. However, in the trailing month, it’s up 11%.
Whatever you think about the underlying industry, Fastenal makes sense as a stable and reliable portfolio pick. For instance, Fastenal enjoys a solid balance sheet, anchored by an Altman Z-Score of 15.5. Again, that demonstrates extremely low bankruptcy risk. Also, its equity-to-asset ratio stands at 0.68 times, ranking better than almost 83% of its peers.
But it’s the bottom line that helps Fastenal distinguish itself amid the elite stocks under $50 to buy. Primarily, the company commands strong profitability metrics. Its operating and net margins ping at 20.9% and 15.7%, respectively. Both metrics occupy the top 5% of the underlying industry.
Stocks Under $50 to Buy and Hold: Simulations Plus (SLP)
Headquartered in Lancaster, California, Simulations Plus (NASDAQ:SLP) develops absorption, distribution, metabolism, excretion, and toxicity modeling and simulation software for the pharmaceutical and biotechnology, industrial chemicals, cosmetics, food ingredients and herbicide industries. Currently, the market prices SLP at $42.88. It’s down 14% YTD. As well, near-term momentum presents concerns, with shares shedding 11% of value in the trailing month.
Similar to the top stocks under $50 to buy, Simulations Plus enjoys a very stable balance sheet. Most conspicuously, its cash-to-debt ratio stands at a whopping 91.3 times. In contrast, the healthcare provider and services industry features an average ratio of only 0.88 times.
Put another way, SLP ranks better than 90% of its peers for this metric. Considering the money-tightening environment, cash on hand may represent a significant premium moving forward.
Also, investors should consider the excellent metrics on the bottom line. For example, the company’s operating and net margins stand at 27.7% and 23.2%, respectively. Both rate among the leaders for the sector.
Founded in 1960, Semtech (NASDAQ:SMTC) represents a supplier of analog and mixed-signal semiconductors and advanced algorithms for consumer, enterprise computing, communications and industrial end-markets. As of this writing, Wall Street priced SMTC at $29. Similar to other tech-related stocks under $50 to buy, SMTC took a beating this year, shedding 68% of equity value.
Worrying? Listen, I wouldn’t be honest if I didn’t say Semtech represented a speculative idea. However, outside headwinds such as the global supply chain disruption negatively impacted companies like Semtech. At some point, these factors will eventually fade and allow investors to focus on core attributes.
For SMTC right now, investors should consider its stability — specifically its Altman Z-Score of 5.32. As well, its equity-to-asset ratio of 0.67 ranks higher than 60.3% of the industry. Moreover, SMTC brings great value to the table. It’s only trading at 10.4 times forward earnings, below the sector median of 15.3 times.
Stocks Under $50 to Buy and Hold: Kulicke and Soffa Industries (KLIC)
Founded in 1951, Kulicke and Soffa Industries (NASDAQ:KLIC) hails from Singapore. According to its public profile, the company is a leading provider of semiconductor, LED and electronic assembly solutions serving the global automotive, consumer, communications, computing and industrial markets. Presently, the market prices KLIC at $46. Since the beginning of this year, KLIC dropped over 29% of equity value.
Again, like other tech-related stocks under $50 to buy, Kulicke and Soffa suffered from sector-specific headwinds. In addition, the exposure to the global automotive industry has been problematic because this segment too suffered from disruptions. As well, economic challenges may pressure auto sales. Still, mobility represents a must-have for many regions. Thus, contrarians may have a viable argument with KLIC.
What’s not disputable, though, centers on its sector-beating financial metrics. Broadly speaking, KLIC benefits from the trifecta of stability (strong cash balance), growth (excellent revenue trek) and earnings (blistering profitability margins). On top of it all, KLIC trades for 5.7 times trailing-12-month earnings, which is deeply undervalued.
Headquartered in Winchester, Virginia, Trex (NYSE:TREX) is a manufacturer of wood-alternative composite decking, railing and other outdoor items made from recycled materials. Per its corporate profile, Trex is the world’s largest manufacturer of wood-alternative decking and railing. Currently, TREX trades hands just under $50. Shares slipped 62% YTD. Moreover, the near-term picture doesn’t encourage, falling almost 14% in the trailing month.
On paper, prospective investors do have a right to be concerned about this market idea. Go ahead and consider it one of the speculative names among stocks under $50 to buy. However, the latter point still presents relevance because of its baseline stability. For instance, Trex features an Altman Z-Score of 14.5, indicating extremely low bankruptcy risk.
Arguably, though, market participants will likely tune in to the company’s income-statement metrics. On the top line, Trex carries a three-year revenue growth rate of 21.3%, beating out nearly 90% of its peers. On the bottom line, the company has a net margin of 16.4%, greater than over 91% of the industry.
To be fair, headwinds like economic woes and the housing boom-bust cycle clearly hurt Trex. However, thanks to its stability, the stock could be a significant discount.
Stocks Under $50 to Buy and Hold: New York Times (NYT)
I’m going to end this list of stocks under $50 to buy and hold on a fun one. Well, I’m talking about the New York Times (NYSE:NYT), so it might not be fun for everyone. Nevertheless, representing one of the most well-known mass media companies in the world, NYT deserves a look. Currently, the market prices its shares at $34.86. Since the start of the year, NYT dropped nearly 28% of equity value.
Still, over the trailing five days, NYT stock gained nearly 5%. While some critics dismiss the Times as “fake news,” the tight results of the midterm elections revealed basically a 50/50 split among voters. This suggests neither side really dominates the political discourse, implying opportunities for a well-known brand like the New York Times.
Let’s get into the facts. According to Gurufocus, NYT enjoys a strong balance sheet unburdened with debt. Further, its Altman Z-Score of 5.7 reflects a business largely safe from bankruptcy risk. As well, it’s a broadly positive enterprise, featuring better-than-sector average operating and net margins. Whatever your beliefs, you can’t ask for much more from stocks under $50 to buy and hold forever.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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