13 NASDAQ Stocks with Lowest PE Ratios That May Not Be Value Traps
In this piece, we will take a look at the 13 NASDAQ stocks with lowest PE ratios. If you want to skip our primer on one of the best performing U.S. stock exchanges this year, then take a look at 5 NASDAQ Stocks With Lowest PE Ratios.
If there's one thing that can be said with certainty about the stock market this year, it's that the NASDAQ index has defied expectations. Led by the surge in mega cap technology stocks, the NASDAQ 100 has delivered 45% returns in the first half of this year and 36.4% year to date after it pared off some of the gains during the third quarter.
The surge in the stocks has come as the market not only becomes quite optimistic about artificial intelligence but also because the U.S. economy has defied investor expectations of a recession and managed to grow during the second quarter. When it comes to AI, the NASDAQ is the index to invest in, as nearly all of the biggest beneficiaries of the new technology such as NVIDIA Corporation (NASDAQ:NVDA) and Microsoft Corporation (NASDAQ:MSFT) are traded on the index.
And while Microsoft has an edge in AI due to its partnership with ChatGPT and the strength of the Azure platform, NVIDIA is a company that is indispensable. This is because NVIDIA's graphics processing units (GPUs) are the best of their kind in the industry and the company is also able to ensure a stable supply of the products to companies that are eager to make the AI transformation. These abilities have changed the narrative around NVIDIA this year, as the firm's earnings results for the second quarter of its fiscal year 2024 saw it report unbelievable revenue and earnings figures which blew analyst estimates not only out of the park but maybe even to space. For its Q2, NVIDIA reported $13.51 billion in revenue, which doubled its year ago figures of $6.7 billion and marked an 88% sequential growth during a time when the chip sector as a whole is undergoing a downturn due to inventory problems. At the same time, NVIDIA was quick to guide an equally strong financial scorecard for its current quarter as the firm expects to bring in $16 billion in revenue to mark 170% revenue growth - a figure that should assuage some nervousness in the market about the firm's ability to sustain the demand for its AI products.
The main reason that NVIDIA is now flying to new heights is its data center division - which includes revenue from the AI products. On this front, the company has partnered up with some of the enterprise computing industry's biggest players. This list includes big ticket and blue chip names such as ServiceNow, Inc. (NYSE:NOW), Accenture plc (NYSE:ACN), Snowflake Inc. (NYSE:SNOW), and VMware, Inc. (NYSE:VMW). NVIDIA's partnership with Accenture and ServiceNow aims to develop a unique platform that is capable of helping business users develop artificial intelligence models to upgrade their capabilities and boost their productivity. Its partnership with Snowflake follows similar principles since it aims to leverage NVIDIA's generative AI development framework called NeMo to enable business customers to use their own data to create large language models for purposes such as search databases and customer support.
Building these partnerships requires remarkably complex products, and NVIDIA's chief financial officer Ms. Collette Kress shared some of this complexity during the firm's latest earnings call where she explained:
There is tremendous demand for NVIDIA accelerated computing and AI platforms. Our supply partners have been exceptional in ramping capacity to support our needs. Our data center supply chain, including HGX with 35,000 parts and highly complex networking has been built up over the past decade. We have also developed and qualified additional capacity and suppliers for key steps in the manufacturing process such as [indiscernible] packaging. We expect supply to increase each quarter through next year. By geography, data center growth was strongest in the U.S. as customers direct their capital investments to AI and accelerated computing. China demand was within the historical range of 20% to 25% of our Data Center revenue, including compute and networking solutions.
However, while NVIDIA is probably the most talked about NASDAQ stock right now, it's far from being the index's best performer. In fact, when you look at some of the best performing NASDAQ stocks this year, you discover that their year to date gains literally leave the GPU manufacturer in the dust. Don't believe us? Consider the fact that shares of American Coastal Insurance Corporation (NASDAQ:ACIC) are up by a stunning 629% year to date, while NASDAQ stock Applied Optoelectronics, Inc. (NASDAQ:AAOI) 591% year to date. Both of these are small cap stocks, and their share price appreciation shows how rapidly such stocks can yield returns. For more such stocks, you can check out 15 Most Profitable Small-Cap Stocks Now.
So, NVIDIA's great for now and small cap NASDAQ stocks have posted strong returns this year. But the NASDAQ is made up of thousands of stocks, and today we've taken a look at some NASDAQ stocks with low price to earnings ratios. Some of the top 5 stocks with the lowest PE ratios are Chesapeake Energy Corporation (NASDAQ:CHK), Chord Energy Corporation (NASDAQ:CHRD), and First Citizens BancShares, Inc. (NASDAQ:FCNCA).
Pixabay/Public Domain
Our Methodology
To compile our list of NASDAQ stocks with low PE ratios, we first compiled a list of 40 NASDAQ listed firms with a price to trailing earnings ratio lower than 15 and a market capitalization greater than $300 million. Then, the number of hedge funds out of the 910 part of Insider Monkey's database that had held a stake in them during Q2 2023 was determined, and the firms with the highest hedge fund investors were selected.
13 NASDAQ Stocks With Lowest PE Ratios
13. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA)
Number of Hedge Fund Investors In Q2 2023: 20
Latest P/E Ratio: 5.39
Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) is a biotechnology company that develops treatments for heart diseases, skin conditions, and other ailments. It marks a strong start to our list, as the shares are rated Strong Buy on average. Analysts have also penned in a nearly $8 share price upside to the stock based on the average share price target.
Insider Monkey's June quarter of 2023 survey covering 910 hedge funds revealed that 20 had invested in Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA). David Rosen's Rubric Capital Management is the firm's biggest hedge fund shareholder through a stake worth $47.5 million.
Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) joins Chord Energy Corporation (NASDAQ:CHRD), Chesapeake Energy Corporation (NASDAQ:CHK), and First Citizens BancShares, Inc. (NASDAQ:FCNCA) in our list of the NASDAQ stocks with low price to earnings ratios.
12. Popular, Inc. (NASDAQ:BPOP)
Number of Hedge Fund Investors In Q2 2023: 20
Latest P/E Ratio: 4.77
Popular, Inc. (NASDAQ:BPOP) is a Puerto Rico based bank with a presence in its home region and the U.S. Despite turmoil in the regional banking sector, the firm has beaten analyst EPS estimates for all four of its latest quarters and the stock is down just 1.14% year to date.
During this year's second quarter, 20 out of the 910 hedge funds polled by Insider Monkey had held a stake in the bank. Popular, Inc. (NASDAQ:BPOP)'s largest investor among these is Bernard Horn's Polaris Capital Management since it owns 2.5 million shares that are worth $155 million.
11. Vodafone Group Public Limited Company (NASDAQ:VOD)
Number of Hedge Fund Investors In Q2 2023: 21
Latest P/E Ratio: 1.94
Vodafone Group Public Limited Company (NASDAQ:VOD) is a telecommunications carrier headquartered in Newbury, the United Kingdom. It is another stock that is rated Strong Buy on average and high inflation in the U.K. has enabled the firm to grow its sales even as users drop.
As of June 2023, 21 of the 910 hedge funds surveyed by Insider Monkey had bought and invested in Vodafone Group Public Limited Company (NASDAQ:VOD)'s stock. Jim Simons' Renaissance Technologies owns the most valuable stake among these, which was last valued at $144 million.
10. Zymeworks Inc. (NASDAQ:ZYME)
Number of Hedge Fund Investors In Q2 2023: 22
Latest P/E Ratio: 2.74
Zymeworks Inc. (NASDAQ:ZYME) is a Canadian biotechnology company that develops cancer treatments. The firm's second quarter earnings report saw it cut its net loss by 45% and report $431 million in cash reserves.
During this year's second quarter, 22 out of the 910 hedge funds part of Insider Monkey's research owned a stake in Zymeworks Inc. (NASDAQ:ZYME).
Zymeworks Inc. (NASDAQ:ZYME), Chord Energy Corporation (NASDAQ:CHRD), Chesapeake Energy Corporation (NASDAQ:CHK), and First Citizens BancShares, Inc. (NASDAQ:FCNCA) are some NASDAQ stocks with low price to earnings ratios.
9. PENN Entertainment, Inc. (NASDAQ:PENN)
Number of Hedge Fund Investors In Q2 2023: 23
Latest P/E Ratio: 5.3
PENN Entertainment, Inc. (NASDAQ:PENN) is a gaming company that provides an online betting platform. The firm is currently part of Disney's strategy to revamp its ESPN platform as it has partnered up with ESPN to operate the ESPN Bet platform.
After digging through 910 hedge funds for their June quarter of 2023 shareholdings, Insider Monkey discovered that 23 had invested in the company. PENN Entertainment, Inc. (NASDAQ:PENN)'s largest hedge fund investor is Parag Vora's HG Vora Capital Management through a $348 million investment.
8. Cal-Maine Foods, Inc. (NASDAQ:CALM)
Number of Hedge Fund Investors In Q2 2023: 26
Latest P/E Ratio: 3.03
Cal-Maine Foods, Inc. (NASDAQ:CALM) is an egg company that is headquartered in Ridgeland, Mississippi. The firm's second quarter earnings saw it mark a whopping 575% increase in operating income as record high egg prices led to more dollar sales.
Insider Monkey dug through 910 hedge fund portfolios for this year's second quarter and found 26 Cal-Maine Foods, Inc. (NASDAQ:CALM) shareholders. Its biggest shareholder in our database is Jim Simon's Renaissance Technologies since it owns 1.6 million shares that are worth $74.4 million.
7. Encore Wire Corporation (NASDAQ:WIRE)
Number of Hedge Fund Investors In Q2 2023: 27
Latest P/E Ratio: 5.22
Encore Wire Corporation (NASDAQ:WIRE) is an American firm that sells electrical products to industries. Out of its four latest fiscal quarters, the firm has beaten analyst EPS estimates in three and the shares are rated Strong Buy on average.
As of June 2023, 27 out of the 910 hedge funds profiled by Insider Monkey had bought the firm's shares. Encore Wire Corporation (NASDAQ:WIRE)'s largest investor is Chuck Royce's Royce & Associates through a stake worth $70.5 million.
6. Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Fund Investors In Q2 2023: 31
Latest P/E Ratio: 4.53
Avis Budget Group, Inc. (NASDAQ:CAR) provides cars, trucks, and other vehicles for rent in several countries. The firm was fined by the New York government in August after it refused to provide vehicles to people without credit cards
31 out of the 910 hedge funds part of Insider Monkey's Q2 2023 database had invested in Avis Budget Group, Inc. (NASDAQ:CAR). Out of these, the biggest shareholder is Karthik Sarma's SRS Investment Management courtesy of its $4.2 billion investment.
Chesapeake Energy Corporation (NASDAQ:CHK), Avis Budget Group, Inc. (NASDAQ:CAR), Chord Energy Corporation (NASDAQ:CHRD), and First Citizens BancShares, Inc. (NASDAQ:FCNCA) are NASDAQ stocks with low price to earnings ratios and strong high hedge fund sentiment.
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Disclosure: None. 13 NASDAQ Stocks With Lowest PE Ratios is originally published on Insider Monkey.