14 Cheap Penny Stocks to Buy According to Analysts

Fahad Saleem
9 min read

In This Article:

In this article, we will take a detailed look at the 14 Cheap Penny Stocks to Buy According to Analysts. For a quick overview of such stocks, read our article 5 Cheap Penny Stocks to Buy According to Analysts.

The US stock market is going through a pullback as optimism around rate cuts fades. The AI-led rally that boosted stock valuations over the past few months caused several analysts to advise caution and expect a pullback. In this backdrop, value vs growth stocks debate has resurfaced as many financial experts believe that with the era of zero interest rates behind us, value investing is set to come back with a vengeance. Since 2007, growth crushed value as low interest rates and economic growth urged investors to pile into risky stocks. However, things changed in 2022 when the Fed decided to begin its battle against inflation. As a result, the MSCI World Growth Index declined 30% in 2022, compared to a decline of about 8.5% for MSCI World Value. But growth came on top again in 2023 when the AI revolution started that benefitted major stocks like  Microsoft Corp (NASDAQ:MSFT) and NVIDIA Corp (NASDAQ:NVDA).

High Interest Rate Environment to Last "Not Months, But Years"

While higher rates had caused a worry for many, some analysts welcomed the new era where easy money is no longer available. For example, Vanguard in a report published in December 2023 said that the return of "sound money" was part of a "structural shift" in the market. Vanguard called this change the "single best economic and financial development in the last 20 years." Vanguard in its report made some prescient comments that are proving true as the Fed continues to grapple with the inflation problem and a  "higher for longer" scenario becomes a possibility:

"Barring an immediate 1990s-style productivity boom, a recession is likely a necessary condition to bring down the rate of inflation, through weakening demand for labour and slower wage growth. As central banks feel more confident in inflation’s path toward targets, we expect they will start to cut policy rates in the second half of 2024. That said, we expect policy rates to settle at a higher level compared with after the GFC and during the COVID-19 pandemic. Vanguard research has found that the equilibrium level of the real interest rate, also known as r-star or r*, has increased, driven primarily by demographics, long-term productivity growth, and higher structural fiscal deficits. This higher interest rate environment will last not months, but years. It is a structural shift that will endure beyond the next business cycle and, in our view, is the single most important financial development since the GFC."

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