Banco Santander, S.A. (SAN): Did This NYSE Penny Stock Exceed Expectations in Q1?

We recently compiled a list of the 10 Best NYSE Penny Stocks To Buy. In this article, we are going to take a look at where Banco Santander, S.A. (NYSE:SAN) stands against the other NYSE penny stocks.

The latest Consumer Price Index (CPI) data by the Bureau of Labor Statistics was released on June 12, which suggests a deceleration in inflation, which could be positive for the US market and economy. Stabilizing prices, particularly in core categories like shelter and food, indicate potential relief for consumers and might influence the Federal Reserve's monetary policy decisions favorably. The steadying of inflation could enhance consumer confidence and support economic stability.

Additionally, the latest inflation report for May, released on June 28, showed that personal income in the U.S. increased by $114.1 billion, up 0.5%, while disposable personal income (DPI) also rose by 0.5% to $94 billion, showing its slowest increase since March 2021. The core Personal Consumption Expenditures (PCE) index, a key measure for the Federal Reserve that excludes food and energy costs, rose by 0.1% from April, matching Wall Street's expectations and slowing from April's 0.3% rise. Annually, core PCE increased by 2.6% which was the smallest gain in over three years.

The data showed a steady rise in income and spending. Real DPI, adjusted for inflation, grew by 0.5%, and real PCE rose by 0.3% due to a 0.6% increase in spending on goods and a 0.1% increase in spending on services. Healthcare, housing, and transportation services contributed to the rise in service spending, while prescription drugs led to an increase in goods spending. Overall, the data showed rising incomes, controlled inflation, and increased consumer spending. This combination suggests steady economic growth and stability, along with manageable inflationary pressures.

What Does the Data Mean for Small-Cap Stocks?

We discussed the key developments of the Fed’s latest meeting in our best Robinhood stocks article, where we mentioned that the chairman's statement indicated that there has been some improvement in lowering inflation toward the desired 2% target. However, he emphasized the need for more data and evidence to confirm that this downward trend is consistent and sustainable. This means that the latest data might not be sufficient enough yet, but it still is a good start to making up the Fed’s mind toward rate cuts. The CME FedWatch Tool reveals that 58% of the market believes that the Fed will cut rates by 25 basis points.

Back in April, Peter Kraus, CEO of Aperture Investors told CNBC that inflation has restricted the growth of small-cap stocks and they have underperformed the large-cap stocks by 9% per annum for the last three years. While he had some recession concerns, he said that if the interest rates decline, the small-cap stocks are going to outperform. He noted that over the long term, even though the falls of the broader market and the small caps are different, the returns are usually equal.

Keeping that in mind, we look at some of the best NYSE penny stocks in our current article. While not all of them are small-cap stocks, they could certainly benefit from a decline in interest rates.

Our Methodology

For this article, we identified over 60 stocks trading under $5 with Buy or better ratings from Wall Street analysts and a market cap of over $200 million. We further narrowed down our list to 10 stocks based on multiple but different metrics such as future growth prospects, valuations, and shareholder returns. We listed the stocks in ascending or of their hedge fund sentiment which was taken from Insider Monkey’s database of over 900 elite hedge funds. We preferred the stocks that were profitable over the last twelve months. Nevertheless, some stocks in the list are yet to post profits and analysts keep an optimistic outlook for them.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A view of a large corporate office building, illuminated at night to show its power and reach.

Banco Santander, S.A. (NYSE:SAN)

Share Price as of June 27: $4.62

Number of Hedge Fund Holders: 13

Banco Santander, S.A. (NYSE:SAN) offers many financial services, including demand and time deposits, asset management and private banking services, corporate and investment banking services, and more.

Banco Santander, S.A. (NYSE:SAN) is in the position to expand its reach and solidify its position as a leader in the financial services industry as it gained 5 million new customers over the past year alone. Moreover, the company’s track record of net operating income growth is also impressive as it has achieved double-digit increases in net operating income year-over-year for the past eight quarters. Reporting a net profit of €2.9 billion in the first quarter, Banco Santander, S.A. saw an 11% increase compared to the same period last year, with a 9% rise in constant euros. The company's efficiency ratio (expenses/revenue) improved by 1.4% year-over-year to 42.6%. Additionally, the Spanish giant’s return on tangible equity (ROE excluding intangible assets) climbed 55 basis points year-over-year to 14.9% in the quarter.

Banco Santander, S.A.’s (NYSE:SAN) shareholder value creation in Q1 was quite healthy, with a notable 14% growth due to its disciplined capital allocation strategies and the execution of share buyback programs. Over the past three years, the company has repurchased approximately 11% of its outstanding shares, which has led to an impressive return on investment of around 19% for its shareholders.

In Q1, 8 hedge funds held stakes in Banco Santander, S.A. (NYSE:SAN), with positions worth $9 million. As of the first quarter, Citadel Investment Group is the most significant shareholder in the company with a position worth $1.4 million.

Overall SAN ranks 6th on our list of the best NYSE penny stocks to buy. You can visit 10 Best NYSE Penny Stocks To Buy to see the other NYSE penny stocks that are on hedge funds’ radar. While we acknowledge the potential of SAN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SAN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.