We recently compiled a list of the 7 worst stocks to invest in. In this article, we’ll take a look at where Acadia Healthcare Company, Inc. (NASDAQ:ACHC) stands compared to the rest of Carl Icahn’s stock portfolio.
The US stock market remains resilient, maintaining upward momentum at the start of the final quarter of the year. The rally to record highs comes as investors bet on themes such as artificial intelligence and interest rate cuts on the back of impressive results.
Nevertheless, the recent market boom has raised concerns about the potential for the market to be overvalued. The market rose significantly, with the S&P 500 up more than 20% to a new all-time high. Given that the bull market continues even as interest rates are at record highs, the bells of overvaluation are ringing all the more.
Also read: Warren Buffett’s 8 best stocks to buy, according to analysts, and Warren Buffett’s 8 best value stocks to invest in.
A 50 basis point cut in interest rates by the US Federal Reserve served as the latest catalyst to maintain the market’s upward trajectory since then. The surge is driven by several factors, including growing investor confidence and optimism about the economy’s future as the Federal Reserve moves to lower interest rates.
The Federal Reserve’s decision to cut interest rates by 0.5 percentage points in September had a major impact on the market. The move, which comes amid concerns about the state of the job market and a slowdown in manufacturing, also raised serious doubts about the health of the U.S. economy. Some experts think the 0.5 percentage point cut is too extreme, while others think it could be a much-needed stimulus for some of the worst battered stocks to invest in. .
Given that the market always tends to move up, with a perfect record of 7 out of 7 such pullbacks, it highlights why investors should be bullish on some of the worst-performing stocks. be done. According to Vance Howard of Howard Capital, there is an 83% chance of an increase as management and the Fed continue to lower interest rates.
Sectors that Vance Howard believes are poised to benefit from a low interest rate environment include real estate and utilities, which were under pressure before the Fed cut. Regarding specific industries to watch, Howard said financials will likely strengthen after the rate cut. He clarified that financial stocks typically rebound after a rate cut and continue rising, but could initially fall. He also advised staying invested in technology stocks.
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While the low interest rate environment could be a tailwind for some struggling stocks, investors should be extremely cautious given the current economic climate. It is important to consider overall market movements and possible risks.
Looking forward to the final three months of the year, veteran investor and Wise Private Singapore CEO Kevin Tan warned of the potential impact of multiple uncertainties on the horizon. Investors believe the upcoming U.S. election, rising geopolitical tensions and concerns about an economic downturn could be headwinds, and even supportive interest rate cuts could weigh on the market.
Moreover, the upcoming US election has analysts and economists nervous as it will make markets more volatile given the economic policies of both candidates. Tom Lee, managing partner and chief research officer at Fundstrat Global Advisors, recently shared his thoughts on CNBC and sees higher growth potential as long as election uncertainty persists. suggested that investing in small-cap stocks and stocks is preferable to bonds.
Meanwhile, analysts at Morgan Stanley believe Chinese stocks could experience a more sustained rally following the latest wave of stimulus. They predict an increase of at least 10% in the near future, and possibly more. As earnings improvement becomes more evident, stocks could rise further and valuations could reach levels last seen during the economic reopening period from November 2022 to March 2023.
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our methodology
To create our list of the most beaten stocks, we first created a list of all stocks with a new 52-week low and a market capitalization above $300 million. Next, we also considered the stock’s year-to-date performance. Finally, this list of beaten stocks is ranked by the number of hedge funds that bought the stock in Q2 2024, with the least popular stocks selected according to hedge funds.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 points (Learn more here Please take a look).
Acadia Healthcare Company, Inc. (NASDAQ:ACHC)
Current stock price: $63.41
52 week range: $53.22 – $87.77
Year-to-date profit as of October 1st: -18.94%
Number of hedge fund holders: 35 people
Acadia Healthcare Company, Inc. (NASDAQ:ACHC) is a healthcare company that provides behavioral healthcare services. We also develop and operate specialty treatment facilities consisting of acute inpatient psychiatric facilities, residential recovery facilities and eating disorder facilities.
Shares have come under pressure, falling to near 52-week lows after reports that federal authorities are investigating the company’s hospitalizations, length of stay and billing practices. Acadia Healthcare Company, Inc. (NASDAQ:ACHC) has previously disputed any wrongdoing, insisting that its decisions regarding patient care are not business decisions and are not influenced by insurance coverage or a patient’s ability to pay. are.
The company was in the midst of a federal investigation, attacking it from all angles and delivering solid results in the second quarter. The company’s second-quarter 2024 earnings were $796 million, an 8.8% increase in revenue, and a 7.6% increase in adjusted EBITDA year-over-year. Acadia Healthcare Company, Inc. (NASDAQ:ACHC) plans to add approximately 1,200 beds and is on track for strong volume growth and 1.5% growth in the second half of this year despite the closure of two unprofitable facilities. A mid-digit increase in same-store patient days is expected.
To improve safety and care coordination, the company also standardized clinical protocols, launched new training initiatives and spent approximately $100 million on technology. Acadia Healthcare Company, Inc. (NASDAQ:ACHC) claims these efforts are yielding encouraging results, as evidenced by increased patient satisfaction and superior ratings for its opioid treatment programs. These are some of Acadia Healthcare’s latest innovations.
Acadia Healthcare Company, Inc. (NASDAQ:ACHC) is an investment as its business model has proven to be resilient, as evidenced by 10% revenue growth over the past 12 months. It’s one of the hardest hit stocks. Along with this growth, EBITDA also increased significantly by 12.69% over the same period, indicating improved operational efficiency. Additionally, 35 hedge funds held shares in the company at the end of Q2 2024.
Overall, ACHC ranks 5th on our list of the 7 worst stocks to invest in. While we appreciate ACHC’s potential as an investment, we believe AI stocks have a better chance of delivering higher returns in a shorter time frame. If you’re looking for more promising AI stocks than ACHC, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: 15 humanoid robot stocks to buy, according to Morgan Stanley and Jim Cramer, says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
