Why Dolphin Entertainment, Inc. (DLPN) is the best penny stock with a low P/E ratio

In this article we will look at that 7 Low P/E Penny Stocks. Let’s look at where Dolphin Entertainment, Inc. (DLPN) stands compared to other low P/E penny stocks.

The US economy has escaped the danger of a recession. Instead, it tends to have a soft landing. Larry Adam, Chief Investment Officer at Raymond James, recently appeared in a CNBC interview and believes that the current market looks exactly like a soft landing. Speaking about how lower interest rates are expected to benefit small caps, particularly the Russell 2000, Adam said he believes the bull market will continue and the economy is nearing a soft landing.

Small-cap stocks get around 56% of their funding from the short end of the curve, which refers to the short-term interest rate on the yield curve. These are typically the yields on bonds with shorter maturities, such as two- or five-year Treasury notes. In contrast, large corporations receive only 26% of their funding from these short ends of the curve. Therefore, Adam concludes that small-cap companies will be better able to meet their financing needs if the Fed continues to lower interest rates.

He noted that the Fed is expected to cut rates twice in 2024 and another four times in 2025, painting a favorable picture for small caps. He emphasized that the interest rate cuts had a positive impact on small caps, which outperformed large caps. Looking at this in historical context, circumstances are helping small caps more than the rest of the market as the economy heads toward a soft landing.

Future prospects for small caps

In one of our last articles on the topic 8 Hot Penny Stocks to Invest in, According to Hedge Fundswe discussed whether a recovery of small caps can be expected in the coming days. Here is an excerpt from the article:

Tom Lee, head of research at Fundstrat Global Advisors, expressed similarly bullish sentiment, saying he expects a significant rally in small-cap stocks as the rate-cutting cycle begins. He believes the recent volatility in small-cap stocks is part of a multi-year bottoming process driven by investor expectations and economic data.

Small-cap stocks, which typically trade at discounted valuations, offer significantly better earnings growth prospects than mega-cap growth stocks. Therefore, monetary easing and strengthening fundamentals make small caps an attractive buy for Lee, even if short-term volatility is unpredictable.

Our methodology

We have the stock screener from Finviz and Yahoo! Finance compiled a list on October 7 of 15 penny stocks with forward price-to-earnings ratios of less than 10 and positive EPS growth this year. We then sourced their hedge fund sentiment from Insider Monkey’s database and ranked the stocks in ascending order by number of hedge fund owners as of Q2 2024.

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

7 Low P/E Penny Stocks

Dolphin Entertainment, Inc. (NASDAQ:DLPN)

Share price: $0.66

Forward P/E ratio: 3.67

EPS growth this year: 91.70%

Number of hedge fund owners: 3

Dolphin Entertainment (NASDAQ:DLPN) is an independent entertainment production and marketing company that operates through its subsidiaries. These include The Door Marketing Group LLC (The Door), 42West LLC (42West), and Shore Fire Media, Ltd (Shore Fire Media). The Company provides advertising and marketing services to brands in the television, film, music, hospitality and gaming industries.

Dolphin Entertainment’s (NASDAQ:DLPN) operations are divided into two segments: entertainment advertising and marketing and content production. The Entertainment Advertising and Marketing segment provides a variety of services, including social media and influencer marketing, strategic communications, entertainment content marketing, public relations, celebrity booking, promotional video content production and strategic communications. The Content Production segment includes Dolphin Films, Inc. and a division within the company that produces, develops and distributes television content, films and other digital content.

The company has strong fundamentals: Q2 revenue was $11.4 million, bringing total revenue for the first half of 2024 to $26.6 million. The company expects to continue this profitability trajectory, improving it even further in the second half of the year and achieving fiscal 2024 revenue above its $50 million target. The goal is annual growth of more than 20%.

Additionally, the Company generated positive adjusted operating income of approximately $900,000 and is on track to report positive adjusted operating income for all of 2024 and beyond. This means it is entering a phase of financial flexibility.

The company also recently announced the acquisition of Elle Communications, a leading public relations agency specializing in social and environmental impact. Elle has joined the company as part of its advertising and marketing group as a division of 42West and will share its clients with its other preeminent PR firms, benefiting everyone. This acquisition has strengthened Dolphin Entertainment’s (NASDAQ:DLPN) portfolio and enabled the company to expand its position through its combined relationships and endorsements.

Total DLPN takes 4th place among the 7 low P/E penny stocks. While we recognize DLPN’s potential as an investment, we believe AI stocks are more promising for generating higher returns, and within a shorter time frame. If you’re looking for an AI stock that has more promise than DLPN but trades at less than 5 times earnings, check out our report on it cheapest AI stock.

READ MORE: $30 Trillion Opportunity: The 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer say NVIDIA has “become a wasteland.”

Disclosure: None. This article was originally published on Insider Monkey.