We recently published a list of 10 Best Low Priced Growth Stocks To Invest In. In this article, we are going to take a look at where Patterson-UTI Energy, Inc. (NASDAQ:PTEN) stands against other best low priced growth stocks.
Low priced stocks usually fall under the small to mid-cap size category. This growth criteria, often proxied through high double-digit revenue growth rate, helps narrow down the stock universe to a sample of relatively cheap stocks but with explosive growth potential that tend to perform well in periods of macroeconomic stability, low interest rates, and positive economic growth. The performance of value vs. growth stocks has been studied for decades, and most studies agree that value tends to outperform growth factors over long periods of time. For instance, Vanguard Research in a 2021 publication showed that value stocks in the US have outperformed growth in almost every single year since 1936 until the early 2010s, when a major shift occurred.
Vanguard Research argued that during the 10 years preceding the publication date, US growth stocks have outperformed US value stocks by an average of 7.8% per year, which is a significantly high difference. Such findings can be attributed to several technological developments in consumer electronics, media & communications, semiconductors, and AI, which fueled unprecedented productivity improvements and growth in new markets that generally fall under the growth category. This hypothesis is confirmed by Arnott et al. (2021) study, which claims that the success of growth stocks is primarily attributed to the technology companies that benefit from platform effects and the “winner-take-all” economics. Among other factors that drove the increasing outperformance of growth stocks are low inflation and prolonged periods of low interest rates during the 2010s and early 2020s.
The last 3 years presented a very mixed picture in the growth vs. value dilemma. The year 2022 brought significant outperformance of value as rising interest rates and inflation slashed the potential of growth stocks. However, 2023 and the emergence of the AI megatrend brought a new growth frontier across the semiconductor and technology sectors, which sparked an unprecedented rise in stock market concentration and the relative outperformance of growth stocks. This rally lasted for exactly 2 years and ended just recently with the inauguration of the Trump 2.0 administration and its subsequent actions that shook the global markets. The US stock market is now down 20% from its February 2025 peak, meaning that growth stocks ceded back almost half of their gains made since 2023. This has been primarily driven by Trump 2.0 actions such as tariffs and public spending cuts that could fuel inflation, keep rates high, and limit GDP growth. This is an unfavorable environment for growth stocks.
However, despite the widespread fears, we believe that the stock market is at or near its bottom, and several potential developments in the following weeks could push stock prices higher and favor the low priced growth stocks again. First, there have been widespread news that the European Union and countries like India are actively seeking the possibility of negotiating free trade agreements with the USA, which points towards the scenario that Trump’s tariffs will be cancelled at some point, at least for the major trade partners. Second, any substantial economic slowdown that could be triggered by tariffs will very likely lead to the FED cutting interest rates and the US administration playing out some of their strong cards, such as corporate tax cuts. Third, the tariff threats will lead to a (partial) move of manufacturing back into the US, which is already slowly happening, as evidenced by total manufacturing employees increasing sequentially in both February and March. This argument is further reinforced by confirmed news that large foreign semiconductor fabs are seeking to expand their presence in the US and build several fabs. All in all, the key takeaway for the reader is that once the current correction is over, the growth factor will become favored again, and the best possible move for investors under such circumstances is to seek exposure to low priced growth stocks.
Is Patterson-UTI Energy, Inc. (PTEN) the Best Low Priced Growth Stock To Invest In?
A drilling site in the wilds of nature, highlighting the company’s commitment to exploration.
We screened the market and selected companies with a share price below $10.00 that achieved a revenue at a compound annual growth rate (CAGR) of at least 20% in the last 5 years. Then we compared the list with Insider Monkey’s proprietary database of hedge funds’ ownership and included in the article the top 10 companies with the largest number of hedge funds that own the stock as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Revenue CAGR last 5 years: 29.52%
Stock price as of April 7th close: $5.69
Number of Hedge Fund Holders: 47
Patterson-UTI Energy, Inc. (NASDAQ:PTEN) is a provider of drilling and completion services for oil & gas exploration and production in the US and some international markets. PTEN offers several core services, such as contract drilling, integrated well completion, and directional drilling, which are crucial for the exploration process. Additionally, the company provides specialized drill bit solutions that help with exploration in difficult areas within the US, the Middle East, and other regions. The Houston-based company ranked 8th on our recent list of 12 Best Oil and Gas Dividend Stocks According to Billionaires.
Patterson-UTI Energy, Inc. (NASDAQ:PTEN) delivered value-accretive results and strong free cash flow in 2024, reducing their share count by over 6% through buybacks while paying dividends equal to 4% of market cap and reducing net debt by almost $100 million. Management announced a strategy focused on three key pillars: monetizing value-based solutions, managing cost structure, and strategic capital allocation with a commitment to return at least 50% of adjusted free cash flow to shareholders. Their integrated drilling and completion arrangements have shown success, delivering wells significantly faster than historical averages while earning performance bonuses.
Looking ahead to 2025, Patterson-UTI Energy, Inc. (NASDAQ:PTEN) expects steady drilling activity with supportive oil commodity prices, while natural gas activity could potentially increase later in the year and into 2026. The company is well-positioned in both drilling and completions, with approximately 80% of its active fleet capable of being powered by natural gas. The company is also strategically positioned to capitalize on the growing power demand in the Permian Basin, where estimates suggest a need for 4 gigawatts of off-grid power over the next 10 years. PTEN is not only a reliable executor and capital allocator with stable cash flows but also a high growth company with strong guidance ahead, which makes us include it on our list of the best low priced stocks to consider.
Overall, PTEN ranks 6th on our list of best low priced growth stocks to invest in. While we acknowledge the potential of PTEN 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 time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PTEN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
