Best Cheap Stocks To Buy
Buying the dip is not a simple trading strategy and should be approached cautiously. Done right, you can earn a fat discount on stocks with sound fundamentals and strong prospects. Think of it like buying quality stocks at a discount.
best cheap stocks to buy
The truth is that many great companies get dinged in short-term market drops but tend to perform very well over time. When you know which metrics of quality to track to uncover cheap stocks to buy, you can pick winners that the market may reward with higher prices after the dip.
We have identified nine cheap stocks to buy that have fallen along with the S&P 500 over the last year and have yet to recover. Each company has a multiyear history of growing earnings per share (EPS) and revenue, and analysts are still expecting similar growth in the years ahead.
Please note that the stocks above were selected by an experienced financial analyst, but they may not be right for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance.
Cory has been a professional trader since 2005, and holds a Chartered Market Technician (CMT) designation. He has been widely published, writing for Technical Analysis of Stock & Commodities magazine, Investopedia, Benzinga, and others. He runs TradeThatSwing.com, has authored several trading courses and books, coaches individual clients, and regularly trades stocks, currencies, and ETFs.
Solid, expanding institutional buying among fundamentally strong companies with double-, triple- and even quadruple digit share prices makes up the I in CAN SLIM, IBD's seven-factor paradigm of successful investing in growth stocks.
IBD Stock Screener filters cheap stocks that not only trade at $10 or less per share. Some also carry many of the key fundamental, technical and fund ownership quality traits routinely seen among the greatest stock market winners.
So, check the gap between a cheap stock's best bid and best ask prices, or the difference between what one investor is willing to pay and another is willing to sell. The smaller the gap between bid and ask prices, the less price slippage.
In the week ended March 3, ARDX ranked in the top 10 among stocks sold short and trading under $10 a share on trading platform TradeZero; customers sold short a total 1,324 shares at an average 3.75 per share.
In late February, the stock cracked through the 15 price level for the first time since early 2008. Lately, it's getting some pushback. Yet LYTS has certainly acted as one of the best stocks since making IBD Stock Screener for companies with a top Composite Rating and trading under 10 a share.
LYTS sports a 98 IBD Composite Rating on a scale of 1 to 99. The stock also hosts a 12-month Relative Strength Rating of 98, next to the best possible. The SMR Rating, measuring sales, profit margins and return on equity, gets a notably bullish grade of B on a scale of A to E, according to IBD Stock Checkup.
In the meantime, event-organizing platform Eventbrite (EB) and Chinese video streaming service iQiyi (IQ) recently made the IBD Stock Screener for top stocks in the Composite Rating and trading under 10 a share. Both show wonderful growth in the top line in the past quarter or two and are reaping big profits. But IQ is deliver better stock action lately.
With the stock market stuck in a downtrend, there are plenty of cheap stocks out there. Indeed, the universe of stocks trading for $5 per share or less is large; currently, about 1,800 U.S.-listed companies are selling for less than that amount.
Most companies trading in the low single digits tend to be poor-quality investments that carry high risks. After all, there is usually an understandable reason why a company ends up in penny stock territory and people should employ extra due diligence with low-priced stocks. That said, there are certainly some bargains out there for discriminating investors.
Shares are also outright cheap for such a stable company, as the stock sells for less than 16 times forward earnings. On top of that, Ambev offers a dividend yield of more than 5% today. That should mark a fine entry point and valuation for this powerhouse of beer. The company has also regained operational momentum, with its recent fourth-quarter results showing a 36% year-over-year rise in profitability.
Latham Group is a consumer discretionary company that designs and manufactures in-ground swimming pools and associated products such as pool covers and liners. The company went public in 2021 and managed to trade initially for around $30 per share. This was while folks were still stuck at home and thus spending heavily on home improvement projects such as pool installations. Since then, demand for pools has dropped and Latham stock has taken a dive; shares are down more than 80% from their peak. At this price, Latham seems much too cheap. Investors are valuing the company at just $445 million, whereas the company generates around $600 million in annual revenues. Additionally, the stock is going for just 11 times forward earnings. It's true that the swimming pool market has cooled off after a couple of huge years. But, the industry isn't going away in the longer-term, making Latham a favorable discount at its current depressed price.
Stocks trading under $10 can be attractive for investors looking to scoop up some cheap shares. Unfortunately, quality stocks in that price range are few and far between, and they can be red flags that something serious is wrong with a company. Many of these stocks have challenged underlying business models or difficult near-term outlooks. Fortunately, the CFRA Research analyst team has identified these cheap, high-quality stocks that could be excellent buying opportunities in 2023.
But with the S&P 500 Index suffering its biggest annual loss since 2008 last year, many investors have seen their portfolios decline in value. And one opportunity that comes from a less favorable environment on Wall Street is the presence of more cheap stocks.
If you are interested in cheap stocks, it's vital to do your research beyond just looking at the latest print for prices. You need to take a hard look at risk metrics, recent performance and future outlook in order to invest responsibly.
With that in mind, here are nine cheap stocks under $10 to consider. The following picks all have something to offer: Some are stable low-priced stocks with healthy dividends, while others are tech companies with growth potential in a digital age. And some are simply bargains after recent declines.
That's in part because the company turned around from a 25 cents per share loss in fiscal 2021 to a 24 cents per share profit in fiscal 2022. Furthermore, ADT's full-year report showed annual revenue growth of 21%, as well as a fourth consecutive quarter of record-high customer retention and recurring monthly revenue balances. This fundamental strength is why ADT is on this list of the best cheap stocks to buy now.
Semiconductor stocks took it on the chin a few years back amid supply-chain disruptions. Headwinds remain after a 2022 U.S. Department of Commerce ruling restricted exports to China and could spark a long-term trade war on chips. However, it's important to understand that recent troubles are coming after significant long-term growth for the semiconductor industry.
It's a lower-margin business, but that means ASE doesn't have to sweat the research side or the marketing of patented semiconductors and therefore offers more stability. Many of the cheap stocks out there in the tech sector can be risky, so ASE's unique business model makes it stand out.
In fact, the dividend is a hefty 9.9% based on its 15 cents per share quarterly payout and current pricing. Even if shares continue to move sideways, that big-time payday could make Equitrans one of the best cheap stocks for income investors to consider.
The icing on the cake for one of Wall Street's best cheap stocks is a 17 cents per share quarterly dividend that is only about 60% of total profits, but adds up to a generous annualized yield of 8.7%. This is more than five times the current S&P 500 yield.
You may think a cheap stock like NL Industries, tied to cyclical manufacturing trends and with a modest market cap of just $315 million in market value, might be a risky bet right now. However, shares are down about 4% in the last 12 months, compared with a nearly 10% loss for the S&P 500 in the same period. It's also up about 130% in the last 36 months, more than doubling the return for the broad market.
Shares of PAYO stock are up more than 40% in the last year thanks in part to its growing business. There's assuredly risk here if we hit a widespread downturn in global spending, and thus reduced transaction volume. But PAYO, one of Wall Street's best cheap stocks to buy, could have a very bright future in a digital age. In 2022, it hired former Alibaba.com (BABA (opens in new tab)) executive John Caplan as its CEO, and it is looking to expand even further in the years ahead.
In November, Payoneer reported strong growth of 30% on a year-over-year basis. And at the end of February, it hit the same mark as it reported record fourth-quarter and full-year revenue, generating more than 30% year-over-year growth for both periods. Looking forward, PAYO expects growth to continue in the 25% to 30% range, which bodes well for investors in this cheap stock.
PSEC is a business development company. BDCs function more like a private equity firm or hedge fund than your typical financial stock, taking in cash and then redeploying it wherever it thinks it can get the best return. All told, the company commands about $8 billion in assets. That cash is primarily invested in mid-sized corporations with less than $150 million in annual profits. This means they are "goldilocks" operations: not so big they require very deep pockets, but not so small a single executive departure or outside disruption can ruin things. 041b061a72