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Find Cheap Stocks Under $10 to Buy During the Recent Market Rebound
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The market extended its recent rebound through early afternoon trading on Tuesday as Wall Street celebrated the relatively solid start to the third quarter earnings season. The early Q3 results and, more importantly, the guidance have held up better than many feared.
The S&P 500 climbed 1.2% on Monday and was up over 1.3% early Tuesday, with the tech-heavy Nasdaq posting even larger gains. The nice start to the busy stretch followed what was the best week for stocks since June. Investors are buying stocks again on the basis that fears about shrinking corporate profits are already adequately priced into stocks.
Investors are also cheering a recent report that indicated some Fed officials are considering a smaller rate hike at their December meeting. The 10-year Treasury is back down to 4.08% after hitting fresh highs of 4.32% late last week. The 2-year, which is far more sensitive to the Fed Funds rate, slipped back to 4.44% early Tuesday after hitting 4.61% last week.
There are still plenty of unknowns in the market right now and Wall Street is waiting anxiously for results and guidance from Apple, Amazon, Microsoft, and many other tech giants to gain a clearer picture of the near-term economic outlook and its impact on profits. The unknowns and the wave of volatility are likely keeping many investors on the sidelines.
But market timing can be a dangerous game and staying in cash comes with an 8% charge at the moment. Taking this all into account, we used one of our Zacks screens to show investors how to find strong, highly-ranked stocks that are trading for under $10 per share to consider buying with the market rebounding as we get closer to November on the back of a ‘good enough’ earnings picture.
Penny Stocks
One dollar or less used to be the common threshold for what we call “penny stocks.” Today, the SEC has expanded penny stocks to securities that trade for less than $5 a share. Many investors avoid these stocks because they are speculative in nature.
Meanwhile, penny stocks often trade infrequently and hold wide bid/ask spreads. These stocks also carry many other traits that, in many cases, cause excessive volatility. With that said, some penny stocks perform incredibly well, which helps them remain attractive.
Stocks Under $10
Moving on, let’s briefly discuss the next class of cheap stocks. Stocks that trade in the $5 to $10 range are generally less risky than their penny stock counterparts. Investors might be more likely to have heard of these companies or seen the tickers. They are, however, still inherently more speculative than many other higher-priced stocks.
Investors can obviously find winning stocks for under $10 if they are extremely selective. So today, we narrowed the list of thousands of these more speculative stocks down to a more manageable group of $10 and under stocks that might help boost your portfolio.
Screen Parameters
• Price less than or equal to $10
• Volume greater than or equal to 1,000,000
• Zacks Rank less than or equal to 2
(No Holds, Sells or Strong Sells.)
• Average Broker Rating less than or equal to 3.5
(Average Broker Rating of a Hold or Better.)
• # of Analysts in Rating greater than or equal to 2
(Minimum of at least two analysts covering the stock.)
• % Change F1 Earnings Estimate Revisions -- 12 Weeks greater than or equal to 0
(Preferably upward earnings estimate revisions, but definitely no downward revisions.)
Here are two stocks out of 50 highly-ranked names trading under $10 a share that made it through the screen today…
Kosmos is a full-cycle deepwater independent oil and gas exploration and production firm focused on the Atlantic Margins. The company’s revenue climbed 49% in 2021 and Zacks estimates call for another 78% revenue expansion in 2022 to expand from $1.33 billion all the way to $2.38 billion.
Kosmos is projected to swing from an adjusted loss of -$0.06 per share last year to +$1.10 in FY22 and then surge another 51% in 2023. The company’s earnings revisions continue to improve, especially for FY23.
KOS shares have skyrocketed 440% in the last two years to outpace its industry’s 290% run. Plus, KOS has managed to soar nearly 90% in 2022 to top its industry’s 45% and stand in stark contrast to the broader market downturn.
Tricon Residential owns and operates roughly 41,000 single-family and multi-family rental properties in 21 markets across the U.S. and Canada, from California and Texas to Florida and Toronto. TCN is attempting to stand out within the middle-market demographic by offering quality rentals in desirable locations, coupled with a focus on customer service. Zacks estimates call for Tricon Residential’s revenue to climb by 7.3% this year and another 10% in 2023.
Tricon Residential’s dividend yields 2.6% right now and it has plenty of room to raise its dividend since its payout ratio sits at 8% right now. Tricon Residential’s current average Zacks price target offers 75% upside to the roughly $9 per share it trades at right now.
Both stocks offer solid growth potential. Yet, it isn’t wise to pack your portfolio full of cheap, $10 or less stocks. Still, these stocks are certainly worth further investigation because grabbing a few of the top names from this list might bolster your returns. And let’s not forget that picking a few cheap stocks can also be quite fun.
Get the rest of the stocks on this list and start screening for the best stocks under $10 for yourself. And don't forget to backtest your strategy so you'll know how successful it's been before you put any of your money at risk.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Image: Bigstock
Find Cheap Stocks Under $10 to Buy During the Recent Market Rebound
The market extended its recent rebound through early afternoon trading on Tuesday as Wall Street celebrated the relatively solid start to the third quarter earnings season. The early Q3 results and, more importantly, the guidance have held up better than many feared.
The S&P 500 climbed 1.2% on Monday and was up over 1.3% early Tuesday, with the tech-heavy Nasdaq posting even larger gains. The nice start to the busy stretch followed what was the best week for stocks since June. Investors are buying stocks again on the basis that fears about shrinking corporate profits are already adequately priced into stocks.
Investors are also cheering a recent report that indicated some Fed officials are considering a smaller rate hike at their December meeting. The 10-year Treasury is back down to 4.08% after hitting fresh highs of 4.32% late last week. The 2-year, which is far more sensitive to the Fed Funds rate, slipped back to 4.44% early Tuesday after hitting 4.61% last week.
There are still plenty of unknowns in the market right now and Wall Street is waiting anxiously for results and guidance from Apple, Amazon, Microsoft, and many other tech giants to gain a clearer picture of the near-term economic outlook and its impact on profits. The unknowns and the wave of volatility are likely keeping many investors on the sidelines.
But market timing can be a dangerous game and staying in cash comes with an 8% charge at the moment. Taking this all into account, we used one of our Zacks screens to show investors how to find strong, highly-ranked stocks that are trading for under $10 per share to consider buying with the market rebounding as we get closer to November on the back of a ‘good enough’ earnings picture.
Penny Stocks
One dollar or less used to be the common threshold for what we call “penny stocks.” Today, the SEC has expanded penny stocks to securities that trade for less than $5 a share. Many investors avoid these stocks because they are speculative in nature.
Meanwhile, penny stocks often trade infrequently and hold wide bid/ask spreads. These stocks also carry many other traits that, in many cases, cause excessive volatility. With that said, some penny stocks perform incredibly well, which helps them remain attractive.
Stocks Under $10
Moving on, let’s briefly discuss the next class of cheap stocks. Stocks that trade in the $5 to $10 range are generally less risky than their penny stock counterparts. Investors might be more likely to have heard of these companies or seen the tickers. They are, however, still inherently more speculative than many other higher-priced stocks.
Investors can obviously find winning stocks for under $10 if they are extremely selective. So today, we narrowed the list of thousands of these more speculative stocks down to a more manageable group of $10 and under stocks that might help boost your portfolio.
Screen Parameters
• Price less than or equal to $10
• Volume greater than or equal to 1,000,000
• Zacks Rank less than or equal to 2
(No Holds, Sells or Strong Sells.)
• Average Broker Rating less than or equal to 3.5
(Average Broker Rating of a Hold or Better.)
• # of Analysts in Rating greater than or equal to 2
(Minimum of at least two analysts covering the stock.)
• % Change F1 Earnings Estimate Revisions -- 12 Weeks greater than or equal to 0
(Preferably upward earnings estimate revisions, but definitely no downward revisions.)
Here are two stocks out of 50 highly-ranked names trading under $10 a share that made it through the screen today…
Kosmos Energy (KOS - Free Report)
Kosmos is a full-cycle deepwater independent oil and gas exploration and production firm focused on the Atlantic Margins. The company’s revenue climbed 49% in 2021 and Zacks estimates call for another 78% revenue expansion in 2022 to expand from $1.33 billion all the way to $2.38 billion.
Kosmos is projected to swing from an adjusted loss of -$0.06 per share last year to +$1.10 in FY22 and then surge another 51% in 2023. The company’s earnings revisions continue to improve, especially for FY23.
KOS shares have skyrocketed 440% in the last two years to outpace its industry’s 290% run. Plus, KOS has managed to soar nearly 90% in 2022 to top its industry’s 45% and stand in stark contrast to the broader market downturn.
Tricon Residential Inc. (TCN - Free Report)
Tricon Residential owns and operates roughly 41,000 single-family and multi-family rental properties in 21 markets across the U.S. and Canada, from California and Texas to Florida and Toronto. TCN is attempting to stand out within the middle-market demographic by offering quality rentals in desirable locations, coupled with a focus on customer service. Zacks estimates call for Tricon Residential’s revenue to climb by 7.3% this year and another 10% in 2023.
Tricon Residential’s dividend yields 2.6% right now and it has plenty of room to raise its dividend since its payout ratio sits at 8% right now. Tricon Residential’s current average Zacks price target offers 75% upside to the roughly $9 per share it trades at right now.
Both stocks offer solid growth potential. Yet, it isn’t wise to pack your portfolio full of cheap, $10 or less stocks. Still, these stocks are certainly worth further investigation because grabbing a few of the top names from this list might bolster your returns. And let’s not forget that picking a few cheap stocks can also be quite fun.
Get the rest of the stocks on this list and start screening for the best stocks under $10 for yourself. And don't forget to backtest your strategy so you'll know how successful it's been before you put any of your money at risk.
Click here to sign up for a free trial to the Research Wizard today.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.