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Stocks gave up some of their recent gains on the last day of May. But the S&P 500’s 0.6% drop Tuesday is hardly shocking after the market ripped higher last Friday ahead of the long Memorial Day weekend. The strong showing capped off a much-needed bounce-back that ended the S&P 500 and the Nasdaq’s seven-week skids.
Last week, all three major U.S. indexes jumped 6% or higher for the first time since November 2020. The benchmark index has now popped around 6% off its intraday lows on Friday, May 20, even though all of the same factors remain in place that brought about the wave of selling.
Thankfully, the market now knows that the Fed isn’t planning to ramp up its rate hikes beyond its current outlook that calls for 0.50% hikes at each of the next two meetings. More importantly, Wall Street is perhaps starting to realize the Fed isn’t on autopilot and will instead update its rate-hike its plans accordingly.
Despite strong consumer spending and sky-high prices, there are signs that inflation is coming down, or at least may have peaked. Plus, investors continue to pour money into U.S. stocks during the downturn because they are bullish on the long-term outlook for the economy and the market. On top of that, there are few places for investors to even attempt to keep up with 8% and higher inflation.
Taking this all into account, we used one of our Zacks screens to help show investors how to find strong, highly-ranked stocks that are trading for under $10 per share to consider buying after the market flashed some positive signs heading into June…
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 over 40 highly-ranked names trading under $10 a share that made it through the screen today…
Playa Hotels & Resorts N.V. is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. Playa owns and/or manages a total portfolio consisting of 22 resorts in Mexico, Jamaica, and the Dominican Republic. PLYA shares have surged 18% in the last 12 months to crush the market’s 1% decline and outpace its industry’s sideways movement.
Playa Hotels & Resorts stands to benefit from a booming summer travel season and beyond as consumers attempt to do all they can to get back to their pre-pandemic lives. PLYA stock is part of the Hotels and Motels space that lands in the top 30% of over 250 Zacks industries right now. And PLYA’s top and bottom-line outlook for both this year and next are strong.
Centennial Resource Development, Inc.
Centennial Resource Development is an independent oil producer focused in the Delaware Basin, which is a sub-basin of the Permian Basin in West Texas. CDEV announced a $350 million stock buyback program in February. Centennial Resource Development’s management team said the repurchase plan is “supported by robust two-year outlook and resilient through commodity price cycles.”
Centennial Resource Development shares soared from under $0.50 a share during the initial covid selloff to over $9.00 in April. The stock has rebounded from a pullback recently, but it still trades over 20% below its recent highs. Zacks estimates call for more top and bottom-line growth in 2022 and 2023. Plus, CDEV stock could continue to benefit from surging oil and energy prices.
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: Shutterstock
How to Find Cheap Stocks Under $10 to Buy in June
Stocks gave up some of their recent gains on the last day of May. But the S&P 500’s 0.6% drop Tuesday is hardly shocking after the market ripped higher last Friday ahead of the long Memorial Day weekend. The strong showing capped off a much-needed bounce-back that ended the S&P 500 and the Nasdaq’s seven-week skids.
Last week, all three major U.S. indexes jumped 6% or higher for the first time since November 2020. The benchmark index has now popped around 6% off its intraday lows on Friday, May 20, even though all of the same factors remain in place that brought about the wave of selling.
Thankfully, the market now knows that the Fed isn’t planning to ramp up its rate hikes beyond its current outlook that calls for 0.50% hikes at each of the next two meetings. More importantly, Wall Street is perhaps starting to realize the Fed isn’t on autopilot and will instead update its rate-hike its plans accordingly.
Despite strong consumer spending and sky-high prices, there are signs that inflation is coming down, or at least may have peaked. Plus, investors continue to pour money into U.S. stocks during the downturn because they are bullish on the long-term outlook for the economy and the market. On top of that, there are few places for investors to even attempt to keep up with 8% and higher inflation.
Taking this all into account, we used one of our Zacks screens to help show investors how to find strong, highly-ranked stocks that are trading for under $10 per share to consider buying after the market flashed some positive signs heading into June…
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 over 40 highly-ranked names trading under $10 a share that made it through the screen today…
Playa Hotels & Resorts (PLYA - Free Report)
Playa Hotels & Resorts N.V. is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. Playa owns and/or manages a total portfolio consisting of 22 resorts in Mexico, Jamaica, and the Dominican Republic. PLYA shares have surged 18% in the last 12 months to crush the market’s 1% decline and outpace its industry’s sideways movement.
Playa Hotels & Resorts stands to benefit from a booming summer travel season and beyond as consumers attempt to do all they can to get back to their pre-pandemic lives. PLYA stock is part of the Hotels and Motels space that lands in the top 30% of over 250 Zacks industries right now. And PLYA’s top and bottom-line outlook for both this year and next are strong.
Centennial Resource Development, Inc.
Centennial Resource Development is an independent oil producer focused in the Delaware Basin, which is a sub-basin of the Permian Basin in West Texas. CDEV announced a $350 million stock buyback program in February. Centennial Resource Development’s management team said the repurchase plan is “supported by robust two-year outlook and resilient through commodity price cycles.”
Centennial Resource Development shares soared from under $0.50 a share during the initial covid selloff to over $9.00 in April. The stock has rebounded from a pullback recently, but it still trades over 20% below its recent highs. Zacks estimates call for more top and bottom-line growth in 2022 and 2023. Plus, CDEV stock could continue to benefit from surging oil and energy prices.
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/.