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Hunting for the Best Cheap Stocks to Buy in June? Here's How to Start
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Most successful investors attempt to block out the outside noise and buy strong stocks in various economic and market environments. The debt-ceiling headlines and Washington’s inability to get a deal done as Treasury Secretary Janet Yellen’s new June 5 default deadline approaches might have many nervous to buy stocks.
But a debt deal is almost certain to get done because the alternative would likely be devastating. Instead of the headlines, investors should look to the fact that the S&P 500 and the Nasdaq are both up big in 2023 and still trading above their 50-day and 200-day moving averages.
Plus, the big tech rally has hidden the fact that many stocks have yet to participate in the current run higher. This backdrop likely presents investors with plenty of opportunities to buy stocks as Wall Street looks ahead to an eventual Fed pivot and a return to earnings growth.
Remember that interest rates and earnings drive the stock market over the long run. Investors who can follow the core market movers and ignore the more transitory concerns might want to hunt for stocks to buy in June.
Today we dive into a pocket of the stock market that many investors like to own as part of diversified portfolios: cheap stocks trading for $10 a share or less.
Along with the cheap price tag, the stocks we explore today boast high Zacks Ranks given their improving earnings outlooks.
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 the nearly 70 highly-ranked names trading under $10 a share that made it through the screen today…
Rover Group ()
Rover operates a platform that connects pet owners with people who perform various pet care services. Rover helps people find everything from dog walkers to overnight boarding, in-home pet sitting, and more. Rover has capitalized on the modern gig economy and on-demand services in a key area that is full of people willing to spend a lot of money on their dogs and other animals across North America and Europe.
Zacks estimates call for ROVR’s revenue to climb 24% in FY23 and another 18% in FY24 to reach $255 million. The firm is also projected to swing from an adjusted loss of -$0.15 per share to +$0.02 a share in 2023 and then climb 67% higher next year. ROVR’s positive earnings revisions help it land a Zacks Rank #1 (Strong Buy) right now.
Image Source: Zacks Investment Research
Rover shares have climbed 23% YTD to double the S&P 500 and its Zacks Econ Sector. ROVR stock also still trades 20% below its average Zacks price target at around $4.57 a share. The stock now trades above its 50-day and 200-day moving averages, and it experienced the bullish golden cross (where the shorter-term average climbs above the long-term trend) back in early April.
AvidXchange provides accounts payable automation software and payment solutions for middle-market businesses and their suppliers. AvidXchange boasts that it integrates with over 225 accounting systems to help “seamlessly automate your invoice and payment processes within your existing ERP workflows.” AVDX is part of the wider software-as-a-service ecosystem and aims to help its clients reduce costs and risks, while boosting efficiency and more.
AvidXchange’s revenue is projected to climb 16% this year and another 18% in fiscal 2024 to reach $435 million, based on Zacks estimates. The company is also projected to trim its adjusted loss from -$0.24 a share last year to -$0.14 in FY24. AVDX’s upward earnings revisions, including its most accurate (most recent) estimate for FY24, help it grab a Zacks Rank #2 (Buy) at the moment.
Image Source: Zacks Investment Research
AVDX recently stormed back above both its 50-day and 200-day moving averages. AvidXchange shares have climbed about 30% since it posted upbeat results and provided strong guidance in early May. Despite the run, AvidXchange still trades 13% below its average Zacks price target. Plus, six of the nine brokerage recommendations Zacks has are “Strong Buys.”
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
Hunting for the Best Cheap Stocks to Buy in June? Here's How to Start
Most successful investors attempt to block out the outside noise and buy strong stocks in various economic and market environments. The debt-ceiling headlines and Washington’s inability to get a deal done as Treasury Secretary Janet Yellen’s new June 5 default deadline approaches might have many nervous to buy stocks.
But a debt deal is almost certain to get done because the alternative would likely be devastating. Instead of the headlines, investors should look to the fact that the S&P 500 and the Nasdaq are both up big in 2023 and still trading above their 50-day and 200-day moving averages.
Plus, the big tech rally has hidden the fact that many stocks have yet to participate in the current run higher. This backdrop likely presents investors with plenty of opportunities to buy stocks as Wall Street looks ahead to an eventual Fed pivot and a return to earnings growth.
Remember that interest rates and earnings drive the stock market over the long run. Investors who can follow the core market movers and ignore the more transitory concerns might want to hunt for stocks to buy in June.
Today we dive into a pocket of the stock market that many investors like to own as part of diversified portfolios: cheap stocks trading for $10 a share or less.
Along with the cheap price tag, the stocks we explore today boast high Zacks Ranks given their improving earnings outlooks.
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 the nearly 70 highly-ranked names trading under $10 a share that made it through the screen today…
Rover Group ()
Rover operates a platform that connects pet owners with people who perform various pet care services. Rover helps people find everything from dog walkers to overnight boarding, in-home pet sitting, and more. Rover has capitalized on the modern gig economy and on-demand services in a key area that is full of people willing to spend a lot of money on their dogs and other animals across North America and Europe.
Zacks estimates call for ROVR’s revenue to climb 24% in FY23 and another 18% in FY24 to reach $255 million. The firm is also projected to swing from an adjusted loss of -$0.15 per share to +$0.02 a share in 2023 and then climb 67% higher next year. ROVR’s positive earnings revisions help it land a Zacks Rank #1 (Strong Buy) right now.
Image Source: Zacks Investment Research
Rover shares have climbed 23% YTD to double the S&P 500 and its Zacks Econ Sector. ROVR stock also still trades 20% below its average Zacks price target at around $4.57 a share. The stock now trades above its 50-day and 200-day moving averages, and it experienced the bullish golden cross (where the shorter-term average climbs above the long-term trend) back in early April.
AvidXchange Holdings, Inc. ((AVDX - Free Report) )
AvidXchange provides accounts payable automation software and payment solutions for middle-market businesses and their suppliers. AvidXchange boasts that it integrates with over 225 accounting systems to help “seamlessly automate your invoice and payment processes within your existing ERP workflows.” AVDX is part of the wider software-as-a-service ecosystem and aims to help its clients reduce costs and risks, while boosting efficiency and more.
AvidXchange’s revenue is projected to climb 16% this year and another 18% in fiscal 2024 to reach $435 million, based on Zacks estimates. The company is also projected to trim its adjusted loss from -$0.24 a share last year to -$0.14 in FY24. AVDX’s upward earnings revisions, including its most accurate (most recent) estimate for FY24, help it grab a Zacks Rank #2 (Buy) at the moment.
Image Source: Zacks Investment Research
AVDX recently stormed back above both its 50-day and 200-day moving averages. AvidXchange shares have climbed about 30% since it posted upbeat results and provided strong guidance in early May. Despite the run, AvidXchange still trades 13% below its average Zacks price target. Plus, six of the nine brokerage recommendations Zacks has are “Strong Buys.”
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/.