Investors are always trying to time the market. They want to get in at the lows and get out at the highs. While this simplistic goal sounds easy, it is almost impossible to achieve.
Regardless of their timing abilities, one area where investors have seen good results is in low-priced stocks. Single-digit stocks are attractive to investors for many reasons, but when is it best to build them into your portfolio? Let's take a look at why now is a good time to buy low-priced stocks.
Works at the Highs
Low-priced stocks work when the market is at its highs because these are the stocks that have been overlooked. The market is too concerned with which stocks are soaring towards triple digits (or even quadruple digits in some cases) to look down the scale.
This allows investors the chance to get in on something that is still fairly close to the ground floor. With the overall market raising all prices, the lower you go on your entry, the better chance you have of outperforming down the road.
Wise investors know that you cannot have all your eggs in one basket. Apply this same idea to the high flyers with big price tags. Adding low-priced stocks to your portfolio works as a defensive measure. If things turn sour, the high-priced stocks will be among the first that are sold.
Works at the Lows
When markets are at their lows, single-digit stocks are among the best plays out there. They are the ones that stand to see significant returns when the market turns around. The small price tag alone will get many investors to "buy low."
Another reason single-digit stocks will work at the lows is that investors begin to scour the entire universe of stocks looking for what is working. Low-priced stocks tend to be among the first to recover from panic selling.
Oftentimes, we see investors getting burned on those high flyers. We don't hear many stories about investors losing everything on the stocks that are already beaten down. On the contrary, the time to buy stocks like that is after everyone else has already abandoned ship.
Have a Game Plan
It sounds like I am talking out of both sides of my mouth here. I supported the idea of buying low-priced stocks at the highs and also at the lows, so which is it? The truth is, it always makes sense to have single-digit stocks in your portfolio.
More . . .
------------------------------------------------------------------------------------------------------
Stocks Under $10 to Buy Today
Zacks is now revealing its most compelling picks priced under $10 per share (but perhaps not for long). These high-quality companies have prospects for returns of up to 2X and more. While not all our picks are winners, recent recommendations have led investors to gains of +110.0%, +163.6%, +164.7%, and even +263.2%.¹
These stocks offer the best of both worlds: immediate growth potential AND the strong likelihood of long-term profitability.
This special opportunity ends at midnight Sunday, September 7.
See Stocks Now >>
------------------------------------------------------------------------------------------------------
You still have to know your target investment structure. By that, I mean you should not have a portfolio of low-priced stocks built to reflect the Dow Jones Industrial Average. That stalwart mix of mega-cap stocks behaves much differently than most low-priced stocks. Instead, look to a smaller index for guidance.
The Russell 2000 is a much better benchmark to use when structuring a lower-priced stock portfolio. Use the weighting in that index as a guideline and overweight sectors that look likely to outperform. The Zacks Industry Rank can help you figure out which areas are seeing more strength.
From $5 to $50
The headline for this section isn't just an attention grabber; it really happens. In fact, it happens more than you think. Stocks that start out in the single digits hold the promise of being 5, 7, or even 10 baggers over time. The key is to be patient and let the winners run.
This is not to say that investing in this space comes without risk. Only a fool would believe all single-digit stocks are destined to be double digits. Along with patience, investors need to be able to accept the risk that comes along with under-followed low-priced stocks.
Balancing risk is key to a well-rounded portfolio. Maybe even more so in a portfolio of low-priced stocks. Let's look at some ideas on how to balance that risk for your low-priced stock portfolio.
Limiting the Risk
The first step in a single-digit stock portfolio is diversification. I discussed benchmarking the portfolio against the Russell 2000, so be sure to use that as a guideline for determining which sectors should be overweighted or underweighted. Financials tend to be overweight in that index, so be sure to check that against the Zacks Industry Rank to see if you should follow suit.
One should not only diversify across industries, but also by size. It is imperative to have some large-cap stocks in your portfolio of low-priced stocks. It aligns with the idea of not having all your eggs in one basket, so be sure to include a few big-name companies as well.
The big-cap names will also serve to soften the blow if the small caps see a sector rotation. Leadership among stock classes changes frequently and often without warning. Having a few big cap names sprinkled in can only help if things take an unexpected turn.
Stay on Top of the Market
In a low-priced stock portfolio, it is important to keep your winners and sell your losers quickly. The Zacks Rank will help you get that early advantage you need to succeed. The Rank will tell you which stocks are seeing positive earnings estimate revisions, which often leads to higher stock prices.
Remember, you are an investor, not a trader. Use time to your advantage. Patience is one of the best weapons you have in your arsenal, so use it wisely. Make sure you have the fortitude to weather the storms of mild market pullbacks, as churning and selling at the lows are surefire ways to have an underperforming year.
Get Set for Big Payoffs
One of the easiest ways for you to avoid costly mistakes and position yourself for healthy profits with single-digit stocks is to see the recommendations we're holding in our Stocks Under $10 portfolio.
We select a diverse group of companies on the verge of significant upward moves and enter when the Zacks Rank and other proven indicators signal success ahead. Then we ride them long and high.
While not all our picks are winners, recent recommendations have led to gains of +110.0%, +163.6%, +164.7%, and even +263.2%.¹
Now is a great time to join the investors following Stocks Under $10. On Monday morning, I plan to add a brand-new stock to the portfolio.
Like all the recommendations we're holding in our portfolio, my pick will offer:
• High growth potential up to 2X and more.
• Excellent prospects for early price movement. Proprietary Zacks signals indicate that significant growth could start within 1-3 months.
• And confidence to stay aboard for months and years while other investors bail out early for lesser gains.
See my new pick and all the stocks we’re holding for only $1.
Free Bonus Report: Get started today, and you are also welcome to download our Special Report, 5 Stocks Set to Double. It highlights 5 tickers that are favored by Zacks experts to potentially gain +100% or more in the next 12 months.
But a word of caution: Your chance to download this report for free ends midnight Sunday, September 7.
See our Stocks Under $10 for $1 and download your 5 Stocks Set to Double Special Report now >>
Good investing,
Brian
Brian Bolan is our aggressive growth expert and the editor of Zacks' Stocks Under $10 portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.
Image: Bigstock
Why Now Is the Time to Buy Low-Priced Stock
Investors are always trying to time the market. They want to get in at the lows and get out at the highs. While this simplistic goal sounds easy, it is almost impossible to achieve.
Regardless of their timing abilities, one area where investors have seen good results is in low-priced stocks. Single-digit stocks are attractive to investors for many reasons, but when is it best to build them into your portfolio? Let's take a look at why now is a good time to buy low-priced stocks.
Works at the Highs
Low-priced stocks work when the market is at its highs because these are the stocks that have been overlooked. The market is too concerned with which stocks are soaring towards triple digits (or even quadruple digits in some cases) to look down the scale.
This allows investors the chance to get in on something that is still fairly close to the ground floor. With the overall market raising all prices, the lower you go on your entry, the better chance you have of outperforming down the road.
Wise investors know that you cannot have all your eggs in one basket. Apply this same idea to the high flyers with big price tags. Adding low-priced stocks to your portfolio works as a defensive measure. If things turn sour, the high-priced stocks will be among the first that are sold.
Works at the Lows
When markets are at their lows, single-digit stocks are among the best plays out there. They are the ones that stand to see significant returns when the market turns around. The small price tag alone will get many investors to "buy low."
Another reason single-digit stocks will work at the lows is that investors begin to scour the entire universe of stocks looking for what is working. Low-priced stocks tend to be among the first to recover from panic selling.
Oftentimes, we see investors getting burned on those high flyers. We don't hear many stories about investors losing everything on the stocks that are already beaten down. On the contrary, the time to buy stocks like that is after everyone else has already abandoned ship.
Have a Game Plan
It sounds like I am talking out of both sides of my mouth here. I supported the idea of buying low-priced stocks at the highs and also at the lows, so which is it? The truth is, it always makes sense to have single-digit stocks in your portfolio.
More . . .
------------------------------------------------------------------------------------------------------
Stocks Under $10 to Buy Today
Zacks is now revealing its most compelling picks priced under $10 per share (but perhaps not for long). These high-quality companies have prospects for returns of up to 2X and more. While not all our picks are winners, recent recommendations have led investors to gains of +110.0%, +163.6%, +164.7%, and even +263.2%.¹
These stocks offer the best of both worlds: immediate growth potential AND the strong likelihood of long-term profitability.
This special opportunity ends at midnight Sunday, September 7.
See Stocks Now >>
------------------------------------------------------------------------------------------------------
You still have to know your target investment structure. By that, I mean you should not have a portfolio of low-priced stocks built to reflect the Dow Jones Industrial Average. That stalwart mix of mega-cap stocks behaves much differently than most low-priced stocks. Instead, look to a smaller index for guidance.
The Russell 2000 is a much better benchmark to use when structuring a lower-priced stock portfolio. Use the weighting in that index as a guideline and overweight sectors that look likely to outperform. The Zacks Industry Rank can help you figure out which areas are seeing more strength.
From $5 to $50
The headline for this section isn't just an attention grabber; it really happens. In fact, it happens more than you think. Stocks that start out in the single digits hold the promise of being 5, 7, or even 10 baggers over time. The key is to be patient and let the winners run.
This is not to say that investing in this space comes without risk. Only a fool would believe all single-digit stocks are destined to be double digits. Along with patience, investors need to be able to accept the risk that comes along with under-followed low-priced stocks.
Balancing risk is key to a well-rounded portfolio. Maybe even more so in a portfolio of low-priced stocks. Let's look at some ideas on how to balance that risk for your low-priced stock portfolio.
Limiting the Risk
The first step in a single-digit stock portfolio is diversification. I discussed benchmarking the portfolio against the Russell 2000, so be sure to use that as a guideline for determining which sectors should be overweighted or underweighted. Financials tend to be overweight in that index, so be sure to check that against the Zacks Industry Rank to see if you should follow suit.
One should not only diversify across industries, but also by size. It is imperative to have some large-cap stocks in your portfolio of low-priced stocks. It aligns with the idea of not having all your eggs in one basket, so be sure to include a few big-name companies as well.
The big-cap names will also serve to soften the blow if the small caps see a sector rotation. Leadership among stock classes changes frequently and often without warning. Having a few big cap names sprinkled in can only help if things take an unexpected turn.
Stay on Top of the Market
In a low-priced stock portfolio, it is important to keep your winners and sell your losers quickly. The Zacks Rank will help you get that early advantage you need to succeed. The Rank will tell you which stocks are seeing positive earnings estimate revisions, which often leads to higher stock prices.
Remember, you are an investor, not a trader. Use time to your advantage. Patience is one of the best weapons you have in your arsenal, so use it wisely. Make sure you have the fortitude to weather the storms of mild market pullbacks, as churning and selling at the lows are surefire ways to have an underperforming year.
Get Set for Big Payoffs
One of the easiest ways for you to avoid costly mistakes and position yourself for healthy profits with single-digit stocks is to see the recommendations we're holding in our Stocks Under $10 portfolio.
We select a diverse group of companies on the verge of significant upward moves and enter when the Zacks Rank and other proven indicators signal success ahead. Then we ride them long and high.
While not all our picks are winners, recent recommendations have led to gains of +110.0%, +163.6%, +164.7%, and even +263.2%.¹
Now is a great time to join the investors following Stocks Under $10. On Monday morning, I plan to add a brand-new stock to the portfolio.
Like all the recommendations we're holding in our portfolio, my pick will offer:
• High growth potential up to 2X and more.
• Excellent prospects for early price movement. Proprietary Zacks signals indicate that significant growth could start within 1-3 months.
• And confidence to stay aboard for months and years while other investors bail out early for lesser gains.
See my new pick and all the stocks we’re holding for only $1.
Free Bonus Report: Get started today, and you are also welcome to download our Special Report, 5 Stocks Set to Double. It highlights 5 tickers that are favored by Zacks experts to potentially gain +100% or more in the next 12 months.
But a word of caution: Your chance to download this report for free ends midnight Sunday, September 7.
See our Stocks Under $10 for $1 and download your 5 Stocks Set to Double Special Report now >>
Good investing,
Brian
Brian Bolan is our aggressive growth expert and the editor of Zacks' Stocks Under $10 portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.