The best cheap stocks to buy now
The stock market has made plenty of people rich, but sometimes it seems inaccessible to average investors. Whether it’s terminology, risk or merely the process of opening a brokerage account, Wall Street can seem like an insider’s game for the wealthy. But for beginning investors, one of the most practical hurdles to investing is finding cheap stocks worth buying. A single share of Amazon (ticker: AMZN) costs over $800, making it impossible for a small investor to diversify. But there are quality stocks that cost just a few bucks a share.
Sirius XM Holdings (SIRI)
You might presume that anybody hunting for the best cheap stocks to buy under $10 a share must not have much money to invest with. That presumption would be dreadfully incorrect. Warren Buffett has a cool $76 billion to play around with — and he just used some of it buying shares of Sirius XM, the satellite radio company whose stock trades for less than $6 a share. SIRI stock has benefited from being the dominant satellite radio provider on the market, surging 33 percent in the last year. The cash cow added nearly 1.8 million subscribers in 2016, bringing its total to over 31 million.
1-800-Flowers.com (FLWS)
This world-class florist also happens to be a solid, consistently profitable company generating free cash flow, which is why its stock makes the list despite being just $10 a share. Not only does FLWS live up to its name by selling all sorts of floral arrangements for every occasion you can think of, it also sells gourmet food, confections, stuffed animals and gift baskets. More importantly, FLWS has a good-looking balance sheet, a sustainable business model, modest expected growth and a reasonable valuation. Shares trade at 20 times forward earnings, but when you account for the nearly $2 per share in cash it holds, that ratio goes down to 17.
Banco Santander, S.A. (ADR) (SAN)
Nominally cheap stocks like ones on this list sometimes mislead investors, who may assume that the stocks themselves are bargains compared to $800-and-up stocks like Amazon. That’s a misconception: Just because one stock trades for less than $10 and another trades for nearly $1,000, the cheaper stock isn’t necessarily a better value. But in Banco Santander’s case, its low price and bargain value coexist. SAN’s credit outlook was upgraded by Standard & Poor’s, which believes Spanish banks have recovered from the Great Recession. Trading at just 14 times earnings, SAN is easily one of the best cheap stocks to buy now.
Arcos Dorados Holding (ARCO)
What if you could buy shares of McDonald’s Corp. (MCD) for less than $8? Well, you can’t — MCD shares have traded well above the $100 range for the last year now — but you can buy shares of its Latin American franchisee for sub-$8 levels today. ARCO operates or franchises more than 2,100 McDonald’s restaurants in 20 Latin American countries like Brazil, Argentina, Venezuela and Peru. Unfortunately many of those economies suffered between 2011 and 2016 as the commodities market imploded and their currencies weakened. As that trend slowly reverses, we should see ARCO stock — which more than doubled since March 2017 — continue to rise.
Vivint Solar (VSLR)
When you look at the price history of small-cap solar energy company Vivint Solar, the trend you see isn’t pretty. Since its 2014 IPO at $16 per share, the stock has plunged all the way down to the $3 range. Thankfully, that incredibly suppressed level makes VSLR one of the best cheap stocks to buy under $10. Sure, it’s still not profitable, but get this: Revenue is expected to nearly quadruple from $64 million in 2015 to $234 million in 2017. And while shares cost just $3, Vivint boasts a full dollar per share in cash, giving the stock a floor of sorts.
MeetMe (MEET)
With just 8 million monthly active users in total, you’ve likely never heard of MeetMe or its other social discovery app, Skout. That small size, however, also comes with a high growth rate; earnings per share rose 60 percent in 2016 on revenue growth of 34 percent, and its fourth-quarter earnings call impressed on all fronts. On top of that, MeetMe just announced the acquisition of if(we), another mobile-heavy social discovery company that should bring MAUs above 10 million. With no debt, strong growth, and a price-earnings ratio around 6, MEET stock is fundamentally sound.
Permian Basin Royalty Trust (PBT)
Of all the cheapest stocks to buy, PBT is least like a stock. Technically, it’s a royalty trust, which means investors are buying the stream of royalty payments that will be generated from certain resource-rich chunks of land. PBT owners are entitled to 75 percent of all royalties from the Waddell Ranch properties, which contain hundreds of oil and natural gas wells, and 95 percent of the royalties on other Texas properties. The good thing about PBT is there’s a monthly distribution to shareholders based on production and energy prices. Total distributions over the last year amount to about a 5.7 percent dividend yield on its current price.
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7 of the Best Cheap Stocks to Buy Under $10 originally appeared on usnews.com
