The best cheap stocks to buy now.
After a much-needed market correction in early February, stocks, which had been marching to an all-time high after hitting all-time highs for months, are finally on sale again. Now’s a great time to go shopping for the best cheap stocks to buy. A quick sell-off of this magnitude — the Dow Jones industrial average dipped into a correction in February — always rouses investor fears. But being a contrarian often pays big. The U.S. economy still has tailwinds: Tax cuts, deregulation, rock-bottom unemployment and rising corporate earnings paint a rosy picture. Now’s a good time to go shopping. Here’s a look at 10 of the best cheap stocks to buy under $10.
Banco Santander, S.A. (ADR) (NYSE: SAN)
Banco Santander is one of the most deserved entrants on our list of best cheap stocks to buy under $10. It’s a rare opportunity indeed to pick up a $117 billion company — it’s the single largest bank in Spain — for less than $10 a share. But SAN stock isn’t just nominally cheap; it trades for just 13.6 times earnings, at a time when the Dow’s price-earnings multiple is nearly twice that (25.7). Banco Santander’s current dividend yield is also quite impressive at 4.1 percent. When you’re shopping for cheap stocks to buy, you’d be hard-pressed to find one with the blue-chip size and hefty yield that SAN carries.
Arcos Dorados Holding Inc (ARCO)
Arcos Dorados, which trades around $10 a share, is essentially a way to own McDonald’s Corp. (MCD) in Latin America and South America. ARCO operates or franchises more than 2,100 McDonald’s restaurants in Brazil, the Caribbean, Costa Rica, Mexico, Panama, Argentina, Chile, Ecuador, Peru, Uruguay and elsewhere. It is, of course, impossible to buy McDonald’s stock itself for less than $10 a share. After years of subpar growth, a CEO shakeup in recent years led a robust turnaround as the company changed its menu, and shares are up 85 percent from January 2015. ARCO is benefiting from that turnaround, making it one of the best cheap stocks to buy today.
Nomura Holdings Inc (ADR) (NMR)
This Japanese financial services company likely won’t double your money any time soon, but at $24 billion, it’s a steady Eddie with a well-known name on Wall Street. NMR, a broker-dealer, offers a variety of other services such as investment advisory, investment banking and consulting, Wall Street debt and equity research, underwriting, mergers and acquisitions, and trading services, among other specialties. Think of it as a poor man’s Merrill Lynch. Shares trade for less than 10 times earnings and boast a 2.6 percent dividend. Like the other cheap stocks to buy for less than $10 a share, NMR is affordable and trading at an attractive valuation.
Permian Basin Royalty Trust (PBT)
Royalty trusts own natural resource rights; in PBT’s case, it owns mineral rights in the Permian Basin, on the border of Texas and New Mexico. This gives shareholders rights to the substantial oil and gas reserves there. Since PBT doesn’t drill itself — it simply collects huge royalties on what others extract — there are no expenses to speak of. This makes PBT’s price largely a function of oil prices. If crude oil ventures below $55 per barrel again, PBT will be an even more attractive buy. Regardless of oil prices, PBT pays a nice monthly dividend and currently yields 6.9 percent. Bullish on oil? Love dividends? This is one cheap stock for you.
Sirius XM Holdings Inc. (SIRI)
Sirius XM is one of the best cheap stocks to buy for several reasons. First, it’s essentially got a monopoly on satellite radio, a foreseeable result of the 2008 Sirius and XM merger. Second, shareholders love SIRI’s subscription-based business model because it begets recurring revenue year after year. The number of subscribers grew 4 percent to 32.7 million in 2017, and with subscriptions running between $16 and $21 a month, that’s some serious customer “lifetime value.” Additionally, SIRI has an extremely aggressive share repurchase program. The $27 billion company has reduced share count 26 percent since 2013 and has authority to do $12 billion more in stock buybacks.
MFA Financial, Inc. (MFA)
MFA, a real estate investment trust, owns residential mortgage assets like mortgage-backed securities, and it lived through the financial crisis to tell about it. With stricter regulation of residential loan quality today, MFA’s assets are much higher quality than they were 10 years ago. MFA pays an enormous dividend — 11.5 percent — which has a habit of easily compensating for any subpar share price performance. A quick example: Nominally, MFA’s share price is the same today as it was in December 2011. But if you’d been reinvesting dividends the whole time, you’d be up 141 percent. MFA rarely trades at or below $7 per share, so opportunity is knocking.
Gogo Inc (GOGO)
The cheap stocks to buy previously listed have included some large companies — few businesses ever make it to that nine-digit valuation club with Banco Santander. Gogo is another story; it’s on the other end of the spectrum, and that’s the first thing you need to know about GOGO as an investor: It’s worth $800 million, it doesn’t pay a dividend and it’s losing money. But this is a long-term play. Gogo is aggressively focusing on the niche aviation connectivity business, and investing in that expansion is expensive. It currently provides in-flight internet and wireless entertainment for airlines in the U.S. and overseas, with a focus on growing in China.
Zynga Inc (ZNGA)
Many cheap stocks to buy below $10 are a bit of a gamble. Companies don’t like to price their initial public offerings below $10, so the majority of the stocks with such low share prices got there by doing poorly. Zynga — the mobile game developer behind “FarmVille,” “Zynga Poker” and the “Words With Friends” and “CSR Racing” franchises — is turning its ship around. Since CEO Frank Gibeau took over for co-founder Mark Pincus in March 2016, ZNGA stock is up 63 percent. For its first four years as a public company, ZNGA never posted an annual profit. That changed in 2017, and Q4 revenue grew 22 percent to boot.
ImmunoGen, Inc. (IMGN)
IMGN is another extremely risky stock. If things go well, it could skyrocket in 2018 and 2019. It would be more accurate to say “continue skyrocketing” as shares are already up 280 percent in the past year. ImmunoGen, like many biotechs, is pinning its hopes on a drug in development. Mirvetuximab soravtansine, an ovarian cancer treatment, is that billion-dollar drug for IMGN. Currently in phase 3 trials, investors should see some pivotal data in 2018. If it’s bad, the downside is 80 to 100 percent. If good though, the upside is likely 100 to 200 percent in the next 18 months.
SRC Energy Inc (SRCI)
Last but not least on our list of best cheap stocks to buy under $10 is SRC Energy with a $2.1 billion market capitalization. The Denver, Colorado-based oil and natural gas exploration and production company was founded in 2005 and went public in 2011. While it helps to be bullish on oil and gas prices if you want to make a good return on your investment, SRCI stock also looks cheap on the face of it. Currently it trades at 18 times earnings and just 8.2 times forward earnings, and has a price-earnings-growth ratio of 0.36 (anything below 1 is considered cheap).
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10 of the Best Cheap Stocks to Buy Under $10 originally appeared on usnews.com
