These stocks under $10 won’t break the bank.
The S&P 500 is off to a shaky start in 2022, providing buying opportunities in high-quality stocks. Unfortunately, quality stocks trading for less than $10 per share are few and far between. Stocks priced at this level can be a red flag for investors that something serious is wrong with a company. Many of these stocks have challenged underlying business models or difficult near-term outlooks. However, the CFRA Research analyst team has identified eight cheap, high-quality stocks that could be excellent buying opportunities for frugal investors. Here are eight of the best stocks to buy under $10, according to CFRA.
Arlo Technologies Inc. (ticker: ARLO)
Arlo Technologies produces smart connected devices, including security cameras, baby monitors and outdoor lights. Analyst Keven Young says Arlo has made an impressive transition to focusing on services, and the stock has a good valuation. Young says Arlo reached $101 million in annual recurring revenue in the first quarter of 2022, a significant milestone for the company. In addition, paid accounts were up 132% compared with the same period last year to 1.27 million. Young says Arlo’s plan to spend $21 million in customer acquisition in 2022 should boost account growth further. CFRA has a “buy” rating and $13 price target for ARLO stock, which closed at $7.05 on Aug. 15.
Crescent Point Energy Corp. (CPG)
Crescent Point Energy is a Canadian oil and gas exploration and production company that has assets in Western Canada, Utah and North Dakota. Analyst Jonnathan Handshoe says Crescent Point is taking advantage of the cash flow provided by high crude oil and natural gas prices by paying down debt and improving its balance sheet. In fact, Crescent Point is on track to decrease capital spending by about 30% in 2022 and keep production flat, which Handshoe estimates will generate more than $1 billion in excess cash flow. CFRA has a “buy” rating and $9.32 price target for CPG stock, which closed at $7.47 on Aug. 15.
Ericsson (ERIC)
Ericsson supplies network infrastructure and services to the telecommunications industry. The U.S. Justice Department and Securities and Exchange Commission are currently investigating Ericsson for compliance breaches related to allegations of misconduct in Iraq from 2011 through 2019. In August, more than 500 American victims of terrorist attacks sued Ericsson, alleging the company paid bribes to al-Qaida and the Islamic State. Despite the regulatory uncertainty, analyst Jun Zhang Tan says Ericsson has an attractive valuation and is a major beneficiary of the global 5G upgrade cycle. CFRA has a “buy” rating and $12 price target for ERIC stock, which closed at $7.59 on Aug. 15.
Nokia Corp. (NOK)
Nokia is a global telecom equipment and digital map data vendor that also licenses intellectual property to third parties. Tan says a longer and larger 5G upgrade cycle relative to previous wireless cycles will benefit Nokia in coming years. Tan says Nokia is losing mobile network market share in North America, and inflation and supply chain disruptions have weighed on recent results. However, Nokia has executed well, and Tan is bullish on its improved earnings visibility. Tan projects 9.6% revenue growth in 2022. CFRA has a “buy” rating and $6.50 price target for NOK stock, which closed at $5.11 on Aug. 15.
Oatly Group AB (OTLY)
Oatly is the world’s largest oat milk producer. With the stock trading right around $4 per share, analyst Arun Sundaram says Oatly has an attractive valuation. In fact, Oatly shares currently trade at less than half the 2023 enterprise-value-to-sales multiple of plant-based foods competitor Beyond Meat Inc. (BYND). Oatly’s sales and earnings growth have been pressured in recent quarters, but Sundaram says these temporary headwinds should subside in the second half of 2022. He projects sales growth will accelerate from 26% in 2022 to 71% in 2023. CFRA has a “buy” rating and $5 price target for OTLY stock, which closed at $4.07 on Aug. 15.
Rocket Lab USA Inc. (RKLB)
Rocket Lab is an aerospace and defense company that specializes in launch services, spacecraft engineering and design, components manufacturing, and other spacecraft management solutions. Analyst Keith Snyder says Rocket is one of the top small-payload spacecraft launch providers, and the company’s reputation has benefited from several high-profile launch failures by Astra Space Inc. (ASTR) and other competitors. Snyder says Rocket also offers customers more orbit flexibility than larger competitors like SpaceX. Finally, he says Rocket’s Electron rocket will eventually become reusable, which will help reduce launch costs. CFRA has a “buy” rating and $10 price target for RKLB stock, which closed at $6.61 on Aug. 15.
Telefonica SA (TEF)
Telefonica is the leading telecom company in Spain. Analyst Adrian Ng says Telefonica has significantly restructured its portfolio, divesting its Central American assets, committing its U.K. assets to a joint venture with Liberty Global PLC (LBTYA) and buying E-Plus in Germany and GTV in Brazil. Ng says these maneuvers have helped reinforce Telefonica’s position in top markets, reduce its debt and improve its balance sheet significantly. Telefonica reported 5.2% organic revenue growth in the second quarter, and the stock pays an attractive dividend. CFRA has a “buy” rating and $5 price target for TEF stock, which closed at $4.34 on Aug. 15.
Telecom Italia (TIIAY)
Telecom Italia is the leading fixed-line and wireless telecom provider in Italy. Ng says Telecom Italia has effectively rejected a $12 billion buyout bid by KKR & Co. Inc. (KKR) by refusing to grant KKR access to its books. The company’s updated long-term strategic plan involves splitting Telecom Italia into two businesses: one that manages its networks and one that contains the consumer, enterprise and Brazil segments. Ng says he remains positive on the stock and says Telecom has an opportunity to further monetize its assets and reduce debt. CFRA has a “buy” rating and $3.80 price target for TIIAY stock, which closed at $2.44 on Aug. 15 in over-the-counter trading.
Best cheap stocks to buy under $10:
— Arlo Technologies Inc. (ARLO)
— Crescent Point Energy Corp. (CPG)
— Ericsson (ERIC)
— Nokia Corp. (NOK)
— Oatly Group AB (OTLY)
— Rocket Lab USA Inc. (RKLB)
— Telefonica SA (TEF)
— Telecom Italia (TIIAY)
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8 of the Best Cheap Stocks to Buy Under $10 originally appeared on usnews.com
Update 08/16/22: This story was published at an earlier date and has been updated with new information.
