These stocks under $10 won’t break the bank.
The S&P 500 has struggled so far 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.
Nokia Oyj (ticker: NOK)
Nokia Oyj is a global telecom equipment and digital map data vendor that also licenses intellectual property to third parties. Analyst Jun Zhang Tan says the global 5G wireless network upgrade investment cycle will be larger and longer than previous upgrade cycles, which will serve as a tail wind for Nokia sales. Nokia lost market share and pricing leverage in 2021, but Tan says management seems confident it will regain that market share and outgrow its industry in 2022 and beyond despite supply chain disruptions and inflationary pressures. CFRA has a “buy” rating and $6.50 price target for NOK stock, which closed at $4.87 on Sept. 15.
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-Qaeda and the Islamic State. Tan says the investigations will likely not have a material impact on Ericsson’s business, which is benefiting from the early stages of the 5G upgrade cycle. CFRA has a “buy” rating and $12 price target for ERIC stock, which closed at $6.74 on Sept. 15.
Telefónica SA (TEF)
Telefónica is the leading telecommunications company in Spain. Analyst Adrian Ng says Telefónica has made several restructuring decisions to improve its balance sheet and strategic positioning, including exiting the Central American market and acquiring E-Plus in Germany and GVT in Brazil. Telefónica will also receive a significant cash infusion from its deal to divest its U.K. assets to a new joint venture with Liberty Global PLC (LBTYA). Ng says Telefónica is on track to achieve its 2022 earnings before interest, taxes, depreciation and amortization, or EBITDA, growth guidance of about 3%. CFRA has a “buy” rating and $5 price target for TEF stock, which closed at $3.81 on Sept. 15.
Telecom Italia (TIIAY)
Telecom Italia is the leading fixed line and wireless telecommunications provider in Italy. Ng says the company 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 a NetCo that manages its networks and a ServCo that contains the consumer, enterprise and Brazil segments. Ng says revenues will likely continue to decline amid intense competition, but the stock has valuation upside from current levels. CFRA has a “buy” rating and $3.80 price target for TIIAY stock, which closed at $2.03 on Sept. 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 has taken advantage of soaring oil and gas prices and reduced its long-term debt by more than 37%. He projects 51% revenue growth and more than $1 billion in excess cash flow for the company in 2022. Revenue growth may slow in 2023, but crude oil prices and Crescent Point’s margins are likely to remain elevated. CFRA has a “buy” rating and $9.04 price target for CPG stock, which closed at $6.95 on Sept. 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 Lab is one of the top launch providers for customers with smaller payloads. He says Rocket is reliable and offers customers more mission customization than larger competitors, such as SpaceX. Snyder says the ability to reuse its Electron rocket could significantly reduce costs in the future. He projects 265.5% revenue growth in 2022 and 40% growth in 2023. CFRA has a “buy” rating and $10 price target for RKLB stock, which closed at $5.10 on Sept. 15.
Oatly Group AB (OTLY)
Oatly is the world’s largest oat milk producer. With the stock trading under $3 per share, analyst Arun Sundaram says Oatly’s valuation is attractive. In fact, the stock is trading at less than half the 2023 enterprise value-to-sales multiple of popular plant-based foods competitor Beyond Meat Inc. (BYND). Oatly’s sales growth has been pressured by capacity constraints and COVID-19-related disruptions in recent quarters, but Sundaram says revenue growth should accelerate from 26% in 2022 to 71% in 2023 as those temporary pressures moderate. CFRA has a “buy” rating and $5 price target for OTLY stock, which closed at $2.98 on Sept. 15.
Arlo Technologies Inc. (ARLO)
Arlo Technologies produces smart connected devices, including security cameras, baby monitors and outdoor lights. Analyst Keven Young says the company’s shift in focus to a service-centered strategy has been impressive, and Arlo’s ability to reach roughly $117 million in annual recurring revenue in the second quarter demonstrates the strategy has been effective. Arlo is also investing $21 million in an awareness campaign in 2022 to raise the company’s visibility. Young projects sales growth will increase from 18% in 2022 to 27% in 2023 as supply constraints are alleviated. CFRA has a “buy” rating and $13 price target for ARLO stock, which closed at $5.36 on Sept. 15.
8 of the best cheap stocks to buy under $10:
— Nokia Oyj (NOK)
— Ericsson (ERIC)
— Telefónica SA (TEF)
— Telecom Italia (TIIAY)
— Crescent Point Energy Corp. (CPG)
— Rocket Lab USA Inc. (RKLB)
— Oatly Group AB (OTLY)
— Arlo Technologies Inc. (ARLO)
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Update 09/16/22: This story was previously published at an earlier date and has been updated with new information.