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 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 investment cycle will be longer and more intensive than previous upgrade cycles, which is good news for Nokia. Tan says Nokia lost Mobile Network market share and pricing power in North America in 2021, but the company is confident it will recover that lost market share and overcome inflation and supply chain challenges in coming quarters. CFRA has a “buy” rating and $6.50 price target for NOK stock, which closed at $4.45 on Oct. 14.
Orange SA (ORAN)
Orange is the leading telecom provider in France. Analyst Adrian Ng says Orange shares are attractively valued and the difficult operating and regulatory environment in Europe is already priced into the stock. Ng says Orange can support margins via cost cutting and can raise cash for investments by monetizing its tower assets. He predicts a roaming revenue recovery and solid services revenues in the near term. Orange is also committed to maintaining its 8.4% dividend yield, the highest yield on this list and a rarity among low-priced stocks. CFRA has a “buy” rating and $12 price target for ORAN stock, which closed at $8.99 on Oct. 14.
Ericsson supplies network infrastructure and services to the telecom 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. Tan says Ericsson is benefiting from the early phases of the 5G investment cycle and the investigation and lawsuit will ultimately have minimal impact on operations. CFRA has a “buy” rating and $12 price target for ERIC stock, which closed at $6.20 on Oct. 14.
Telefónica SA (TEF)
Telefónica is the leading telecom company in Spain. Ng says Telefónica’s acquisition of E-Plus in Germany and GVT in Brazil, its exit of the Central American market and its merger of its telecom assets in the U.K. with Liberty Global PLC (LBTYA, LBTYK) have helped Telefonica improve its balance sheet and streamline its portfolio. Ng says the company has a strong position in its core markets and is on track to generate about 3% earnings before interest, taxes, depreciation and amortization, or EBITDA, growth in 2022. CFRA has a “buy” rating and $5 price target for TEF stock, which closed at $3.18 on Oct. 14.
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. Not only is Crescent Point the best-performing stock on this list in 2022, with a 28.3% gain as of Oct. 14, but it is also the only stock on the list that has generated a positive return at all this year. Analyst Jonnathan Handshoe says Crescent Point has taken advantage of higher oil and gas prices by paying down its debt and improving its balance sheet. CFRA has a “buy” rating and $8.74 price target for CPG stock, which closed at $6.76 on Oct. 14.
Telecom Italia (TIIAY)
Telecom Italia is the leading fixed-line and wireless telecommunications provider in Italy. The company plans to split off its network business into a separate company, and Ng says Telecom Italia essentially rejected a buyout offer from KKR & Co. Inc. (KKR) by not granting access to its books. Other private equity firms, including CVC Capital Partners, have also shown interest in Telecom Italia, making a buyout deal or even a bidding war a potential bullish catalyst. Telecom Italia’s Brazil revenues grew 21.8% in the most recent quarter. CFRA has a “buy” rating and $3.80 price target for TIIAY stock, which closed at $1.67 on Oct. 14.
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 services for customers with small payloads. The company has a better launch track record than its smaller competitors, yet it allows for more mission customization than larger competitors, such as SpaceX. Snyder says Rocket can significantly reduce costs once its Electron rocket becomes reusable, and he projects 265.5% revenue growth in 2022. CFRA has a “buy” rating and $10 price target for RKLB stock, which closed at $3.95 on Oct. 14.
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. Sundaram says Oatly trades at a significant valuation discount to Beyond Meat Inc. (BYND) and other plant-based food competitors. He says Oatly’s sales slowdown has come largely from temporary capacity constraints and supply chain disruptions, and he anticipates that sales growth will rebound from 26% in 2022 to 71% in 2023. The stock is down 71.7% year to date as of Oct. 14, but Sundaram says the weakness is a buying opportunity. CFRA has a “buy” rating and $5 price target for OTLY stock, which closed at $2.25 on Oct. 14.
8 of the best cheap stocks to buy under $10:
— Nokia Oyj (NOK)
— Orange SA (ORAN)
— Ericsson (ERIC)
— Telefónica SA (TEF)
— Crescent Point Energy Corp. (CPG)
— Telecom Italia (TIIAY)
— Rocket Lab USA Inc. (RKLB)
— Oatly Group AB (OTLY)
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Update 10/17/22: This story was published at an earlier date and has been updated with new information.