The stock market may be at a turning point. Booms in industries such as artificial intelligence and semiconductors are unleashing a huge wave of opportunities. On the other hand, inflation remains a concern, and the Federal Reserve may hesitate to cut interest rates if the economic data doesn’t support a looser monetary policy. Investors may feel like they have missed the best opportunities with stocks at record highs, especially given the heightened macroeconomic and geopolitical concerns.
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There are still plenty of low-priced stocks out there, however. In fact, as of March 2024, there are roughly 1,800 stocks listed on the major American exchanges trading for $5 or less. That’s a big pile to sift through. Here are nine cheap stocks that look like diamonds in the rough to put on your watchlist today:
— iQiyi Inc. (ticker: IQ)
— Payoneer Global Inc. (PAYO)
— Sibanye Stillwater Ltd. (SBSW)
— Sandstorm Gold Ltd. (SAND)
— New York Community Bancorp Inc. (NYCB)
— Almacenes Exito SA (EXTO)
— Grupo Aval Acciones y Valores SA (AVAL)
— Rocket Lab USA Inc. (RKLB)
— Matterport Inc. (MTTR)
iQiyi Inc. (IQ)
iQiyi is one of the largest Chinese video streaming platforms. The company both aggregates content and creates its own original productions, with a focus on dramas and variety programming. It generates revenues from its more than 100 million active users through a combination of subscriptions, ads and online gaming ventures.
Investors may remember iQiyi from its 2018 initial public offering when shares were highly valued despite the company’s large operating losses. That picture has totally flipped over the past few years, however. Now, iQiyi has reined in its expenses, while the firm has grown dramatically. All told, iQiyi is generating large operating profits today. The Chinese equity market remains exceptionally unpopular right now, but if sentiment flips, IQ stock should be a genius trade.
Payoneer Global Inc. (PAYO)
Payoneer Global is a financial services company focused on payments platforms. It provides customers with a one-stop, global, multi-currency account to serve their accounts receivable and accounts payable needs. The company offers numerous tools for managing payrolls, invoicing, cross-border payments and so on. This has been a great fit for the global economy, as more and more companies rely on remote workers and freelancers operating in several countries and operating currencies, making for a favorable growth atmosphere.
Payoneer has grown revenues from $346 million in 2020 to $831 million in 2023. And while the stock price is currently down, revenues are still growing nicely and the firm is solidly profitable. This sets shares up for a rebound once investors return to the fintech and payments themes.
Sibanye Stillwater Ltd. (SBSW)
Sibanye Stillwater is a precious metals mining company that produces gold and silver along with metals such as palladium, platinum and rhodium. It is a highly diversified firm, with projects in locations ranging from South Africa and Zimbabwe to the U.S., Canada and Argentina.
SBSW stock plummeted in 2023 amid a harsh downturn in prices for various platinum group metals. Big drivers for demand in this space are vehicles, particularly for emission reduction and zero carbon initiatives. These fell out of favor last year as the electric vehicle sector slowed down and auto sales in general cooled off. Sibanye Stillwater has a strong balance sheet, however, and it benefits from the recent rally in gold prices, making this stock a bargain.
Sandstorm Gold Ltd. (SAND)
Speaking of gold, the price of that precious metal has hit new all-time highs recently, but that’s not evident from looking at the price of gold miners. In fact, many are down significantly over the past year despite the improved outlook for gold bullion. To be fair, mining is a tough industry. Operating costs tend to be volatile and have been hit by inflationary conditions. Geopolitical pressures have also affected mining in several critical jurisdictions over the past few years.
Arguably, royalty streaming companies like Sandstorm are a better way to benefit from rising precious metals prices. These invest in a variety of royalty streams across a broad portfolio of mines in many markets, lowering risk. In addition, the streamers aren’t exposed to direct costs like labor or energy. SAND stock has fallen about 10% over the past year despite the rally in gold, setting up a nice catch-up trade later this year.
[15 Best Dividend Stocks to Buy for 2024]
New York Community Bancorp Inc. (NYCB)
The regional banking panic has returned in 2024. After several quarters of calm, regional banks have slumped once again amid continuing high interest rates, deposit jitters and concerns about the commercial real estate market. This all came to a head with New York Community Bancorp, which lost a majority of its share value this year. The bank’s CEO is out, it took a large write-down on loans and there are worries about the firm’s office market exposure. These are good reasons for the stock’s plunge.
That said, things may be overdone here. Book value per share remains substantially above its current share price, suggesting the stock currently trades at about a 70% discount to the bank’s assets. A group of investors announced a more than $1 billion cash injection on March 6, with new leadership at the board level along with a new CEO. Assuming the bank makes it through this crisis, shares should be set for a considerable rebound in due time.
Almacenes Exito SA (EXTO)
Almacenes Exito is one of Colombia’s largest retail chains. It operates large supermarkets that sell both groceries and mass merchandise, such as clothing and consumer electronics. It operates more than 1,500 locations in Colombia, Brazil, Uruguay and Argentina. In addition to running stores, Exito has a substantial real estate business; it often builds shopping centers where its Exito location is the lead anchor, and then it rents out adjoining spaces to restaurants and retailers. Exito recently listed its stock in New York via a somewhat complicated spin-off process, and shares have sunk following that listing. This has pushed the company down to one of the lowest enterprise value to earnings before interest, taxes, depreciation and amortization ratios for grocers in the market today. Improving Latin America sentiment could send Exito shares much higher.
Grupo Aval Acciones y Valores SA (AVAL)
Exito isn’t the only deeply discounted Colombian stock right now. Grupo Aval is one of Colombia’s largest financial groups; it operates several banking brands along with insurance, asset management and infrastructure units. Aval, along with its two primary rivals, control nearly 70% of the domestic banking market, which leads to high profit margins and a consistent operating outlook.
AVAL shares plunged from more than $8 prior to the pandemic to less than $3, though that is somewhat affected by the fact that Aval spun off its Central American banking business in 2022. Regardless, it’s been a rough run for the bank. After admitting to paying bribes to secure a Colombian highway project, Aval agreed to pay more than $80 million in fines to settle violations of the U.S. Foreign Corrupt Practices Act in August 2023. Days later, Colombian President Gustavo Petro asked the country’s attorney general to reopen an investigation into one of Aval’s subsidiaries. While the risks are admittedly elevated for this financial firm, this has led to the bank trading at just 0.73 times book value and about eight times forward earnings.
Rocket Lab USA Inc. (RKLB)
Rocket Lab operates in the fast-growing field of launch services and space systems solutions. When industrial companies or defense agencies need to launch objects such as satellites into space, they can hire Rocket Lab to design and plan the mission to deliver that cargo to its orbit or destination. Rocket Lab has already proven substantial commercial demand, generating $245 million in revenue in 2023. The industry appears to be at an inflection point as interest is building; analysts foresee Rocket Lab’s revenues soaring 78% to $436 million this year. In addition, Lockheed Martin Corp. (LMT) recently announced a takeover offer for Terran Orbital Corp. (LLAP), a small satellite maker. Lockheed’s move could start a broader M&A wave in the space, thus increasing valuations.
Matterport Inc. (MTTR)
Matterport is a spatial data company. It develops tools to turn physical spaces into data for digital purposes and has attracted a sizable number of real estate and hospitality industry clients. Matterport stock soared during the SPAC boom, and investors rushed to put money into apparent metaverse plays. While the metaverse buzz has cooled somewhat, augmented reality could be set for a comeback thanks to the launch of Apple Inc.’s (AAPL) Vision Pro headset.
Meanwhile, while the hype has faded, Matterport is continuing to build out its business. The company has grown revenues from $46 million in 2019 to $158 million in 2023. While there were some stumbles in pivoting from a fixed license to subscription model, Matterport appears to be turning the corner now. And, with interest rates seemingly set to decline in coming quarters, Matterport could benefit from a stronger commercial real estate market and increased demand for property marketing tools.
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9 Best Cheap Stocks to Buy Under $5 originally appeared on usnews.com
Update 03/07/24: This story was previously published at an earlier date and has been updated with new information.
