The U.S. officially entered a bear market on June 13, 2022, when, as CNBC reported, the S&P 500 closed over 21% below January’s all-time record high. While the bear market seems to be abating, in this economic environment, with still-volatile share prices and high inflation, some investors will shy away from high-flying, high-dollar stocks and look instead toward lower-priced stocks.
Some of the companies listed below haven’t yet made their mark, but you should be sure to talk with your financial advisor before diving in. Some low-priced stocks may have yet to move, but others trade in the single digits due to poor or uncertain operating histories. As with any investment, make sure that the names you pick are in line with your investment objectives and risk tolerance before you make any moves.
Which Are the Cheapest and Best Stocks To Buy Today?
Here are 27 low-priced stocks with the potential to grow.
|Company Name and Symbol||Stock YTD % Change||Sector||Price|
|Accel Entertainment (ACEL)||+28.38%||Consumer Cyclical — Gambling||$9.54|
|Ares Capital (ARCC)||+3.22%||Asset Management||$19.08|
|Ally (ALLY)||+15.44%||Financial — Credit Services||$27.64|
|Berry Corp. (BRY)||-9.77%||Oil and Gas Exploration and Production||$6.71|
|Bluegreen Vacations Holding Corp. (BVH)||+33.61%||Resorts and Casinos||$32.03|
|Carriage Services Inc. (CSV)||-1.47%||Consumer Cyclical — Personal Services||$26.12|
|CompoSecure Inc. (CMPO)||+42.77%||Metal Fabrication||$6.78|
|Eagle Point Credit Company (ECC)||+4.10%||Financial — Closed-End Fund — Debt||$10.17|
|Energy Transfer (ET)||+8.59%||Oil and Gas Midstream||$12.89|
|Forestar Group Inc. (FOR)||+36.63%||Real Estate — Development||$20.50|
|Genco Shipping & Trading Limited (GNK)||-9.67%||Marine Shipping||$13.79|
|General Motors (GM)||+4.44%||Auto Manufacturers||$34.13|
|The Hackett Group Inc. (HCKT)||-1.91%||Information Technology Services||$19.51|
|HireQuest Inc. (HQI)||+60.72%||Industrials — Staffing and Employment Services||$24.13|
|Host Hotels & Resorts Inc. (HST)||+9.75%||Real Estate — REIT — Hotel and Motel||$17.41|
|Information Services Group Inc. (III)||+12.61%||Technology — Information Technology Services||$5.15|
|Lincoln Educational Services Corp. (LINC)||+16.06%||Education and Training Services||$6.70|
|The Lovesac Co. (LOVE)||+11.49%||Consumer Cyclical — Furnishings, Fixtures and Appliances||$22.86|
|MasterCraft Boat Holdings Inc. (MCFT)||+11.08%||Recreational Vehicles||$26.95|
|Modine Manufacturing Co. (MOD)||+53.63%||Auto Parts||$29.68|
|NMI Holdings Inc. (NMIH)||+25.22%||Insurance||$25.36|
|Playa Hotels & Resorts N.V. (PLYA)||+45.87%||Resorts and Casinos||$9.37|
|Radian Group Inc. (RDN)||+37.99%||Financial — Insurance — Specialty||$25.72|
|Riley Exploration Permian Inc. (REPX)||+23.00%||Oil and Gas E&P||$33.98|
|Schneider National Inc. (SNDR)||+13.12%||Real Estate — REIT — Mortgage||$26.04|
|Tri Pointe Homes Inc. (TPH)||+73.96%||Residential Construction||$30.91|
|Vector Group (VGR)||+5.65%||Tobacco||$12.21|
What Factors Affect Returns?
With any investment, there is a degree of risk as well as return. When deciding which cheap stocks to buy, here are key factors to keep in mind: price-earnings ratio, price-to-book value, cash flow and earnings reports.
Read more about how each of these factors works when it comes to low-priced stocks.
To calculate a P/E ratio, simply take a company’s stock price and divide it by the company’s net earnings. In a general sense, stocks with a high P/E are considered expensive, and those with a lower P/E are considered cheap.
Book value is essentially a company’s net worth, as it equals a company’s assets minus its liabilities. Theoretically, if you had to liquidate a company, the company’s book value would be what remains. Stocks trading below book value could be good cheap stocks.
Net cash flows, cash from operations and free cash flow are just a few of the cash flow metrics used to analyze a company’s value. A company with a low price relative to cash-flow measures is less expensive than one with a higher ratio.
Earnings reports offer a wealth of information on companies, including their profits and losses. They also note whether a company performed as expected for a given period. Digging into past earnings reports can help you anticipate future performance and decide whether cheap dividend stocks are a good buy.
Is There a Downside to Investing In Cheap Stocks?
There’s no such thing as a crystal ball on Wall Street. Even stocks that appear undervalued with high growth prospects might not go up in value for any number of reasons.
Some companies simply fail to live up to projections. And others are destined to remain undervalued for years, simply due to investor sentiment.
Potential for Loss
While your investment in cheap stocks is limited, there is the potential for loss. As with any investment, the best approach is diversification. Don’t put all your funds into one stock. Spread out your risk by investing in a variety of stocks and other investment vehicles like mutual funds.
Choosing the Top Brokers for Cheap Stocks
Here are some of the best brokers when it comes to cheap stocks:
- Charles Schwab: This brokerage offers both personalized advice and online access for purchasing stocks on your own, with $0 commission on stocks and many ETFs and mutual funds.
- Merrill Edge: Merrill Edge offers $0 commission online trades and tools to help you manage your portfolio and decide what stocks to buy.
- E-Trade: This company has an excellent mobile app and $0 commission trades.
- Fidelity: Fidelity offers a high level of service with zero-commission trading, zero-fee ETFs and no account minimums.
- TD Ameritrade: TD Ameritrade offers multiple trading platforms to help you make informed investment decisions, along with $0 commissions on most equity and ETF trades.
Choose a user-friendly platform with low or no fees and excellent customer service. Research your stock choices and buy when you’re ready.
FAQ on Buying Cheap StocksMany people wonder about investing in cheap stocks. Here are some answers to some frequently asked questions.
- What is the best stock to buy in 2023?
- The past year has certainly seen its ups and downs in the stock market. Here are some stocks to keep on your radar right now: Alphabet Inc. (GOOG, GOOGL), Costco (COST) and Berkshire Hathaway Inc. (BRK-A).
- Which is the best stock to buy today?
- Consider companies such as Berkshire Hathaway Inc. (BRK-A), Herc Holdings Inc. (HRI) and Qualcomm Inc. (QCOM). Think about stocks that have both long-term and short-term potential to grow. Companies that have shown strong leadership, ability to grow and sustain their sales, as well as maintaining an active customer or audience base, are some of the factors you might consider as an investor.
- What stocks are undervalued right now?
- Some of the best value stocks right now include T-Mobile (TMUS) and Qualcomm (QCOM). Read this guide on undervalued stocks to learn more.
- Can you invest in stocks with $10?
- Yes, you can invest in stocks with $10 or even less. If you want to purchase stock that is priced over $10, you can purchase partial shares from many brokers.
Daria Uhlig and Melanie Grafil contributed to the reporting for this article.
Data is accurate as of June 5, 2023, and is subject to change.
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