27 Best Cheap Stocks To Buy Now
After tumbling sharply in the early months of the COVID-19 pandemic, stocks posted a remarkable turnaround, rallying hard through 2020 and all the way until the end of 2021, albeit with a few hiccups. The specter of rising inflation and interest rates began to take their toll in early 2022, however, with the market as a whole, and high-multiple stocks in particular, selling off sharply in January and remaining volatile in the third quarter of 2022.
The U.S. officially entered a bear market on June 13, when, as CNBC reported, the S&P 500 closed over 21% below January’s all-time record high. While no one can predict how long the bear market will last, one thing is certain: In this economic environment, with shares falling and inflation on the rise, 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 any names you pick are in line with your investment objectives and risk tolerance before you make any moves.
Cheap Stocks Projected To Increase in Value
Here are 27 low-priced stocks with the potential to grow.
|Company Name and Symbol||Stock YTD % Change||Sector||Price|
|Ares Capital (ARCC)||-3.86%||Asset Management||$19.11|
|Alliance Resource Partners (ARLP)||+66.14%||Thermal Coal||$21.00|
|American Vanguard Corp. (AVD)||+30.02%||Agricultural Inputs||$21.31|
|Arhaus Inc. (ARHS)||-59.55%||Consumer Cyclical — Home Improvement Retail||$5.42|
|Beazer Homes USA Inc. (BZH)||-42.59%||Residential Construction||$13.33|
|BlackRock TCP Capital Corp. (TCPC)||-6.59%||Asset Management||$12.62|
|Brigham Minerals (MNRL)||+20.62%||Oil and Gas Exploration and Production||$24.70|
|Catalyst Pharmaceuticals Inc. (CPRX)||+28.06%||Biotechnology||$8.67|
|Celularity Inc. (CELU)||-64.61%||Biotechnology||$3.61|
|The Duckhorn Portfolio Inc. (NAPA)||-20.91%||Beverages — Wineries and Distilleries||$18.46|
|Energy Transfer (ET)||+22.60%||Oil and Gas Midstream||$10.09|
|The Hackett Group (HCKT)||-4.29%||Information Technology Services||$19.65|
|iTeos Therapeutics Inc. (ITOS)||-48.17%||Healthcare — Biotechnology||$24.46|
|Karat Packaging Inc. (KRT)||-14.15%||Packaging and Containers||$17.35|
|Mattel Inc. (MAT)||+0.09%||Leisure||$21.58|
|Meridian BIosciences Inc. (VIVO)||+57.79%||Diagnostics and Research||$32.19|
|MultiPlan Corp. (MPLN)||+14.67%||Healthcare Plans||$5.08|
|Natural Grocers by Vitamin Cottage Inc. (NGVC)||+18.11%||Grocery Stores||$16.83|
|NexPoint Real Estate Finance Inc. (NREF)||+9.09%||REIT — Diversified||$21.00|
|Oxford Lane Capital Corp. (OXLC)||-21.14%||Closed-End Fund — Debt||$7.46|
|PROG Holdings Inc. (PRG)||-61.07%||Industrials — Rental and Leasing Services||$17.96|
|Radiant Logistics Inc. (RLGT)||+2.88%||Integrated Freight and Logistics||$7.13|
|Ramaco Resources Inc. (METC)||-16.32%||Coking Coal||$11.38|
|Sinclair Broadcast Group Inc. (SBGI)||-18.88%||Communication Services — Broadcasting||$22.03|
|SSR Mining Inc. (SSRM)||-7.40%||Gold||$16.51|
|Univar Solutions Inc. (UNVR)||-15.70%||Chemicals||$24.31|
|Vector Group (VGR)||-12.28%||Tobacco||$10.34|
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: P/E 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 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.
Daria Uhlig contributed to the reporting for this article.
Data is accurate as of July 19, 2022, and is subject to change.
This article has been updated with additional reporting since its original publication.
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