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 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|
|Ares Capital (ARCC)||-16.12%||Asset Management||$12.39|
|Alliance Resource Partners (ARLP)||+72.55%||Thermal Coal||$21.18|
|American Vanguard Corp. (AVD)||+37.46%||Agricultural Inputs||$22.25|
|Arhaus Inc. (ARHS)||-32.60%||Consumer Cyclical — Home Improvement Retail||$8.72|
|BlackRock TCP Capital Corp. (TCPC)||-1.70%||Asset Management||$13.28|
|Bluegreen Vacations Holding Corp. (BVH)||-40.60%||Resorts & Casinos||$20.85|
|Brigham Minerals Inc. (MNRL)||+76.11%||Oil and Gas Exploration and Production||$35.30|
|Capital Bancorp Inc. (CBNK)||-7.98%||Banks — Regional||$24.11|
|Catalyst Pharmaceuticals Inc. (CPRX)||+132.64%||Biotechnology||$15.75|
|The Duckhorn Portfolio Inc. (NAPA)||-36.68%||Beverages — Wineries and Distilleries||$14.78|
|Energy Transfer (ET)||+46.17%||Oil and Gas Midstream||$12.03|
|Forestar Group Inc. (FOR)||-37.52%||Real Estate – Development||$13.59|
|Genco Shipping & Trading Limited (GNK)||+1.06%||Marine Shipping||$16.17|
|The Hackett Group, Inc. (HCKT)||-9.69%||Information Technology Services||$22.52|
|iTeos Therapeutics Inc. (ITOS)||-55.09%||Biotechnology||$20.91|
|Modine Manufacturing Co. (MOD)||+110.21%||Auto Parts||$21.21|
|Natural Grocers by Vitamin Cottage Inc. (NGVC)||-19.23%||Grocery Stores||$11.51|
|NexPoint Real Estate Finance Inc. (NREF)||-7.27%||REIT — Diversified||$17.85|
|Oxford Lane Capital Corp. (OXLC)||-27.76%||Closed-End Fund — Debt||$5.57|
|Radiant Logistics Inc. (RLGT)||-20.30%||Integrated Freight and Logistics||$5.81|
|Ramaco Resources Inc. (METC)||-22.50%||Coking Coal||$10.54|
|Riley Exploration Permian Inc. (REPX)||+66.87%||Oil & Gas E&P||$32.34|
|Ryerson Holding Corp. (RYI)||+2.61%||Metal Fabrication||$26.73|
|Silvercrest Asset Management Group Inc. (SAMG)||+4.31%||Asset Management||$17.91|
|Sinclair Broadcast Group Inc. (SBGI)||-25.24%||Communication Services — Broadcasting||$19.76|
|SSR Mining Inc. (SSRM)||-16.38%||Gold||$14.80|
|Vector Group (VGR)||-6.62%||Tobacco||$10.72|
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.
FAQs on Buying Cheap StocksMany people often wonder about investing in cheap stocks. Here are some answers to those frequently asked questions.
- What are the best smalls stocks to buy now?
- Some of the small-cap stocks to watch right now are Ebix (EBIX), Dycom Industries (DY) and First Bancorp (FBNC), to name a few. Small-cap stocks are used to refer to small capitalization, which means the company has a market cap between $300 and $2 million.
- What is the best stock to buy in 2022?
- 2022 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), Visa Inc. (V) and EOG Resources Inc. (EOG).
- Which is the best stock to buy today?
- 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 maintain an active customer or audience base are some of the factors you might consider as an investor. Think about companies such as Lithia Motors Inc. (LAD), Berkshire Hathaway Inc. (BRK-A), Herc Holdings Inc. (HRI) and Qualcomm Inc. (QCOM) as examples.
- What stocks are undervalued right now?
- Some of the best value stocks right now include M&T Bank (MTB), Rent-a-Center (RAC) and CVS (CVS). Read this guide on undervalued stocks to learn more.
- What are the best stocks under $1?
- Stocks that cost less than $1 don't carry the risk to investors if the price falls drastically. Look at stocks such as iBio, Inc. (IBIO), Westmoreland Coal Company WLB) and Parker Drilling Company (PKD), companies that are in the biotech, technology and pharmaceutical industries. You might wish to consider penny stocks such as Pitney Bowes (PBI) and Ring Energy Inc (REI) to name a few.
- Can you invest in stocks with $10?
- Yes, you can invest in stocks with $10 or even less. You might want to look into some of the cheap stocks in this guide as a start, such as Oxford Lane Capital Corp. (OXLC) and Arhaus Inc. (ARHS), including several more on the list with share prices less than $10.
Daria Uhlig and Melanie Grafil contributed to the reporting for this article.
Data is accurate as of Nov. 15, 2022, and is subject to change.