When 2020 began, the stock market was nearly 11 years into the longest bull market in U.S. history, and investors had to hunt a little harder than usual to find cheap stocks. That dynamic came to a swift end in the first few months of the year, although the subsequent rally technically started a whole new bull market. Regardless, a given stock trading for less than $10 doesn’t make it a steal, and the most popular Robinhood stocks don’t always make the best investments. That said, two of the previously mentioned best cheap stocks to buy under $10 have already zoomed into double digits, so there are diamonds to be found in the rough. Here are nine of the top cheap stocks on the market now. Some (but not all) come with higher-than-average risk.
Sirius XM Holdings
Since Sirius and XM Radio merged in 2008, the combined Sirius XM Holdings has enjoyed a near-monopoly on satellite radio. Sirius built on that with the 2018 acquisition of Pandora, helping to reignite rapid revenue growth; its audio products now reach more than 100 million people. Although Netflix gets all the Wall Street love for its growing stream of recurring revenue, Sirius’ situation is pretty rosy, too – SIRI added 1.1 million subscribers in 2019 alone, bringing its total paying subscribers to roughly 30 million. The company’s savvy strategy of partnering with auto manufacturers to preinstall SiriusXM in new models should help steadily grow the business. An admittedly slow but altogether steady grower, Sirius is consistently profitable, and the $26 billion company just approved $2 billion in stock buybacks to take advantage of 2020’s modest pandemic-induced price decline.
ADT
The fact that shares of home security company ADT haven’t been considered safe by Wall Street since their 2018 initial public offering isn’t mere irony to ADT’s IPO investors – it’s frustrating. In the chaotic pessimism that characterized the early days of the pandemic, the stock plunged as low as $3.40, a more than 75% haircut to its $14 IPO price. That said, ADT wouldn’t be one of the best cheap stocks to buy today if it didn’t have a silver lining: Analysts expect recent losses to turn to profits, the stock has more than doubled from its lows and shares still trade for under eight times forward earnings. Also, ADT is refinancing debt at more favorable rates and focusing on growing areas like automation, smart home tech and mobile security. Don’t be surprised if ADT eclipses the $10 level as the year progresses.
Zynga
In sharp contrast to ADT, which, as one of the more contrarian names on this list, is coming off a lousy 2019, ZNGA shares rallied last year, adding more than 50%. Zynga’s portfolio of popular games, combined with some truly impressive recent growth, makes it one of the best cheap stocks to buy under $10. Last quarter, the social gaming developer behind franchises like Words With Friends, Zynga Poker, CSR Racing and FarmVille set new first-quarter revenue records – up 52% overall, with quarterly bookings surging 18%. While growth is likely to decelerate quickly from such unsustainable levels, analysts still expect 40% revenue growth in 2020. ZNGA is standing up remarkably well in the quarantine era as people increasingly turn to mobile devices for entertainment. If the stock merely treads water in 2020, it’ll put up back-to-back 50% returns and will soon be priced out of sub-$10 lists. At the time of this writing, ZNGA trades around $9.75 per share.
Century Casinos
The next of the best cheap stocks to buy below $10 is the second-smallest publicly traded resort and casino company on Wall Street. Century Casinos, a roughly $117 million gaming company based in Colorado, owns and operates racetracks and casinos in the U.S., Canada and Poland, operating one ship-based casino to boot. There’s no way around one thing: The pandemic has severely hurt CNTY’s business and its stock price. That said, at current levels, the stock trades for less than half its trailing revenue, and CNTY has already more than tripled from 52-week lows. If the company can survive this unique period, the stock has enormous rallying potential. Keep a close eye on the progression of the virus and management’s commentary in upcoming quarters.
Nokia Corp.
Another of the rare contrarian companies on this list, Nokia isn’t a stock for everyone – the brand itself is a bit culturally antiquated, and no one really expects revenue growth to top 3% to 4% over the next few years. That said, Nokia’s longer-term expected earnings growth is impressive, with Wall Street projecting five-year earnings growth of 14% annually. Cheap stocks to buy, especially stocks to buy for less than $10, don’t often come in the form of well-established global companies worth almost $25 billion. Nokia, the Finnish communication equipment giant, is one of the rare exceptions, with revenue compounding by 14.7% annually over the last five years. NOK may end up one of the top 5G stocks to watch in the years ahead, benefiting as telecoms upgrade their networks. Nokia also pays a hefty 5% dividend.
Nomura Holdings
Japanese investment brokerage Nomura Holdings offers many of the same products and services that a Goldman Sachs would. That means asset management, underwriting, structured products and trading – the whole nine yards. Shares currently trade for less than $5, but the fact that Nomura made the cut as one of Wall Street’s best cheap stocks to buy doesn’t mean it runs a rinky-dink business – NMR is a $14 billion behemoth, Japan’s fourth-largest publicly traded financial institution available on mainstream U.S. exchanges, and the country’s single largest brokerage. What makes NMR stock a buy is its attractive valuation (under 10 times forward earnings), high dividend (4%) and relative stability compared with the market (shares are actually up more than 30% in the last year). In 2019, Nomura approved a $1.4 billion buyback and announced improvements to its corporate governance.
Ambev
Swapping one beverage stock with another, Ambev is one of several new additions to the list. It’s replacing one of the smallest companies named, Celsius Holdings, which rapidly grew to exceed the sub-$10 constraint. At the time of this writing, CELH now trades north of $14 per share. ABEV, a subsidiary of Anheuser-Busch InBev, enjoys a legendary portfolio of alcoholic beverage brands, including Budweiser, Stella Artois, Modelo Especial, Hoegaarden, Busch and many more. Think of it like Anheuser-Busch, but with a focus on Brazil and Latin America. With a market value of more than $40 billion, a dividend of 4.6% and global brand recognition, ABEV is easily one of the best-established cheap stocks to buy under $10.
SmileDirectClub
SmileDirectClub, a direct-to-consumer provider of clear aligners, went public in fall 2019. Unfortunately, the $23 IPO was overpriced and shares quickly corrected, falling all the way to $3.64 per share at the depths of the market crisis. Some degree of price discovery is expected after an IPO, and it seems unlikely SDC will reach those lows again. This year brought an exclusive partnership with Walmart to sell a line of oral care products like electric toothbrushes and teeth whitening kits, as well as an ultraviolet-powered product cleaner for things like aligners, mouthguards, retainers and more. Although several years from profitability, its 3D-printed invisible aligners can be ordered online after just one visit with a dental professional, and if claims that its aligners can work in just six months and compete with traditional braces prove true over time, the stock could double or triple from sub-$9 levels in the coming years.
Kinross Gold Corp.
Last but not least is Kinross Gold, another new pick among the best cheap stocks to buy under $10. While Kinross replaces FS KKR Capital (FSK), which zipped past the $10 per share limit in recent months, this Canadian gold miner has been on a run of its own in 2020, with shares up more than 72% year to date. A major beneficiary of the rally in precious metals this year that has seen gold soar to levels last seen in 2011, Kinross has more than 24 million ounces of proven gold reserves and more than 55 million ounces in silver reserves – another commodity that has been on a tear. Gold and silver prices often rise as hedges against further market declines and the Federal Reserve’s dovishness. If that trend continues, KGC stock should continue to outperform.
The best stocks to buy that are less than $10:
- Sirius XM Holdings
- ADT
- Zynga
- Century Casinos
- Nokia Corp.
- Nomura Holdings
- Ambev
- SmileDirectClub
- Kinross Gold Corp.
