One of the most common misconceptions for beginner investors is that low single-digit share prices are what make “cheap stocks.” No matter the sector — energy stocks, tech stocks and everything in between — nothing is further from the truth.
Instead, you must look at various metrics such as price-to-earnings or price-to-book ratios to find cheap stocks … and stocks under $10 a share stock can actually be quite expensive, while picks going for over $1,000 can be the real cheap stocks.
However, that doesn’t mean these low-priced “cheap stocks” can’t be a huge source of returns for a portfolio. In fact, the Fidelity Low-Priced Stock Mutual Fund (FLPSX) has managed to beat the pants off of its benchmark indices and produce market-beating annual returns since its inception.
So for investors willing to delve into the world of cheap stocks based on share price, the rewards can be great. In fact, some of the best low-priced jewels are actually energy stocks … and thus members of my favorite sector.
Featuring decent reserves and production along with low share prices, consider these energy stocks to buy now — five names that could be some of your portfolio’s biggest future winners.