Looking for cheap stocks to buy now can be a lot like digging through the discount racks at your favorite store. Sure, you might find plenty of cheap stocks … but they are clearly discounted for a reason. And when you eventually find something worth taking seriously, there’s always the nagging doubt you may be actually buying something that’s defective or damaged in order to be priced so low.
While it’s not true that all cheap stocks are bad investments, all bad investments inevitably become low-priced stocks when given enough time.
That’s why finding the best cheap stocks to buy now should involve discipline and a strict set of guidelines to avoid buying a bad company destined to go nowhere.
I just ran an intensive screen on every stock in the market priced under $10 a share, looking for the best cheap stocks based on the following criteria:
- Outperformance YTD in 2015 to show current momentum
- Earnings growth this year to show optimism going forward
- Listing on a major exchange, a market cap of at least $300 million and share price of at least $1 to weed out any high-risk gambles on the pink sheets.
To be clear, there are never any guarantees with cheap stocks — and volatility tends to be the name of the game for low-priced equities, particularly those with low volume and market values. For this reason, only the most aggressive investors should chase cheap stocks.
But if you’re not afraid of taking the tiger by the tail, here are the 12 cheap stocks I think are worth looking at … just make sure you do your own digging before buying, and always stay diversified!