The best cheap stocks to buy now aren’t necessarily the best stocks to hold forever. After all, there’s a lot of uncertainty out there, and investors have a hard enough time deciding whether entrenched megacaps are safe bets let alone whether a $300 million tech company has staying power.
But when looking for the best cheap stocks to buy now, investors can find significant profits if they are willing to look at the short-term trends behind a company — particularly its momentum in the past month or so.
Yes, some stocks are cheap because of long-term troubles. But if there is a big uptrend taking place this spring and into summer, you should capitalize on it and sell in a matter of months before you have to worry about where this company is in 2017 or beyond.
Those are the kind of aggressive trades that investors look for in the best cheap stocks to buy now, and those are the kind of trades I’ve outlined here with nine stocks to buy under $10 apiece.
Take a look.
Best Cheap Stocks to Buy Now: Cliffs Natural Resources (CLF)
YTD Performance: +175%
Share Price: ~$4.30
On April 19, I called out Cliffs Natural Resources Inc (NYSE:CLF) as one of the best cheap stocks to buy before its earnings report. And the stock did rally handsomely when CLF swung to a profit after losing money for two straight years.
This proved an encouraging sign for investors … but after we saw CLF stock gap up in April, it rolled back dramatically in the beginning of May.
This provides another good swing trading opportunity for investors in cheap stocks — particularly after analysts at JPMorgan Chase just raised from “neutral” to “overweight” at the investment bank, with a $7 price target.
Cliffs no longer plays in the coal business, with the company selling off its last coal mines in 2015, and is restructuring the best it can. But there are still risks as Wall Street predicts another top-line decline for this year as well as for fiscal 2017.
But the bears fearing bankruptcy are way off, as Cliffs didn’t just post a recent profit, but it also saw its net debt outstanding decline in Q4 and just posted a quarterly profit.
Aggressive investors may want to dive into this cheap stock here on the pullback.
Best Cheap Stocks to Buy Now: SunOpta (STKL)
Sector: Consumer staples
YTD Performance: -30%
Share Price: ~$4.80
SunOpta, Inc. (USA) (NASDAQ:STKL) isn’t a big household name, but since it specializes in both healthy packaged foods as well as “field-to-table” raw materials including organic and non-GMO grains, it is in the right place to capitalize on healthier eating habits among American consumers.
This cheap stock has just a $400 million market cap, but is growing nicely; sales are projected to improve by 25% this fiscal year. Furthermore, earnings should surge from a projected 25 cents per share this year to 43 cents in FY2017 if projections hold.
Of course, STKL has had trouble living up to expectations in the past, with shares down by more than 50% in the past 12 months. However, a huge rally off its May lows has delivered more than 35% gains for traders in less than a week. That has created nice short-term momentum to buy into.
SunOpta may not be a pick to hold forever, but this is one of the best cheap stocks to buy right now.
Best Cheap Stocks to Buy Now: Erin Energy (ERN)
YTD Performance: -27%
Share Price: ~$2.30
Erin Energy Corp (NYSE:ERN) is a small-cap oil exploration company that has had serious profitability problems, so it’s another company that you certainly shouldn’t hang on to forever … but it’s a good name to swing trade now.
Consider that oil prices have been rallying nicely, hitting new highs all across the last month and recently reaching $50 a barrel. Sure, we can expect prices to roll back a bit, and energy won’t keep moving up in a straight line, but the sentiment certainly has created a floor under troubled players like ERN.
In fact, Erin is up about 15% in the last month and has returned to where it was trading in late January back when oil was in the low $30s.
Sure, this is a company with a lot of debt and deep losses. But if you want an aggressive play on a cheap stock, this could be a profitable pick over the next few weeks. ERN stock has just seen its 20-day moving average push above its 50-day — a so-called silver cross — hinting that upside momentum will continue… for a little while, at least.
Best Cheap Stocks to Buy Now: Advanced Semiconductor Engineering (ASX)
YTD Performance: Flat
Share Price: ~$5.70
Advanced Semiconductor Engineering (ADR) (NYSE:ASX) is a nearly $9 billion semiconductor packaging and testing company operating in Taiwan. While a lot of Asian companies have taken it on the chin thanks to the China slowdown, the fact remains that ASX is very much in demand now that semiconductors are part of everything from phones to cars to kitchen appliances.
In fact, FY2015 revenue was up 6% over the prior year, and ASX is expecting a roughly 8% increase in the top line this year, too.
Given the consolidation in the semiconductor space over the last few years, this is one of the best cheap stocks to buy now not only for growth potential, but also because ASX could be targeted by a larger chip company looking to bring more services in-house.
Shares have been choppy in the past year but are up by more than 25% in the past week or so, hinting that momentum is back on its side.
Best Cheap Stocks to Buy Now: Exact Sciences (EXAS)
YTD Performance: -26%
Share Price: ~$6.85
No list of cheap stocks to buy now would be complete without an aggressive, money-losing biotech that is banking on a big FDA approval or a Big Pharma buyout to send shares soaring.
This time, the pick I’m watching is Exact Sciences Corporation (NASDAQ:EXAS).
A molecular diagnostics company, EXAS stock focuses on the early detection and prevention of various cancers. With aging baby boomers and the wide variety of cancers that continue to affect millions of Americans each year, this is a stock whose path to growth speaks for itself… so long as the procedures meet with regulatory approval.
There are still no profits to speak of, but it’s worth noting that Exact has an ongoing collaboration with the Mayo Clinic to develop screening, surveillance and diagnostic tests beyond colorectal cancer. The initial collaboration between the two led to the creation of Cologuard — an FDA-approved colorectal cancer screening test.
The company recently announced an agreement with Anthem Blue Cross and Blue Shield that gives it in-network status in five states, which should help increase the use of Cologuard.
Shares flopped in 2015 as biotech fell out of favor, but the jury is still out on the long-term performance of this company and EXAS could be a screaming bargain here.
If it finds a way to bring its Cologuard results up to snuff with expectations — consider that doctors recommend that every person over age 50 regularly screens for colorectal cancer — it will be attractive to investors, and possibly to M&A suitors.
Best Cheap Stocks to Buy Now: Harmony Gold (HMY)
YTD Performance: +230%
Share Price: ~$3.10
Harmony Gold Mining Co. (DAR) (NYSE:HMY) is a junior miner that returns as one of the best cheap stocks to buy now after rolling back slightly from my recommendation about a month ago. Gold stocks have been on a tear this year, and I believe they should still be a key part of all portfolios as the FOMC meeting approaches and interest rates are once again in focus.
That’s because the dollar simply can’t hold firm if Janet Yellen and her colleagues at the Federal Reserve stand pat on interest rates … and frankly, I think it’s very likely that the Fed will fail to raise rates yet again thanks to a host of mixed economic data thus far in 2016 and the presence of negative rates in the eurozone and in Japan.
There are a lot of cheap stocks to buy now in the junior miners space, but I like Harmony in particular thanks to its strong performance year-to-date and its recent return to profitability in Q2 earnings.
Best Cheap Stocks to Buy Now: Nimble Storage (NMBL)
YTD Performance: +1%
Share Price: ~$9.30
Nimble Storage Inc (NYSE:NMBL) is one of those cloud computing stocks you hear so much about, operating as a data storage platform as well as offering services to IT professionals to better optimize their networks.
Now, like many startups in the space, NMBL is not yet profitable. However, as a company worth under $800 million, is it very buyout-worthy and digestible by a bigger tech player looking to expand its cloud operations or IT services division.
Admittedly, this cheap stock got brutalized in November after ugly Q3 numbers that included a revenue miss and a deeper than expected loss. However, remember that at the end of 2015 a lot of these “risk-on” tech startups got demolished — and now, the negativity is priced in.
In fact, NMBL is slightly in the black on the year and has actually rallied 30% in the past month. And since it’s trading at around twice sales, it’s hard to argue this cloud pick is overpriced the way it was last year.
If you’re looking for a swing trade — particularly if you expect investors to go more risk-on in the months ahead — Nimble is one of the best cheap stocks to buy now.
Best Cheap Stocks to Buy Now: Groupon (GRPN)
Sector: Consumer Discretionary
YTD Performance: +15%
Share Price: ~$3.60
I called out Groupon Inc (NASDAQ:GRPN) in March as one of the best cheap stocks to buy, in part because of buyout interest. I’m putting GRPN back on this list because I still feel the same way now that shares are a bit cheaper.
Alibaba Group Holding Ltd (NYSE:BABA) disclosed a modest stake in the digital deal and e-commerce company, and things still seem to be moving toward a deeper partnership. But Alibaba’s 5.6% stake isn’t the only reason to believe in GRPN stock right now.
Fourth-quarter earnings reported in February were a smash hit, sparking a significant rally in shares. More recently, the stock plunged on poor results at the end of April and investors were quick to give up on Groupon.
I think the reaction is overblown. GRPN stock still trades for a discount to projected fiscal 2016 sales. This cheap stock is pretty attractive here, then, considering it can turn an occasional profit and has almost zero debt.
Best Cheap Stocks to Buy Now: Frontline (FRO)
YTD Performance: -42%
Share Price: ~$9.00
Frontline Ltd. (NYSE:FRO) is a shipping company that specializes in oil tankers. And ever since a glut of new shipping capacity hit the market several years ago — coinciding with a crash in crude oil thanks to the Great Recession, to boot — tanker companies like FRO have been in a world of hurt.
However, while shares have moved steadily lower in the last few years, revenue has been moving higher and profits are actually looking pretty nice once more as Frontline has stabilized. In fact, FRO is set to post more than double the revenue this year compared with last and its profits should surge from breakeven to $1.30 per share.
Of course, shipping stocks like this have burned many investors and are incredibly dependent on the oil situation. Given that OPEC is taking the pedal off production, that could mean tankers will have a tough time getting ahead in the next year or so. But on the other hand, it’s not like Saudi Arabia can ever turn off the oil derricks completely — and if recent trends hold with oil prices staying firm, we could see more traffic for FRO in the future.
Considering Frontline just started paying dividends again after slashing payouts in 2011, there is also some nice income potential from this cheap stock.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.