The best cheap stocks in this volatile environment are not just ones with a low share price, but ones with stability. In fact, if you look around, you’ll actually find a handful of high-yield master limited partnerships (MLPs) and real estate investment trusts (REITs) that trade for less than $10 a share!
Those are some of the best cheap stocks to buy now, in my book. But as always, there are still some of the conventional plays out there including small-cap technology players and biotech stocks that are aggressive bets and potential acquisition targets.
But please remember that the key to investing responsibly in any of these cheap stocks is to remember they play a small role in a diversified portfolio. This goes both for theoretically lower-risk plays like MLPs trading for under $10, as well as big-potential biotech players. You should never have more than 10% of your portfolio in a given investment, and for aggressive plays like these cheap stocks, I would advise to put even less behind them.
If you have a properly balanced portfolio, however, cheap stocks can be an important driver of outperformance. So if you’re looking for the best cheap stocks to buy now under $10, take a look at these nine names:
Cheap Stocks to Buy Now: Independence Realty Trust (IRT)
Price as of 7/15: ~$8.35
Market Cap: $400 million
Industry: Apartment Real Estate
YTD Returns: 11% vs. 5% for the S&P 500
Independence Realty Trust Inc (NYSE:IRT) is an apartment-focused real estate investment trust with 48 properties and more than 13,500 units across the U.S.
Risk-off investments like REITs have been in favor this year thanks to market volatility and incredibly low interest rates. With a tailwind behind shares, IRT stock has been outperforming this year, but it is also throwing off a dividend north of 8% thanks to reliable revenue.
This high-octane REIT is certainly one of the best cheap stocks to buy now with that combination of share appreciation and income potential.
Cheap Stocks to Buy Now: Vista Gold (VGZ)
Price as of 7/15: ~$1.60
Market Cap: $125 million
Industry: Gold mining
YTD Returns: 485%
Vista Gold Corp. (NYSEMKT:VGZ) is a small-cap gold miner operating in North America and Australia that only recently returned to profitability, at the end of 2015, and still isn’t returning regular profits.
However, like many miners, it has seen a big run-up in 2016 thanks to firmer commodity prices. VGZ stock has cooled off significantly from a recent 52-week high in June, but to me, this looks like a nice buying opportunity for investors who are late to the rally in gold stocks.
Cheap Stocks to Buy Now: Calix (CALX)
Price as of 7/15: ~$7.60
Market Cap: $360 million
YTD Returns: -3%
Calix Inc (NYSE:CALX) is a communications service company that hasn’t really gone much of anywhere in the last few years after the government ended a stimulus program that benefited broadband internet access.
However, after continued disappointment, CALX stock looks like it finally may be one of the best cheap stocks to buy now. Pessimism has been very much baked in, and Wall Street analysts expect Calix to return to profitability next year. (And if things go even a little better than expected, Calix could be profitable or breakeven by the end of the current fiscal year.)
Revenue is growing at a nice 7% clip, and CALX could be a bargain at current pricing.
Cheap Stocks to Buy Now: CNinsure (CISG)
Price as of 7/15: ~$7.40
Market Cap: $415 million
YTD Returns: -20%
Calling a Chinese financial company one of the best cheap stocks to buy now isn’t exactly intuitive. But CNinsure Inc. (ADR) (NASDAQ:CISG), a small insurance company in Asia, has a lot of upside for aggressive investors not as frightened by the gloom and doom about the slowing economy there.
After all, keep in mind that this insurer is set to grow revenue by more than 20% this year and another 15% next fiscal year, meaning it’s far from circling the drain.
And given the fact that China continues to urbanize and increase its standard of living, life insurance and property insurance from CNinsure is increasingly in demand from both consumers and businesses — meaning a nice tailwind long-term.
Cheap Stocks to Buy Now: Achillion Pharmaceuticals (ACHN)
Price as of 7/15: ~$8.70
Market Cap: $1.2 billion
YTD Returns: -19%
Every list of the best cheap stocks to buy now has to include a biotech company, since these high-growth but high-risk investments have tremendous opportunity if their research pays off.
Unlike some microcap biotech stocks, however, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) is moderately sized and focused on the treatment of rare diseases with no other viable medications right now. That means little to no competition and nice margins should the drug pipeline pay off.
The charts look good for ACHN stock right now, too, as InvestorPlace options expert Rick Rouse recently pointed out, and the long-term potential is huge for this cheap stock.
Cheap Stocks to Buy Now: Viavi Solutions (VIAV)
Price as of 7/15: ~$7.05
Market Cap: $1.7 billion
YTD Returns: 16%
Viavi Solutions Inc, (NASDAQ:VIAV) is a high-tech service stock that helps with the maintenance of communication equipment and networks. The company actually is the renamed remnant of JDS Uniphase, which took the new moniker after spinning off Communications and Commercial Optical Product segment (Lumentum) last year.
The year-over-year comps are hard to really get a sense of as the company hits its stride as a free-standing entity. What’s very encouraging, however, is that even in a rough environment, VIAV stock has nicely outperformed the market and is up about 50% from its January lows.
This hints that investors see this tech company as one of the best cheap stocks to buy now.
Cheap Stocks to Buy Now: Enduro Royalty Trust (NDRO)
Price as of 7/15: ~$3.60
Market Cap: $125 million
Industry: Energy Royalty Trust
YTD Returns: 48%
Enduro Royalty Trust (NYSE:NDRO) is an oil and gas royalty trust focused on production in Texas, Louisiana and New Mexico. High-yielding assets such as REITs, MLPs and royalty trusts have had a nice tailwind in 2016 thanks to the low-interest-rate environment and high volatility of the stock market, but what’s really amazing is that even after a very nice run this year, NDRO still yields over 9%!
NDRO may not continue its outperformance, but with income potential like that you can rely on this MLP as one of the best cheap stocks to buy now.
Cheap Stocks to Buy Now: AudioCodes (AUDC)
Price as of 7/15: ~$4.20
Market Cap: $155 million
YTD Returns: 7%
AudioCodes Ltd. (NASDAQ:AUDC) is a tech company that focuses on voice and data services, including VoIP. Among its products is a set of solutions connecting businesses with Microsoft Corporation’s (NASDAQ:MSFT) Skype.
This small-cap tech stock is seeing modest buy consistent revenue growth, and unlike other cheap stocks in the space, it has been able to put up a couple profitable years. Adjusted EPS estimates for next fiscal year are for 29 cents a share — up from the 24 cents expected this year, which would easily trump last year’s 14 cents.
There are risks with a small tech company like this, of course, but also big rewards if it gets bought out by a larger player. The fundamentals are sound and AUDC has staying power even without an acquisition, however, making it a very solid buy.
Cheap Stocks to Buy Now: SunOpta (STKL)
Price as of 7/15: ~$5.00
Market Cap: $425 million
Industry: Food Products
YTD Returns: -27%
SunOpta, Inc. (USA) (NASDAQ:STKL) deals in both healthy packaged foods as well as “field-to-table” raw materials including organic and non-GMO grains. Thus, it is in the right place to capitalize on healthier eating habits among American consumers.
This cheap stock is growing nicely, with sales are projected to improve by 25% this fiscal year and earnings forecast to surge from a projected 26 cents per share this year to 41 cents next fiscal year.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at [email protected] or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.