Nowadays, it seems all “good” stocks trade in the quadruple or triple digits.
But that’s not really true — it’s just that it takes a little more work to find companies that aren’t on the institutional investors radar screens yet. And “yet” is the operational word here, because these seven A-rated cheap stocks to buy have very bright futures ahead of them.
A couple of them I have talked about before, and their stories remain intact, as do the potentials both companies show. For the others, this may be the first time you have ever heard of them. And even though they’re small (market caps in the tens or hundreds of millions), they show great potential in very compelling niche markets.
These picks have a two-way path to growth. The first is by growing their market share, getting more attention and building their revenue stream. The other is to get noticed by a bigger firm looking for exposure in one of these niche markets — M&As are at all-time highs now — and buy them at a significant premium to their market prices.
Cheap Stocks to Buy: Kingold Jewelry (KGJI)
Market Capitalization: $127 million
Stock Price: $1.93
YTD Gain: 166%
Kingold Jewelry Inc (NASDAQ:KGJI) leads our list of underpriced stocks. I have written about this stock on a number of occasions because it’s in a unique niche in the perfect country.
KGJI is the top producer of 24-karat gold jewelry in China. Now, it may seem overly optimistic to expect China’s growing middle class to spend a lot of money right now on jewelry since the country is in — for China — a slow-growth period.
But the fact is, this is the best time for KGJI products. You see, the Chinese are traditionally focused on hard assets as a store of value, rather than on stocks, bonds and derivatives. And while real estate has value relative to the market it’s in, gold has universal value. It is a much better place to store money than holding it in a savings account at a bank while the yuan drops.
KGJI wins whether the economy rebounds or remains mired.
Cheap Stocks to Buy: Sorl Auto Parts (SORL)
Market Cap: $77 million
Stock Price: $4
YTD Gain: 58%
Sorl Auto Parts, Inc. (NASDAQ:SORL) is the leading Chinese maker of OEM brake systems and other safety parts in China and internationally. It also sells aftermarket products under various brands.
This is one of those niche industries that was outsourced from Europe by companies like Bosch, Volvo and Jost, and now has established itself as major player throughout the world. It sells its products to 75 OEM manufacturers worldwide.
It operates in three segments: OEMs in China, aftermarket distributors in China, and international customers. Its market share for OEMs in China is 47.2%; for Chinese aftermarket its 25.9% and its international market share is an impressive 26.9% according to 2014 figures.
That means one out of every four brake or safety systems sold in the international market likely came from SORL. And in the Chinese market it’s in an even more dominant position.
Word is quickly getting out on this untapped gold mine — the stock is up 145% in the past six months. But this is the beginning, and it’s still priced too low for most institutional investors to get in and mess things up. Get in now and then wait until the stock rises enough for the Street to get involved and this triple-digit growth will continue for years.
Cheap Stocks to Buy: MeetMe (MEET)
Market Cap: $250 million
Stock Price: $4.90
YTD Gain: 36%
MeetMe Inc (NASDAQ:MEET) is part of the new social network craze and has been on my radar for quite a while.
MEET specializes in what it calls “social discovery.” It’s a meeting place for people who don’t know each other rather than an online group of people you know in some way or another. And its biggest growth is in mobile.
Another interesting aspect of MEET is it’s available in English, Spanish, Portuguese, French, Italian, German, Chinese (Traditional and Simplified), Russian, Japanese, Dutch, Turkish and Korean. That allows expatriates to find one another and speak their native language. It also allows foreign-born nationals to reach back to their homes for connection.
The point is, monthly and daily active user metrics continue to rise, and it’s very likely that its ad revenues will start to grow in earnest.
There’s also the possibility of a takeover from one of the big social media companies to either reduce competition or to adopt its platform for its own uses. The stock is up 32% in the past six months, and that’s off from its August highs, so now is a good time to move in.
Cheap Stocks to Buy: Hudson Technologies (HDSN)
Market Cap: $209 million
Stock Price: $6.42
YTD Gain: 116%
Hudson Technologies, Inc. (NASDAQ:HDSN) just had a massive quarterly report released on Nov. 2.
Why wasn’t this news on your favorite financial channel or news service? Because HDSN has a $211 million market cap and it’s in the refrigerant services business. Yep, the sexy refrigerant services business.
But like many industries that don’t exactly shout sexy or exciting, there’s a lot going on in this sector that is coming to fruition now and for many years to come.
Old, Freon-based refrigerants have been on the outs for a while now. But now that most consumer products have made the transition, industry throughout the world is also beginning to comply. That’s why HDSN revenues were up 61% compared to the same quarter last year. In the first nine months of 2016, revenues are up to a record $98 million, a 35% increase from the same period last year.
It also just inked a 10-year deal with the U.S. Defense Logistics Agency worth around $400 million. And it is major contractor to all the U.S. armed forces.
The stock is up 117% year to date, but it’s still not very visible. It’s a great time to get in on its growth.
Cheap Stocks to Buy: Birks Group (BGI)
Market Cap: $21 million
Stock Price: $1.22
YTD Gain: 231%
Birks Group Inc (NYSE:BGI) is a jewelry store firm with 59 stores in the U.S. and Canada. Now, with a lackluster domestic economy, this doesn’t sound like a great sector to be in right now.
However, because BGI is set up in fast growing markets in the U.S. Southeast and across Canada, it captures some unique and compelling markets.
Canadians are some of the most reliable “snow birds.” That means, in the winter, they tend to head to Florida or the southern east coast to thaw out from Great White North winters. BGI has a brand that travels with this mobile set of consumers.
Also, in Canada there are a great deal of Chinese nationals that have emigrated to Canada. Jewelry is prized commodity in China because it has value across borders. And buying jewelry outside of China is a great way to get money out of China.
You see, the Chinese government is interested in keeping much of the money in China in Chinese yuan and because the yuan isn’t a free floating currency, it doesn’t trade much internationally. For Chinese, it’s difficult to find stores of value to buy that can be converted to international currency.
The stock is up 153% in the past six months, and that is off its highs. There is plenty left in this grower.
Cheap Stocks to Buy: Flexible Solutions (FSI)
Market Cap: $16 million
Stock Price: $1.49
YTD Gain: 49%
Flexible Solutions International, Inc. (NYSE:FSI) is one of the smallest players on the list. Its market cap is a mere $17 million but it continues to punch above its weight.
It has developed a unique protein-based biodegradable polymer that slows water evaporation. This has applications from deploying a “liquid blanket” over a residential or public pool to reduce evaporation to coating pipes in the oil and gas industry, to incorporating into commercial irrigation systems.
Studies have shown that its WaterSavr technology can reduce evaporation by 35%. The liquid blanket also shades the water from solar heat.
In the past 12 months, FSI stock has been on a tear, up 100% over that time. But this company is just building its business with this unique product. While most of its revenue comes from the U.S., it has operations beyond the borders which helps with maintaining a solid revenue stream when it’s too cold to swim in the U.S.
Plus, once the domestic energy business picks up again, FSI’s water solutions will be in high demand.
Cheap Stocks to Buy: AXT Inc (AXTI)
Market Cap: $86 million
Stock Price: $5.19
YTD Gain: 107%
AXT Inc (NASDAQ:AXTI) is a state of the art substrate manufacturer. It’s headquartered in Fresno, CA but its cutting edge manufacturing plant is in Beijing, China.
What does all this mean?
Substrates are basically the building blocks of all electronic chips. They form the surface from which everything is built. They’re also know as wafers.
AXTI builds wafers primarily for lighting display applications, wireless communications and fiber optic communications. It’s the latter to sectors that stand out because some of the biggest and most enduring growth, both domestically and internationally, come from those two sectors.
And that’s especially true in China where they are building out major infrastructure projects that will connect all of China and connect China to the world. This is why having the largest fabrication plant of its kind in China is a very attractive piece of AXTI.
Just look at the recent numbers: AXTI is up 110% in the past 12 months and 55% in the past six months. That is solid, steady growth.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.