Finding the best cheap stocks to buy now involves a mix of following the news and following your instincts. After all, many companies find their share price battered for a reason, be it poor earnings, legal issues or simply mismanagement.
That’s where your instincts come in. There are always a few battered plays that could see a big-time turnaround based on a favorable change in circumstance … while other picks deserve to be at the bottom of the barrel.
In the following nine stock picks, I’ve looked for cheap stocks to buy now based on a combination of current news and future trends. But I’ve also looked at the fundamentals to see if these companies have what it takes to make the most of their circumstances in 2017. Corporations that trade for only a few dollars a share tend not to have deep pockets nor access to a ton of resources, so there’s not a lot of margin for error.
So what are some of the best cheap stocks to buy now? Here are nine, under $9.99 apiece.
Best Cheap Stocks to Buy Now: Pulmatrix (PULM)
Industry: Biotherapeutic drugs
Stock Price (2/3): ~$4.70
Market Cap: $110 million
52-Week Performance: +70%
Pulmatrix Inc (NASDAQ:PULM) is one of the best cheap stocks to buy now in my book. It’s a clinical stage biotech company that is a classic high-risk, high-reward play.
Shares have run up 560% since the announcement that its drug candidate to fight fungal infections just received the favorable “Qualified Infectious Disease Product” designation from the U.S. Food & Drug Administration.
It’s the first step among many. The company admittedly doesn’t make a penny in profits and has next to zero revenue as it chases drug approval. However, the QIDP designation will help streamline that process and could result in big success for Pulmatrix if its clinical trials validate the company’s research.
And bigger-picture, there’s always hope of a Big Pharma buyout as the biotech industry continues to consolidate. There was a record $1.7 trillion in M&A last year, according to data provider PitchBook, and 80% of that involved strategic deals by competitors or peers — the perfect scenario for smaller biotech companies.
With plenty of cash at the top of the food chain in Big Pharma and a favorable regulatory environment in Washington, the stage is set for a feeding frenzy in the sector. Pulmatrix just needs a little more success to prove it’s worth a spot on the menu.
Best Cheap Stocks to Buy Now: VimpelCom (VIP)
Industry: Wireless telecommunications
Stock Price (2/3): ~$4.10
Market Cap: $7 billion
52-Week Performance: +18%
VimpelCom Ltd. (ADR) (NASDAQ:VIP) is a telecom company serving a host of markets, from Italy and the Ukraine all the way to Kazakhstan and Pakistan. Most interestingly, the company does more than $4 billion in revenue in Russia — and given how cozy President Donald Trump seems to be with Russia, that could bode very well for this telecom and its operations there and nearby.
Many investors may have forgotten that Russia invaded part of Ukraine and annexed Crimea in 2014. That resulted in harsh rhetoric from the West, including escalating sanctions from nearby European nations. Around that time, VimpelCom crashed and burned from a peak of $14 in late 2013 to lows near $3 at the end of 2016.
Now, with the chance of normalized relations, this could be the perfect chance to buy into VIP stock at rock-bottom prices that make it one of the best cheap stocks to buy now. After all, its mobile and internet businesses are a key part in helping these regions participate in the 21st century economy, and there is assuredly demand for modern telecom services there.
VimpelCom has already added 20% in the last three months or so, and is looking to move even higher.
Best Cheap Stocks to Buy Now: Sirius XM (SIRI)
Industry: Satellite radio
Stock Price (2/3): ~$4.78
Market Cap: $22.4 billion
52-Week Performance: +37%
Sirius XM Holdings Inc. (NASDAQ:SIRI) is a regular in lists of the best cheap stocks to buy now, but is often overlooked since it has remained cheap for many years.
However, folks who pass by SIRI may be surprised to learn shares are up roughly 35% in the past year and are now at the highest level in a decade.
So what gives? Well, as usual, some of the gains have been from squeezing out unsuspecting shorts. But that’s not the whole story. The reason the shorts have been pushed out of SIRI stock is because this company closed 2016 with 31.3 million subscribers to top expectations. Furthermore, it actually has been moving higher after telegraphing that it’s no longer interested in acquiring streaming radio company Pandora Media Inc (NYSE:P) — which cheered investors, who worried about overpaying and wondered if it would really spark future growth for Sirius given that Pandora faces plenty of competition right now.
Revenue is steadily moving higher and beating expectations, and the company remains comfortably profitable with an effective monopoly on satellite radio. There’s a good chance this run over the past 12 months will continue in 2017, and push SIRI to even higher levels.
Best Cheap Stocks to Buy Now: Kratos Defense (KTOS)
Industry: Aerospace and defense
Stock Price (2/3): ~$8.50
Market Cap: $616 million
52-Week Performance: +180%
Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) is, as the name implies, a contractor that offers defense and security solutions for the government and private companies. This includes everything from cybersecurity and video surveillance to guided munitions and drones.
Once again, the policies of the current administration stack up in favor of a company like Kratos. That’s particularly true in light of a recent focus on national security via a ban on immigrants from certain parts of the world, and concerns over the border with Mexico.
Like Trump or hate Trump, his policies matter. And it’s safe to say that defense and security are a growth business right now — particularly in the areas of cybersecurity and unmanned combat systems. That makes KTOS one of the best cheap stocks to buy now.
Kratos is a smaller company, but one that’s at the center of those trends — and thus has the most to gain with just a few small contracts. SunTrust Robinson Humphrey in January initiated coverage with a “buy” rating and a $9 price target that implied double-digit upside in shares.
That could be only the beginning if the chips fall right this year.
Best Cheap Stocks to Buy Now: Kinross Gold (KGC)
Industry: Gold mining
Stock Price (2/3): ~$3.95
Market Cap: $5 billion
52-Week Performance: +117%
Another play on geopolitical uncertainty is, of course, gold. But while gold bullion has been edging up slightly, some gold miners have simply been on a tear. Consider the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) is up almost 25% this year while gold itself has rallied only about 6%.
That’s where cheap gold miner Kinross Gold Corporation (USA) (NYSE:KGC) comes in. The $5 billion junior miner is small enough to ride this trend, but also big enough that it’s not at risk of the same volatility and credit woes that smaller miners and commodity plays suffer.
Shares have doubled since their 52-week low in December, and with 33 million ounces of proven reserves, this miner is trading for a bargain price vs. its mining potential.
After gold crashed about 40% from its 2012 peak to its 2015 lows, miners like KGC were forced to right-size operations and pare back production. Not all of these junior miners weathered the storm, but Kinross is now in an enviable position after rebounding to post a couple profitable quarters in 2016 and currently riding a recovery in gold prices into 2017.
KGC is one of the best cheap stocks to buy now.
Best Cheap Stocks to Buy Now: Cliffs Natural Resources (CLF)
Industry: Iron mining
Stock Price (2/3): ~$8.75
Market Cap: $2.1 billion
52-Week Performance: +360%
Another volatile commodity name worth pursuing is Cliffs Natural Resources Inc (NYSE:CLF). After bankruptcy fears dissipated earlier this year, I called out CLF as one of the best cheap stocks to buy last April when it was around $4 a share. Now, it’s over $8 a share and climbing — and still one of your best bets under $10 on Wall Street.
That’s because the election of Donald Trump as president means the hurt on commodity stocks like Cliffs has a big chance of fading, and investors are piling in on the hopes of looser regulations and brighter days ahead.
To be clear, Cliffs is no longer a coal stock — so don’t buy this because you think energy policy will favor coal in 2017. Rather, have faith in CLF stock because its coal is used by iron and steel companies, and Trump’s rhetoric about the return of U.S.-made steel being used in buildings and infrastructure is assuredly good for this pick.
When you couple this short-term sentiment with the longer-term proof of a turnaround for Cliffs, it adds up to big potential going forward.
Best Cheap Stocks to Buy Now: SunOpta (STKL)
Industry: Specialty foods
Stock Price (2/3): ~$6.80
Market Cap: $576 million
52-Week Performance: +22%
SunOpta, Inc. (NASDAQ:STKL) is a specialty foods company that focuses on packaged foods as well as “field-to-table” raw materials including organic and non-GMO grains for other consumer staples companies to use in their finished product.
If you’ve taken a stroll down the grocery aisle recently, surely you’ve seen the focus on things like gluten-free foods and organic edibles. That means SunOpta is in the perfect position to capitalize on healthier eating habits among American consumers.
This cheap stock is one of the smallest ones on the list, with less than $600 million in market capitalization, so there is assuredly risk in this aggressive play. But investors should be encouraged by sales that are projected to improve by 22% this fiscal year and another 8% next year. Furthermore, earnings should surge from a projected 26 cents per share this year to 39 cents in FY2017 if projections hold.
SunOpta might not be a pick to hold forever, since there is a lot of competition in the space. But this is one of the best cheap stocks to buy right now thanks to its medium-term growth prospects and the potential of a buyout from one of the bigger players.
Best Cheap Stocks to Buy Now: Advanced Semiconductor Engineering (ASX)
Stock Price (2/3): ~$5.90
Market Cap: $9.5 billion
52-Week Performance: +14%
Advanced Semiconductor Engineering (ADR) (NYSE:ASX) is an old favorite of mine on these lists of the best cheap stocks to buy. It’s quite volatile, moving between as little as $4 and about $8 since 2013, but it is once again a good opportunity now that it’s in the middle of that range.
Consolidation in the semiconductor space over the last few years is very noteworthy, including last year’s $32 billion purchase of ARM Holdings by SoftBank Group Corp (OTCMKTS:SFTBF) and the $47 billion buyout of NXP Semiconductors by Qualcomm, Inc. (NASDAQ:QCOMM). While ASX stock might not be the biggest or most attractive player remaining the space, it’s a foregone conclusion that this sector is only going to continue this buyout trend as the big dogs get bigger and the little guys get acquired.
It’s not just a buyout hope you’re buying, of course. Revenue is growing at a modest rate and ASX is comfortably profitable and looking to record another good year in 2017. Plus, with a bargain forward price-to-earnings ratio of about 12, you can be sure you’re not overpaying — and that a nice buyout premium is realistic if and when a deal happens.
Best Cheap Stocks to Buy Now: Enerplus (ERF)
Industry: Oil & gas production
Stock Price (2/3): ~$9.35
Market Cap: $2.3 billion
52-Week Performance: +200%
Enerplus Corporation (NYSE:ERF) is a mid-cap oil exploration company that has had serious profitability problems of late. However, it is forecast to get out of the red in 2017 — and if oil prices continue to lift and policymakers continue to focus on domestic energy, this could be a big year for ERF.
Consider that oil prices have been rallying nicely, hitting an 18-month high in January on an OPEC deal to limit production this year. There are also forecasts that 2017’s winter should be a cold one, pushing up energy prices even more.
And back to the fundamentals, Enerplus is forecasting a huge jump of 34% in revenue in the coming fiscal year.
Sure, this is a company with a lot of debt and deep losses in the past. But if you want an aggressive play on a cheap stock, ERF could be a profitable pick over the next few months.
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.