Stock markets finished lower Thursday as traders responded to a surprisingly hawkish turn by the world’s three major central banks over the past 24 hours. Today, the Dow Jones Industrial Average looks to open sharply lower as Trump’s trade war with China manifests a $100 billion round of tariffs on Chinese goods.
There’s a lot to digest.
The Federal Reserve raised interest rates again this week, penciling in four quarter-point hikes for 2018 and another three in 2019 while scrubbing much of the mealy-mouthed language from its policy statement about inflation being low and rates being low. The European Central Bank signaled it would end its bond-buying program by the end of the year. What’s more, the Bank of Japan aggressively tapered its own bond-buying stimulus program.
As banks around the world end the stimulus that propped up asset prices, and the U.S. awaits China’s response to the recent tariffs levied by the Trump administration, it’s a wise move to buy cheap stocks rather than load up on expensive stocks sensitive to harsh headlines.
But the dip is likely to prove a buying opportunity as economic fundamentals remain strong, the job market remains ultra-hot and earnings growth is solid. Here are six cheap stocks under $6 that are prime for a turnaround:
6 Cheap Stocks to Buy Under $6: Apollo Investment Corporation (AINV)
Publicly traded private equity firm Apollo Investment Corporation (NASDAQ:AINV) has seen shares stagnate since the beginning of 2017 as its industry group has lagged both the rise in the broad market and the impressive rise in financial stocks in general during this time.
The reason is complicated but tied to worries over higher deal multiples (potential buyouts are expensive) and rising debt costs needed to fund leveraged deals. But tax changes and a recent move for public-P/E firms to change into C-corps is driving buying interest.
The company will next report results on Aug. 2 before the bell. Analysts are looking for earnings of 15 cents per share on revenues of $62.4 million. When the company last reported on May 18, earnings of 15 cents per share missed estimates by a penny on a 7.2% decline in revenues.
6 Cheap Stocks to Buy Under $6: Fortuna Silver Mines (FSM)
Fortuna Silver Mines Inc (NYSE:FSM) shares are breaking out of a multi-week pullback to resume the uptrend that started in November and is trading at levels that have been in play, more or less, since 2016.
The economy is running well past its “speed limit” now, with more job openings than unemployed persons and price pressures increasing. That should set the stage for a nice rally in precious metals in the months to come.
The company will next report results on Aug. 8 after the close. Analysts are looking for earnings of eight cents per share on revenues of $65.5 million. When the company last reported on May 9, earnings of nine cents per share matched estimates on an 8.6% rise in revenues.
6 Cheap Stocks to Buy Under $6: Life Vantage (LFVN)
LifeVantage Corp (NASDAQ:LFVN) shares have rallied nearly 70% from the lows seen in April to challenge the highs seen late last year.
The company develops nutritional supplements and skin care products such as LifeVantage TrueScience (an anti-aging skin product) and Axio energy drink all appealing to “biohackers” trying to take maximum control over their body and health. All on a monthly recurring payment plan.
With wages poised to push higher, consumers will have extra cash to burn on luxuries like non-FDA approved supplements and cremes.
6 Cheap Stocks to Buy Under $6: Sportsman’s Warehouse (SPWH)
Guns-and-camo outfitter Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) has seen shares languish since dropping off a cliff in early 2017 as President Trump’s election lessened the impetus for many firearm enthusiasts to make purchases out of fear of pending legislation outlawing things like AR-15s or expanded capacity magazines.
After basing for the last two years, shares look ready to run higher thanks to the action in retail stocks in general lately.
The company will next report results on Aug. 16 before the bell. Analysts are looking for earnings of 16 cents per share on revenues of $204.2 million. When the company last reported on May 24, a loss of eight cents per share beat estimates by two cents on a 14.8% rise in revenues.
6 Cheap Stocks to Buy Under $6: DryShips (DRYS)
Shares of dry bulk shipping outfit DryShips Inc. (NASDAQ:DRYS) are surging nearly 13% higher on Thursday to break up and out of a long sideways pattern going back to October/November. The shipping industry has been plagued by fleet overcapacity resulting in pressure on charter rates.
But with a possible trade deal with China looking likely, the need to use dry bulk ships to transport American grain and soybeans across the Pacific Ocean will only grow.
The company reported a profitable quarter at the beginning of May, with adjusted operating earnings of $12.9 million versus a loss of $7.4 million the year before.
6 Cheap Stocks to Buy Under $6: AU Optronics (AUO)
AU Optronics Corp (ADR) (NYSE:AUO) is a supplier of flat panel displays used in everything from 4k and 8k televisions to cell phones and notebooks.
Shares look poised to move up and out of a three-year sideways range as higher wages set the stage for increased spending on new iPhones (with a TFT-LCD model on the way in addition to the OLED iPhone X) and televisions.
The company will next report results on July 26 before the bell. Analysts are looking for earnings of 10 cents per share on revenues of $72.2 billion. When the company last reported on April 26, earnings of 45 cents per share beat estimates by 25 cents on a 15.9% decline in revenues.