It’s tempting to avoid low-priced stocks. The absolute numbers never seem impressive, and there is a tendency to see low prices as indicators of low quality. On the flipside, however, stocks under $10 offer plenty of room for growth, and a small gain in price can translate into a huge percentage gain. In fact, the lowest-priced stock we’ll look at here has a 100% upside target.
I turned to TipRanks to pinpoint five stocks under $10 poised for gains. These opportunities come from a variety of industries: two are pharmaceutical companies, one is an energy exploration company, one is a tech and networking provider, and one is a communications company.
Here are 5 cheap stocks to buy:
AVEO Pharma (AVEO)
Specializing in cancer treatments, AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) has a number of drugs in various stages of its pipeline, and is well-positioned for rapid growth. AVEO’s main products, tivozanib and ficlatuzumab, are designed as treatments for kidney and pancreatic cancers. The lowest priced of our stocks under $10, AVEO also has the highest potential upside by percentage. The stock’s current price is $2.74 per share with an average target $5.50 — or a 100% gain.
Swayampakula Ramakanth (Track Record & Rating), of H.C. Wainwright, sees good profit potential from AVEO’s lineup of cancer drugs, saying, “We derive our price target based on a risk-adjusted NPV analysis of projected tivozanib and ficlatuzumab revenues through 2030 assuming a 12.5% discount rate and 3% terminal growth rate.” Piper Jaffray’s Edward Tenthoff (Track Record & Rating) agrees, and gives AVEO a straight $5 target price. Overall, the analyst consensus on AVEO is a ‘Strong Buy.’
Interested in AVEO stock? Get a free AVEO Research Report
Northern Oil and Gas (NOG)
Founded in 2007 to take advantage of the oil discoveries and fracking opportunities in North Dakota and Montana, Northern Oil and Gas, Inc. (NYSE:NOG) acquires, explores, and develops oil and gas properties. NOG stock has fallen since the heyday of the shale and fracking boom several years ago, but has been on an upturn over the last twelve months. Indeed, on a year-to-date basis prices are up almost 85% — but NOG still firmly falls into the category of stocks under $10.
Northern is getting a boost from its recent agreement with Royal Bank of Canada on a $750M revolving credit facility. Jeff Grampp of Northland Securities gives Northern a ‘Buy’ rating and a target price of $5.50, in a review done before the Bank of Canada agreement was finalized. Looking forward, it will be interesting to see how Northern’s stronger credit position will affect the stock.
Limelight Networks (LLNW)
High-tech gets a lot of buzz these days, but there are stocks under $10 in the field who are still under appreciated.
Limelight Networks, Inc. (NASDAQ:LLNW) specializes in digital content delivery. Like the big players, Limelight also offers secure cloud storage options, website accelerators, and website and content security. In its last earnings report, for the quarter ending June 30, Limelight showed a net profit of $15.16M, a profound turnaround from the $1.63M loss in the same quarter of the previous year.
Considering the strong business model that a competent tech player can follow, with high demand for services, Sameet Sinha of B. Riley FBR singles out the stock as an ‘Alpha Generator’ pick. He believes that Limelight’s edge computing and real time streaming products will drive a boost in the revenue target to 15%. This is with a $6 price target.
Craig-Hallum’s Jeff Van Rhee is also optimistic about LLNW, foreseeing “over the top” 50% to 100% returns. The analyst consensus is ‘Strong Buy,’ with an average price target of $6.38, for a 30% upside.
Inovio Pharmaceuticals (INO)
Our fourth of our stocks under $10 is another pharma company, Inovio Pharmaceuticals, Inc. (NASDAQ:INO). Healthcare and pharmaceutical companies live in another sector with guaranteed customer demand and a ‘crumbling frontier’ of constant innovation. There will never be time when pharmaceuticals are not needed, so a company positioned to develop new treatments will have a strong foundation for growth.
Inovio Pharmaceuticals is in that position. Its focus is on treating and preventing cancer and infectious diseases. Stephen Willey, analyst for Stifel, says the perception of clinical risk remains favorable, and expects to see long-term expansion of the label toward patients with more difficult-to-treat conditions. He gives INO an $8 target, a bit lower than the $9.33 average. The average upside target is 83% over today’s price of $5.09.
Sirius XM Holdings (SIRI)
Our final bargain proposition today is Sirius XM Holdings Inc. (NASDAQ:SIRI). Founded in the early 1990s, Sirius was the first company to explore the potential of available unused radio bandwidth on communications satellites. Unlike traditional radio broadcasters, Sirius was based on a subscription model. The company had early success when it signed Howard Stern’s popular talk show, and it continues to make strong inroads to the automotive factory-install radio market. It’s estimated that there are 100 million cars in North America with Sirius-compatible satellite radios.
Now the big news is that Siri is expanding from just the vehicle arena. It snapped up its main competitor Pandora Media Inc (NYSE:P) in a savvy all-stock transaction valued at $3.5 billion. Pandora’s powerful music platform means SiriusXM will now have a sizable presence in home and mobile.
At a current share price of $5.95, with an average target of $7.75, SIRI shows a 30% upside and earns a ‘Strong Buy’ on the analyst consensus. Barrington’s James Goss gives a more optimistic target price of $8, while Bryan Kraft of Deutsche Bank takes a bullish view of the stock based on the company’s recent Pandora acquisition.