[Editor’s Note: This story was previously published November2018. It has been updated and republished.]
Cheap stocks are never “sure things.” There are many cheaply traded companies, even penny stocks, under $10 right now that deserve to be there and will only get cheaper. Keep in mind that share value is all relative, however, among cheap stocks as well as expensive ones.
For instance, Amazon (NASDAQ:AMZN) is worth about $1,631 per share right now. What will make it go up or down? Surely not its size alone, but rather its growth potential and Wall Street sentiment. The same is true for cheap stocks. You simply have to look deeper than the share price and explore the fundamentals and future growth potential.
Yes, some picks have fallen from great heights, but the only thing that matters is where they go from here — not whether they ever get back to all-time highs from a decade ago.
Staying objective is important, and you should always do your own research. But if you’re looking for tips on cheap stocks to invest in, here are a few names that haven’t went out of style yet:
Share Price (as of 2/20): ~$3.98
AgroFresh Solutions Inc (NASDAQ:AGFS) is one of the best cheap stocks to buy now to capitalize on increased demand for healthier eating.
AgroFresh specializes in technologies to keep produce like apples and avocados fresh and attractive to customers. Considering how once-seasonal fruits and veggies are in continuous demand in every geography, this is a no-brainer investment no matter the price.
But with shares well under $10 a share and with AGFS hovering just above two-year lows but trending upward, this is a lock for any investor looking for cheap stocks to buy now.
Royal Bank of Scotland (RBS)
Share Price (as of 2/20): ~$6.81
Royal Bank of Scotland (NYSE:RBS) may sound like a crazy bet on this list of the best cheap stocks to buy now, given the risks of the Brexit and continued anemic growth in the U.K. and the nearby eurozone.
However, keep in mind that getting a nearly $40 billion bank for under $7-a-share at present prices is a rare occurrence. The last time we saw massive banks like this trade at bargains, patient investors made a killing.
Think Bank of America (NYSE:BAC), which traded for $7 or so as recently as 2012 as investors shunned the stock in the wake of the financial crisis and continued troubles. Now, BAC trades for $32.
RBS provides the same potential opportunity for patient and determined investors, as its shares are trading for just 60% of book value.
Everi Holdings (EVRI)
Share Price (as of 2/20): ~$7.75
Everi Holdings (NYSE:EVRI), formerly Global Cash Access Holdings, is a Nevada-based company that produces slot machines and services to casinos.
In 2017, hopes of a cyclical recovery backed up by strong consumer spending numbers has led to high hopes for this segment of the entertainment and leisure sector. Shares of Everi soared 200% to around $7 a share. Now approaching $* it looks like those gains were for real and there’s still room for growth.
EVRI continues to be one of the best cheap stocks to buy now. After an impressive first-quarter earnings report last year, analysts at Stifel raised their price target to $7.50 on this gaming stock. It blew that one out of the water and we can expect it to go much higher.
Kinross Gold (KGC)
Share Price (as of 2/20): ~$3.80
Kinross Gold (NYSE:KGC) is a bit risky, but what cheap stock isn’t an aggressive investment?
After struggling to find traction last fall, gold prices have been moving up in this risk-on environmen. We have seen the U.S. dollar weaken recently and a bit of fear creep in after Republican economic policies have run into a Wall and as geopolitical unrest has continued. If we see a market correction or an increase in uncertainty across the summer, gold prices and KGC stock will benefit nicely.
And unlike a junior miner without much room for error, Kinross is a $6 billion company with much better access to credit and capital so don’t worry about it imploding because of short-term volatility in gold prices.
Share Price (as of 2/20): ~$5.36
Harmonic (NASDAQ:HLIT) is a video and audio systems company that helps digital media companies and traditional broadcast outlets process and produce their content. As podcasts and streaming video become the norm, HLIT services are increasingly in demand, particularly as the video and soundbites of an intensely partisan media environment are difficult to ignore.
HLIT is scheduled to turn a profit of just 6-cents-per-share this year, but that’s much better than previous fiscal years in the red. And if predictions hold, Harmonic will post 32 cents in earnings-per-share next year, more than 5x growth!
As American consumers increasingly use alternative media sources and those digital outlets try to meet demand with audio and video, Harmonic should see continued growth in 2017 and beyond. That makes HLIT one of the best cheap stocks to buy now.
Community Health Systems (CYH)
Share Price (as of 2/20): ~$4.03
It’s admittedly dangerous to buy a cheap stock into a downtrend. But now that Community Health Systems (NYSE:CYH), has bounced and is trending up, it’s easier to see the longer-term potential.
Yes, revenue remains under pressure, and rhetoric out of Washington regarding cuts in Medicare are weighing heavily on this hospital operator. However, revenue declines aren’t because of poor operations but rather strategic divestitures of 30 hospitals as part of a debt-reduction strategy.
I don’t believe Congress is dumb enough to cut Medicare spending, and I don’t believe Wall Street is being realistic about the future of CYH after the short-term pressures on revenue as operations shrink. There are assuredly pressures on the company, which used to be the largest for-profit hospital operator in America.
But CYH also has long-term potential for bold investors who buy in.
BlackRock Capital Investment (BKCC)
Share Price (as of 2/20): ~$6.30
The smaller and more focused BKCC is a business development company that provides loans to small- and mid-sized firms, and the regular payments on that debt can provide for a juicy revenue stream and fuel big dividends. Right now, the company pays more than 11% in annual yield.
The risk is that those dividends could be cut, as they were reduced from 21-cents-per-share in 2016 to the current level and even that 21-cent payday was down from 26 cents back in 2014. And of course, there’s also a risk of share declines if companies BKCC lends to can’t make good on that debt.
But a mammoth dividend yield and a great brand like Blackrock are reasons to give this cheap stock the benefit of the doubt.
Furthermore, if you believe in an economic expansion, then more midsize companies will look to expand and tap into BlackRock Capital to fuel that growth.
Avon Products (AVP)
Share Price (as of 2/20): ~$3.06
Avon Products (NYSE:AVP) is hardly the powerful cosmetics brand it once was. But remember: Many cheap stocks are often cheap for a reason as they’ve fallen from previous highs.
Just because Avon trades for under $4 a share right now doesn’t mean it’s doomed. Rather, it just means that investors need to get realistic about what to expect. And frankly, it’s realistic to expect a nice double-digit gain from here, even if the company doesn’t revisit 2013 levels over $20 ever again.
That’s because AVP is expected to grow revenues over the next couple of years, even if it’s only in the low single digits.
Sure, Avon stock has fallen on hard times, but it’s already up more than doubled since Dec. 24. This is one of the best cheap stocks to buy now based on its current valuation and outlook, so long as you can look past the pain of a few years ago.
Jeff Reeves is the executive editor of InvestorPlace.com, and his commentary has appeared in numerous respected media outlets including USA Today, CNBC and the Fox Business Network. 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.