Well that was a quick turnaround! After a bout of volatility we are now enjoying the S&P 500’s longest winning streak since April 8. President Trump decided to retract his Mexican tariff threat (for now at least) while China appears to be finally addressing its trade surplus. Investors are also increasingly optimistic about the prospect of lower interest rates from the Federal Reserve and there’s plenty of M&A activity to get excited about. So while most of the attention is now returning to the large-cap tech stocks, I am taking a different approach. I am looking for cheap stocks to buy now.
If you are looking for a stock that is both cheap (literally) and undervalued look no further. There are still some serious bargains lurking in the market — and you won’t need to break the bank. Here I used TipRanks Stock Screener to scan through over 5,000 stocks for the most promising investing opportunities. All these cheap stocks boast a ‘Strong Buy’ analyst consensus, plenty of upside potential and come in at under $10 to boot. Let’s take a closer look now:
Gaming stock Zynga Inc (NASDAQ:ZNGA) has put on a remarkable rally of 65% so far in 2019. Yet the cheap stock still holds a bullish ‘Strong Buy’ consensus. That’s alongside a 10/10 Smart Score. Shares surged following a ratings upgrade from Stephens analyst Jeff Cohen. “Zynga continues to have the strongest advertising platform in mobile gaming,” the analyst told investors.
The company has introduced a lucrative new advertising format, while a slew of new games should hit the market in the next few years. As Cohen writes: “Of the new titles, we are most confident in the potential for FarmVille (due to its historic success on Facebook) and Puzzle Combat/Merge (because of the success that Small Giant and Gram have had with their past games).” He ramped up his price target from $6.50 to $8.25. From current levels that indicates further upside potential of 28%.
Meanwhile, Zynga also carried out a savvy real estate transaction for their San Francisco headquarters. The company has just announced a $600 million sale leaseback agreement with Beacon Capital Partners. Following the news Benchmark analyst Mike Hickey reiterated his buy rating and $8 price target. The analyst commented “We project ZNGA as cash flow positive, and will likely end fiscal 2019 with nearly $1B in cash.”
Where will all that money go? “ZNGA has a strong recent track record of acquisitions including Gram Games and Small Giant Games. We expect the M&A market will continue to provide opportunities for additional deals” the analyst concludes. Interested in Zynga stock? Get the free ZNGA Stock Research Report.
OrganiGram Holdings (OGI)
If you are looking for a cheap stocks that are also cannabis plays, look no further. OrganiGram Holdings Inc (NASDAQ:OGI) is Atlantic Canada’s original licensed producer of medical cannabis. The company sells both organic and non-organic strains of cannabis, as well as vaporizers and cannabis oils.
What’s interesting about OGI is that it currently scores 8 back-to-back buy ratings from the Street. That gives it a ‘Strong Buy’ analyst consensus. Right now analysts are most bullish about OGI’s new expanded licensing. It has just received permission from Health Canada for an additional 163,000 square feet of cultivation space, which should lead to an extra 53,000 kg of annual growing capacity from 36,000 kg/ year currently.
“We see this as testament to OGI’s foundation of operational and technological excellence. OGI’s established and escalating medical and adult-use consumer base, its multiplicity of forward-thinking strategic partnerships and collaborations, its innovative and meticulous cultivation methodologies, and its industry-leading product quality, cost of goods, and pricing, in our view, set this company in bold relief against its peers in the cannabis arena,” says Paradigm Capital’s Rahul Sarugaser.
He sees the OGI expansion coming fully online by the fourth quarter of 2020 and is predicting revenue and EBITDA in fiscal 2020 of $177.3 million and $73.5 million, respectively.
Plus the NASDAQ Global Select Market has just approved OGI for listing. According to management the move should boost the company’s liquidity. “We view OGI as highly comparable to HEXO and TRST, both of which obtained US exchange listings earlier this year” writes Beacon’s Russell Stanley. He sees shares doubling to $15 from $7.26 currently. Get the OGI Stock Research Report.
ADMA Biologics Inc (ADMA)
Adma Biologics Inc (NASDAQ:ADMA) develops specialty plasma-based biologics for the treatment of Primary Immune Deficiency Disease (“PI”). This is an inherited genetic disorder that causes a deficient or absent immune system. Sufferers are more vulnerable to infections and typically receive monthly infusions of immunoglobulin (IVIG) therapy.
Shares have soared 58% year-to-date, and analysts see massive upside potential ahead. Most tellingly, Oppenheimer’s Leland Gershell recently picked ADMA as his best idea in the biopharma field. He explained “Our bullish position on ADMA is supported by the prospects of lead development asset RI-002, a specialized IVIG enriched in antibodies against respiratory syncytial virus (RSV), for use in certain patient populations requiring IVIG (intravenous immune globulin) therapy.” This drug (now known as Asceniv) was approved by the FDA in April 2019.
“There are approximately 250,000 PI patients diagnosed and living in the U.S., and we believe there is an opportunity to treat meaningful segments of this patient population with ASCENIV™” stated ADMA in the press release. Gershell sees the stock outperforming in the coming months- as reflected by his $14 price target (270% upside potential).
And the good news continues. On May 10, the FDA approved the Prior Approval Supplement (PAS) for BIVIGAM (immune globulin intravenous,10% liquid). “This key regulatory catalyst occurred in line with our expectations and widens ADMA’s approved product lineup; the principal revenue drivers should, in our view, now be BIVIGAM, ASCENIV™ (approved last month) and Nabi-HB going forward” wrote HC Wainwright’s Ram Selvaraju.
Low supply from larger IVIG providers should drive healthy demand for BIVIGAM over the next few quarters, says Selvaraju. Get the ADMA Stock Research Report.
Lurking near the $10 mark but still within the boundaries comes Cleveland-Cliffs Inc (NYSE:CLF). After sailing a little too close to the rocks, management appears to have righted the ship. The company mines iron ore that goes into the production of steel and the latest quarterly results suggest that the 170-year old business is in the early stages of a significant turnaround.
For one thing, the steel industry should be a direct beneficiary of the $2 trillion infrastructure package proposed by President Trump and the U.S. Congress on Tuesday. Cleveland Cliffs is the dominant iron ore player in the U.S., accounting for 55% of total production from its mines in Minnesota and Michigan.
Indeed Cliffs sees revenue improving through the year, stating in the recent earnings call: “For the remainder of the year, our second, third and fourth quarter revenue rate will be much higher as the larger sample size of shipping volumes is more closely representative of our full customer mix.”
Following the company’s Q1 results, Credit Suisse analyst Curt Woodworth upgraded Cleveland-Cliffs to Buy from Hold and raised his price target $1 to $14 (46% upside potential). In a research note to investors, Woodworth says he sees potential value near $16-$18 once the HBI plant is fully ramped, even with low hot-rolled coil prices.
In addition, the company is sharing this steady cash flow with investors. Management has now pledged to buy back another $100 million of its stock, on top of $29 million previously authorized, by the end of 2019. Cleveland-Cliffs also pays out a quarterly dividend of $0.05 a share (2% yield) that was started earlier this year. The next payment will likely be made in July. Get the CLF Stock Research Report.
Aurora Cannabis (ACB)
Our second ‘Strong Buy’ cannabis stock under $10 is Aurora Cannabis Inc (NYSE:ACB). One of the world’s largest and fastest growing cannabis stocks, Aurora boasts a funded production capacity of over 500,000 kilograms per year.
And with the increasing adoption of medical and consumer cannabis globally, Aurora has embarked on an aggressive international expansion strategy. This currently sees the company with sales and operations in 24 countries around the world.
So far this approach is winning the Street’s approval. In the last three months, six analysts have rated ACB vs just 1 hold rating. One analyst in the bull corner is Merrill Lynch’s Christopher Carey. He has an $11 price target on the stock, indicating upside potential of 44% for this cheap stock.
Carey isn’t deterred by Aurora’s third-quarter earnings results. Although the numbers didn’t quote meet expectations, the analyst believes that a bit of volatility is par for the course at this early stage of the game. And most crucially, Aurora is still progressing towards its long-term goals. The company reiterated its Q4 guidance for for 25,000 kg of cannabis ready for sale, positive EBITDA and improving margins going into fiscal 2020.
However- Carey did have a word of advice for ACB. While the analyst approves of the company’s expansion into vapes and edibles, he lamented that ACB has so far steered clear of the potentially lucrative cannabis drinks market. “We wonder if Aurora could be ‘missing the boat’ on an area which could prove large as newer consumers wanting less pervasive, socially accepted product forms demand both psychoactive (THC-infused) and CBD beverages,” Carey mused in his investor report. Get the ACB Stock Research Report.
I would argue that Inseego Corp (NASDAQ:INSG) is a very compelling investing opportunity right now. Note that in the last year shares have exploded by over 130%. INSG provides fifth generation (5G) and intelligent Internet of things (IoT) device-to-cloud solutions. And as the drum beat of 5G is getting louder, so too is the case for INSG stock.
First off, the company sports only buy ratings from the Street. That’s with an average analyst price target of $6.63 (41% upside potential). Following a Q1 revenue beat, Northland Securities’ Michael Latimore reiterated his buy rating citing strong 2H catalysts. “Management noted the opportunity around 5G is “spectacular,” and the addressable market doubled since last quarter given the carriers with which INSG is in discussions” explained Latimore.
The analyst continued: “5G products could contribute a few million $ in quarterly revenue in 2H, and accelerate from there. Talking to 30 carriers representing two billion subscribers for various products.” He has a $6 price target on the stock.
Latimore isn’t the only analyst with high hopes for 2H19 (and a $6 price target). “Management highlighted expanding carrier engagement on 4G and 5G connectivity solutions… some of these opportunities are expected to begin converting in 2H:19, supporting our anticipation of a significant pick up in revenue in the back half of the year” writes National Securities’ Matthew Galinko. Get the INSG Stock Research Report.
Evofem Biosciences (EVFM)
Our final high-quality cheap stock is Evofem Biosciences Inc (NASDAQ:EVFM). The company has a bold goal: to improve the lives of women. From an investor perspective, the most exciting development is the company’s revolutionary birth control product. Called Amphora, this non-hormonal birth control is currently undergoing a second pivotal, Phase 3 clinical trial to assess effectiveness and safety. Unlike many current forms of contraception, there is no need for a daily pill or implant.
“We reiterate our Overweight rating and $9 PT for EVFM stock” wrote Cantor Fitzgerald’s Matthew Lillis on May 8. “The company’s market research continues to indicate that Amphora, if approved, could become an important new contraceptive modality for women electing not to use hormonal or device-related methods” the analyst added.
EVFM plans to resubmit the NDA during 4Q19, which would allow for a potential Amphora launch during 2Q20. In fact, preparations are already underway for launch. As Oppenheimer’s Leland Gershell highlights, the review will now include second manufacturing site, positioning EVFM to better meet anticipated commercial demand.
“We believe shares deeply discount Amphora’s $400M+ US sales potential, and reiterate our Outperform” says Gershell. He also has a $9 price target on the stock. Get the EVFM Stock Research Report.
TipRanks.com offers exclusive insights for investors by focusing on the moves of experts. See what the experts are saying about your stocks now at TipRanks.com. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.