With the S&P 500 entering its eleventh year since the great market meltdown of 2008, many stocks boast record high, triple-digit prices. But not all have been buoyed to the moon by the boom. For one reason or another, some companies maintain a cheap price tag. Today we will focus on finding stocks to buy in this frequently forgotten corner of the Street.
Scanning stocks with a price range south of $40 reveals several themes. Some sit in out-of-favor sectors like mining and energy. Others carry toxic fundamentals and deteriorating earnings. Both areas will be sidestepped in favor of others.
Today’s selection of stocks to buy comprises companies that are dirt-cheap right now and also flashing buy signals. One is a recent IPO. Another is a down-on-its-luck momentum stock. And the third is a booming bank that just tagged record highs.
Let’s take a closer look at these three cheap stocks to buy now.
Yeti Holdings (YETI)
Following its mid-January IPO, Yeti Holdings (NYSE:YETI) became a favorite stock for momentum traders. Its trending behavior was clean, and its large daily percentage moves offered plenty of profit potential. After getting a bit ahead of itself by rising 125% in three months, the stock swooned on an earnings announcement that failed to support such a rapid rise.
After resetting with a 37% drop, however, buyers returned to bid YETI stock up anew. The gains since then have been glorious, and it now sits a stone’s throw from the April peak. At $33, the price tag is low enough for traders seeking cheap stocks to buy now.
In the short run, YETI is extended, so watch for a pullback or pause to materialize before piling in.
Ally Financial (ALLY)
The second category of cheap stocks includes those that only recently went public. Since they missed the majority of the bull market they haven’t had as much time to get pulled higher with everything else. Additionally, if the IPO price was set at a low cost, then traders instantly have another cheap stock to play with.
Ally Financial (NYSE:ALLY) matches both criteria. After its 2014 IPO in the low $20 area, ALLY stock spent much of the next few years in a range. But recent strength has carried it to fresh record highs. Indeed, it’s testing last week’s all-time high as I type.
This year’s price action has been healthy with breakouts seeing strong follow through. The current high base could be setting another such upside thrust. While the looming earnings announcement is an X-factor, a pop above $31.70 should be viewed as a buying opportunity.
Iqiyi (NASDAQ:IQ) is a Beijing-based online video platform. Following its public debut last year, IQ stock became a volatile beast experiencing massive moves higher and lower. The rally that kicked off 2019 quickly unwound into the summer, returning IQ to a lowly $16 price tag.
But a recent upside breakout amid heavy volume suggests buyers may be wading back into the waters. And last week’s pullback is providing a second chance to buy low for those believing a new uptrend could be in the cards. Given the messy nature of its longer-term trend, IQ is probably the most speculative idea of today’s trio.
Consider using support from last month at $17 as your stop loss.
At the time of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility.