Since the lows seen in March, a broad range of stocks made stellar comebacks and even new 52-week highs. As a result, many of them have reached rather expensive valuations and price tags. A large number of market participants may feel these shares may be out of their budget range. They also wonder whether there may be cheap stocks that may do well in the coming months. Therefore, I’ll introduce seven cheap stocks under $10 right now.
Several of these companies are already known to many InvestorPlace readers. They have established robust business in finance, insurance, or mining that are decades if not centuries old. Several others are beginning to ride the wave in technology and biotechnology.
You will also note that several of these cheap stocks pay dividends. They are likely to continue the payouts, which investors could reinvest for the long-term. Here are seven cheap stocks I believe are worth researching further:
- Aegon (NYSE:AEG)
- Arcimoto (NASDAQ:FUV)
- Biomerica (NASDAQ:BMRA)
- Gaia (NASDAQ:GAIA)
- Garrett Motion (NYSE:GTX)
- Harmony Gold (NYSE:HMY)
- Nomura Holdings (NYSE:NMR)
As always, before hitting the ‘buy’ button, investors should do due diligence to get a more comprehensive picture of quality of earnings and earnings growth. Stock price does not always dictate the value of a company.
Cheap Stocks: Aegon (AEG)
52-week Range: $1.80-$5.15
Dividend Yield: 10.8%
The first on this list of cheap stocks is Aegon. Netherlands-headquartered Aegon is a global provider of life insurance, pensions and asset management. Its history dates back 175 years and its 24,000 employees serve 29.9 million customers. As of December 2019, Aegon managed around $1 trillion of revenue-generating investments.
The operations cover more than 20 countries, including the U.S., where it is known as Transamerica. The U.S. is Aegon’s largest market, generating almost two-thirds of earnings. Transamerica is among the top ten largest providers of pensions, variable annuities, individual universal life, and individual term life in the U.S.
In Europe, its largest markets are the Netherlands and the UK. In Asia, Aegon operates through three major joint ventures in China, India, and Japan, as well as the pan-Asian operations of Transamerica Life Bermuda (serving affluent and high net worth individuals).
Earlier in May, the group released Q1 earnings. Underlying earnings before tax were 366 million euros, reflecting adverse mortality and impacts from lower interest rates in the Americas, and limited COVID-19 related non-life claims in the Netherlands. Return on equity was 7% in the first quarter. Due to the pandemic, management now finds it very unlikely to reach annual 10% return on equity target.
Despite the recent challenges, I believe this is a solid company that deserves your attention. It’s well-managed with a robust balance sheet. In Q1, the capital positions in each of Aegon’s three main units remained above the bottom end of their respective target ranges. Year-to-date (YTD), AEG shares are down close to 31% and the current price of $3.10 makes it a cheap stock.
52-week Range: $0.97-$8.89
Dividend Yield: N/A
Oregon-based Arcimoto may pique your interest if you are looking for an Electric Vehicle (EV) firm that could become the next Tesla (NASDAQ:TSLA). As a cheap stock with a price tag of $5.75, FUV cannot rival TSLA stock, that now costs around $1,500 per share.
Since going public in September 2017, Arcimoto has built its production facility in the Arcimoto Manufacturing Plant, completed regulatory compliance for Fun Utility Vehicle, its flagship EV, initiated production in September 2019, and now delivers vehicles to early customers. The group has also initiated pilot programs for its next EVs.
The first one is Deliverator, last-mile delivery solution that is customizable to carry a range of food products. The second one is Rapid Responder, which is designed for specialized emergency, security, and law enforcement services. Production of those vehicles is set to begin in late 2020.
In June, the company released earnings when it reported quarterly sales of $616.8 million. A year ago in Q1, total revenue had been $2,645 for the same period in 2019. The increased revenue in the current year period was due to continued sale of FUV products that began in late 2019 following the start of commercial production.
Due to the pandemic, the company had to close down its production facility during the quarter. Prior to the suspension, it had increased production capacity to two vehicles a day, up from the one per day initial production rate. To date, it has built more than 100 vehicles, up from the 57 produced by December 31, 2019.
A recent press release also notified the Street that Arcimoto is beginning to rent pure electric Deliverator in Los Angeles using HyreCar (NASDAQ:HYRE). If you believe in the future of EVs, FUV may be an appropriate cheap stock. The company may also find itself a takeover candidate.
52-week Range: $9.56-$23.39
Dividend Yield: N/A
Biomerica describes itself as “a global biomedical company that develops, manufactures and markets advanced diagnostic products used at the point-of-care (in home and in physicians’ offices) and in hospital/clinical laboratories for the early detection of medical conditions and diseases.”
Its main campus occupies an area of over 23,000 square feet in Irvine, California and houses administrative offices, laboratories, and FDA registered manufacturing facilities. It also has two subsidiaries in Mexico and Europe.
The company primarily focuses on products for gastrointestinal disease, (especially Irritable Bowel Syndrome, or IBS) and diabetes. Other diseases include cancers, ulcers, and infertility, among others. It recently announced that Mayo Clinic is joining Biomerica’s new InFoods diagnostic-guided therapy (DGT), designed to alleviate IBS symptoms. The company estimates that over 45 million Americans suffer from IBS. At the end of the clinical trial period and other required steps, the company is hoping to get FDA clearance.
In mid-March, the company announced the development of a new test for the novel coronavirus that it was shipping to distributors outside the U.S. It is a single-use, disposable, 1-minute test that tests for coronavirus exposure. It is a serology test that looks for the presence of antibodies, which are specific proteins made in response to infections. The test would cost less than $10 per patient.
Later in May, Biomarin received CE mark for the test, which would mean it conforms with relevant European Union (EU) directives regarding health and safety or environmental protection. Management also said its distribution partners “are supplying multiple customers that include NATO, and government agencies in Germany, Switzerland and the Netherlands among others.”
As a result BMRA stock has benefited from these developments. If you are looking for cheap stocks, shares of BMRA definitely deserve your attention.
52-week Range: $4.70-$10.49
Dividend Yield: N/A
Boulder, Colorado-based Gaia, formerly known as Gaiam, is a global digital video streaming service and online community. Those investors who participate in yoga-related events likely know of the company’s meditation, fitness, and yoga-focused content. It has over 650,000 fee-paying subscribers in 185 countries. There are around 8,000 titles in its streaming library. Over 90% of the library is exclusive to Gaia, and about 80% of the views are generated by content produced or owned by Gaia.
In June, the group provided a business update which highlighted that it’d be “generating positive earnings and cash flows beginning July 1st as planned.” CEO Paul Tarell said, “The momentum we saw in member additions in April continued through May despite stay-at-home orders relaxing.”
The group is expected to report its second quarter 2020 earnings results in early August. Investors would like to see further positive momentum in revenue and subscribers. If you are looking for a cheap stock of a streaming company that serves a like-minded community, GAIA may just fit the bill.
Furthermore, in the coming months, GAIA stock may also become an acquisition target. For example in June, Lululemon Athletica (NASDAQ:LULU) announced that it was buying home fitness start-up Mirror, which has an interactive workout platform that features live and on-demand classes. This acquisition is likely to be a stepping stone for LULU to become a technology company as internet-connected workouts increasingly become the norm. Lululemon, or alternatively, a streaming company such as Netflix (NASDAQ:NFLX), may find value in adding the group’s customer and product base to their own.
Garrett Motion (GTX)
52-week Range: $2.50-$14.98
Dividend Yield: N/A
Switzerland-based Garrett Motion is an automotive technology company. It makes turbochargers for light and commercial vehicles. It also offers software focused on automotive cybersecurity and integrated vehicle health management. The group describes itself as a “technology provider that enables vehicles to become safer, more connected, efficient and environmentally friendly.” Ford (NYSE:F) is its largest customer, accounting for over 10% of revenue.
In October 2018, it was spun-off from industrial giant Honeywell (NYSE:HON). At the time, Honeywell shareholders got one share in Garrett for every $10 shares in the parent. The group inherited a large asbestos-related liability from Honeywell, a fact that has weighed down on the stock price. Year-to-date, GTX stock is down over 30%. Since its IPO in 2018, the shares are down over 57%.
In early May, it released first quarter 2020 financial results. Revenue came at $745 million, a decrease of 10.8%. Net income totaled $52 million, or 68 cents per diluted share.
On paper, the company is a leader in its market with good margins and offers value, which may translate into significant upside potential for patient shareholders. However, potential investors may want to see the next quarterly result before committing new capital into this cheap stock.
Harmony Gold (HMY)
52-week Range: $1.76-$6.11
Dividend Yield: 0.98%
Year-to-date (YTD), South Africa-head quartered Harmony Gold is up around 83%. Harmony Gold’s mining history in the country goes back to 1950s. In February, the company agreed to buy AngloGold Ashanti’s (NYSE:AU) South African assets. Analysts regard the acquisition as a strategic, financial, operational, and geographical fit. It may help improve the company’s cash flow margins. The miner also has gold and silver operations in Papua New Guinea.
Earlier in May, the group provided and operational update for the nine months ended March 31. Total gold production was 8.5% lower, affected by the country’s COVID-19 pandemic national lockdown. Yet due to the increase in the price of gold, its operating free cash flow margin more than doubled to 13% from 6%.
Harmony Gold is expected to release FY20 financial year end results on August 18. If you believe gold and gold miners will continue their bull run in the rest of the year, HMY may be one of the best cheap stocks to add to your portfolio. Its position as South Africa’s primary gold producer will likely support the price of the miner’s shares.
Nomura Holdings (NMR)
52-week Range: $3.18-$5.41
Dividend Yield: 3.98%
Last up on this list of cheap stocks is Nomura. Nomura is a global financial services group, operating in over 30 countries where it employs close to 30,000 people. The group’s history goes back to 1925 and is the largest investment bank in Japan. It also has the largest retail network in the country. The group has sizable operations in China, too.
Four business divisions contribute to Nomura’s revenue, i.e., Retail, Asset Management, Wholesale (Global Markets and Investment Banking), and Merchant Banking. Its asset management arm has exposure to companies listed in Japan’s Nikkei index. Therefore, its fortunes are dependent on that particular market as well.
On June 30, management filed the latest annual report with the U.S. Securities and Exchange Commission (SEC): “The COVID-19 pandemic has affected Nomura’s business, customers and employees and this may continue in the future.” Earlier in May, it reported its first loss in five quarters. The results were adversely affected by declines in its internationally-focused asset management and wholesale banking divisions.
The firm is expected to release Q1 results for FY2020/21 later this month. At the time, analysts would like to see if there have been a further adverse effect of the pandemic on the business. However, any potential bad news is likely to be factored into the share price. If you are looking for a cheap stock that also provides exposure to the Asia-Pacific region, then NMR stock should be on your radar.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education, including a Ph.D. degree, in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.