Valuation is a real concern right now when it comes to stocks. Many analysts and investors are raising concerns that certain stocks are overvalued and due for a price correction. But not every stock is currently sitting at sky-high levels. There are many cheap stocks out there that are undervalued and could provide decent returns in the year ahead as the pandemic retreats and economies around the world rebound.
Here we look at seven cheap stocks to buy now before markets advance further.
- Riot Blockchain (NASDAQ:RIOT)
- General Electric (NYSE:GE)
- Ford Motor Co. (NYSE:F)
- Sirius XM Holdings (NASDAQ:SIRI)
- eBay (NASDAQ:EBAY)
- American Airlines (NASDAQ:AAL)
- Coty (NYSE:COTY)
Cheap Stocks To Buy Now: Riot Blockchain (RIOT)
Bitcoin is red hot now, recently trading above $40,000 for the first time. And for investors who are not comfortable putting money directly into cryptocurrencies, there are other ways to take advantage of the Bitcoin craze.
Riot Blockchain, for example, provides investors with exposure to Bitcoin’s growth at a much more affordable cost and with less risk. Riot Blockchain is a digital currency company. (It calls itself a Bitcoin miner). Essentially, the company buys cryptocurrency and blockchain technology companies. Blockchain is the database on which Bitcoin and other cryptocurrencies are built.
As Bitcoin has surged in recent months, RIOT stock has also risen sharply. On Jan. 8 alone, the stock rose nearly 18%. In 2020, Riot Blockchain’s stock rose nearly 1,500%. Consider that Riot Blockchain was trading at $1.12 a little more than a year ago (December 31, 2019), and you get an idea of the stock’s explosive growth. However, at under $30 a share, Riot Blockchain’s stock is still cheap compared to many other securities. And it’s a lot cheaper than buying a single Bitcoin.
General Electric (GE)
Many Wall Street gurus are urging investors to rotate out of technology stocks and into industrials, claiming that industrial stocks will surge once the U.S. economy begins firing on all cylinders again. And among industrial stocks, there are few that are better known, more established and cheaper to buy than General Electric.
The Boston-based company founded by Thomas Edison has been a going concern since 1892. Today, GE manufactures everything from aircraft engines to wind turbines. It remains an industrial powerhouse and despite its diminished fortunes in recent years, General Electric remains a leading American company, ranked 21st on the Fortune 500 list by gross revenue.
In terms of its share price, GE stock has more than doubled since it was trading at $5.49 in May 2020. However General Electric shares remain incredibly affordable at $11.35 each. While many analysts remain down on General Electric, some optimists see brighter days ahead for the company, especially as the U.S. recovers from Covid-19 and the aviation industry rebounds, increasing demand for its aircraft engines.
General Electric is also heavily invested in green, renewable energy, which should get a shot in the arm under President Joe Biden.
Ford Motor (F)
The Ford Motor Company and its stock will get there. Eventually. Despite years of repeated under performance and shareholder disappointment, Ford should finally turn things around in 2021. Hopefully.
While the Detroit automaker’s stock continues to languish, the company is doing a lot of the right things and moving in the right directions, according to industry observers. Consider that in the last year, Ford has appointed a new Chief Executive Officer in Jim Farley, changed its senior leadership team, introduced an all-electric version of its classic Mustang muscle car called the “Mach-E,” and achieved labour peace by inking new contracts with many of its unions around the world.
The company also continues to push forward with its long-term electric vehicle strategy. The positive news has helped F stock to more than double since it was trading at $4.01 a share in March 2020.
Today’s Ford’s share price sits at $9 a share, making it one of the most affordable cheap stocks to buy. And many analysts say 2021 is the year when Ford shares will finally breakout. The company is one strong quarterly performance away from its share price skyrocketing. Maybe.
Sirius XM Holdings (SIRI)
Another perennial underperforming stock is Sirius XM Holdings. A major stock breakout has long been predicted for the New York-based satellite radio provider, yet has failed to materialize.
Many investors expected SIRI stock to move higher after the company completed its $3.5 billion acquisition of music streaming service Pandora. Yet, shares have continued to falter and now trade at $5.91 a share. Cheap, yes. But quickly approaching the $5 threshold that would put the company into penny stock territory.
SIRI stock has struggled to stay above $7 a share since 2018. The stock has fallen nearly 10% since the start of this year after it was revealed that the company plans to write off $1 billion of the Pandora buy as a “goodwill impairment charge.”
Yet, the current share price could be seen as a buying opportunity among bargain hunters looking for cheap stocks. Not everyone has written off Sirius XM Holdings. In fact, the company counts none other than legendary value investor Warren Buffett as one of its shareholders. The Oracle of Omaha himself owns 50 million shares of the company’s stock. And Buffett has a pretty good track record.
Amazon (NASDAQ:AMZN) gets all the attention, but what about the other major online retailer? We’re talking, of course, about eBay. The San Jose, California-based e-commerce company that specializes in consumer-to-consumer and business-to-consumer sales flourished during the Covid-19 pandemic and had a very good year in 2020.
The company had been posting sales decline prior to the pandemic, but those declines turned into gains of 29% in 2020’s second quarter and 21% in the company’s fiscal third quarter. eBay’s profitability in 2020 climbed above 25% of sales, which is impressive.
The success has helped to lift EBAY stock. In fact, shares of the company have more than doubled from their March low of $26.34 and now trade at $54.48. But eBay stock is still one of the cheap stocks at its current price, especially when compared to Amazon’s share price of nearly $3,200. Investors can buy a lot of eBay stock for the cost of one share of Amazon.
Some investors think eBay’s stock still has room to run and that the company should continue performing well during the final stages of the global pandemic.
American Airlines (AAL)
Airlines stocks are a surefire bet for the post-pandemic economic recovery. And American Airlines stock looks super cheap at its current price of $15.13 a share. This time last year, AAL stock was trading above $30 a share, twice its current level. And while the share price has recovered from its low last spring of $8.25 a share, there is still plenty of upside for the stock of the world’s largest airline.
Many analysts are forecasting an absolute boom in travel and tourism once the pandemic is behind us, something people are referring to as “revenge travel.” And few airlines will benefit more from the boom than American Airlines.
To be sure, the company has endured its share of pain in the past year — it lost $2.2. billion in the first quarter of 2020 alone. But it has managed to endure and weather the storm. The airline and its shareholders should come out stronger on the other side of the pandemic.
New York-based beauty company Coty’s stock is currently trading at $6.81 a share, half the level it was at in early 2020. The company, which has been in operation since 1904 and today owns more than 75 brands, including Cover Girl, Rimmel London and Max Factor, has struggled to boost its share price since it fell last March.
Weighing down COTY stock has been debt that the company took on when it acquired Cover Girl and dozens of other beauty brands from Procter & Gamble (NYSE:PG). People working from home this past year has also contributed to declining sales of beauty products.
Things look to improve for COTY stock and its shareholders in 2021. The company hired a new Chief Executive Officer, Sue Nabi, last July and has been working to pare down its debt. The company should also get a lift as consumer spending on discretionary items such as beauty products picks-up in the second half of this year. Coty has also taken stakes in cosmetics brands owned by Kim Kardashian and Kylie Jenner, which should help the company attract younger consumers going forward.
Grab Coty shares while they are still cheap.
On the date of publication, Joel Baglole held a long position in RIOT.