Many investors like cheap shares, particularly those under $10, and frequently put them on their lists of “stocks to watch.” After all, many of today’s market darlings were trading at much lower values yesterday.
For instance, in May 2002, Netflix (NASDAQ:NFLX) started life as a public company at an opening price of $15. Since then, NFLX shares have split twice, which would put the split-adjusted IPO opening price at slightly over $1.
Netflix stock is currently hovering at $530.
Put another way, $1,000 invested in Netflix stock almost two decades ago would now be worth well over $500,000. That’s the kind of eye-popping return that turns humble investments into significant portfolios.
Therefore, today I’ll introduce 10 stocks under $10 to watch in the second-half of the year:
- Advantage Energy (OTCMKTS:AAVVF)
- Amneal Pharmaceuticals (NYSE:AMRX)
- DavidsTea (NASDAQ:DTEA)
- Endeavour Silver (NYSE:EXK)
- Gevo (NASDAQ:GEVO)
- One Stop Systems (NASDAQ:OSS)
- Quest Resource Holding (NASDAQ:QRHC)
- Sirius XM (NASDAQ:SIRI)
- Socket Mobile (NASDAQ:SCKT)
- United States 12-Month Natural Gas Fund (NYSEARCA:UNL)
These ten names deserve further due diligence as they could have significant upside potential. However, their prices are also likely to be choppy. Thus, they may not always be appropriate for all investors.
Stocks to Watch: Advantage Energy (AAVVF)
52 week range: $1.03 — $4.14
Canadian oil and gas group Advantage Energy is our first cheap stock to buy, and reported first quarter earnings in late March.
Sales came at $94.8 million; a year before it had been $65.8 million. Net loss was $425,000, compared to $266.5 million for the same period in the 2020.
Investors were pleased to see that results from the winter drilling program exceeded expectations both in costs and well performance. Meanwhile increasing gas prices amidst the record-breaking freeze in winter months strengthened financial outlook and guidance for 2021. Advantage expects to generate significant free cash flow due to planned low capital spending.
So far in the year, AAVVF stock has returned over 200%. Forward price-to-earnings (P/E) and price-to-sales (P/S) ratios are 15.55 and 3.44, respectively. In the coming quarters, management plans to increase liquids production. Advantage Energy deserves to be on your watchlist.
Amneal Pharmaceuticals (AMRX)
52-Week range: $3.45 — $7.45
Bridgewater, New Jersey-based Amneal Pharmaceuticals focuses on generic and specialty drugs. The company has a portfolio of about 250 products with operations in North America, Asia and Europe.
AMRX also owns 65% of AvKare, provider of pharmaceuticals and infection control products primarily to governmental agencies such as the Department of Defense (DoD), Food and Drug Administration (FDA) and Veterans Health Administration (VHA).
On May 7, AMRX reported first quarter financial results. Net revenue was $493 million, down 1% year-over-year (YoY), mainly due to decreased influenza activity and higher customer purchases at the onset of the Covid-19 pandemic.
Non-GAAP adjusted net income of $61 million was up 1.2% YOY. Non-GAAP diluted earnings per share (EPS) of 20 cents remained unchanged. Cash and equivalents stood at $452 million, increasing 12% YOY.
Management said in part that, “strong profitability reflects the validity of our strategy, our diversified and relevant product portfolio and strength of our research and development pipeline.”
So far this year, AMRX has returned 2.8%. Forward P/E and P/S ratios are 6.18 and 0.35 respectively. Value investors who want to invest in healthcare sector should keep the stock on radar.
DavidsTea (DTEA)
52-week range: $0.58 — $7.45
Canada-headquartered DavidsTea is a retailer of different types of tea through both its own stores and e-commerce site. The businesses has three segments: Tea, Tea Accessories and Food and Beverages.
DavidsTea issued first quarter financial results on June 15. Total revenue was 23.2 million CAD, compared to 32.2 million CAD in the same period of 2020. Adjusted net income was 3.2 million CAD, compared to a net loss of 45 million CAD in Q1 2020. Adjusted net income per diluted share was 5 Canadian cents in Q1 2021 vs. an adjusted net loss per diluted share of 26 Canadian cents in Q1 2020. Cash and equivalents ended the period at $31.3 million.
CEO Sarah Segal said:
“As a leading tea merchant with a strong brand, we seek to share our passion and love for tea, and our unique and innovative blends, with new audiences. We believe that our financial position allows us to support continued innovation, meet our working capital needs and make the right strategic investments to grow our business as we drive toward sustained profitable growth.”
DTEA shares are up over 63% in 2021. P/S ratio stands at 1.15. Investors believe the company can continue the current sales momentum in the coming quarters too.
Endeavour Silver (EXK)
52-Week range: $2.40 — $7.76
Next is another Canadian firm, namely Endeavour Silver, which operates three silver-gold mines in Mexico. The miner released first quarter financial results on May 11. Revenue was to $34.5 million, up 58% YOY, as a result of higher metal prices and increased production.
Net income came at $12.25 million compared to a loss of $15.93 million a year ago. Diluted EPS was 7 cents versus a loss of 11 cents the same quarter prior year. Cash flow from operations was $5.2 million, increasing 205% YOY.
On the results, CEO Bradford Cooke said: “We are off to a good start in 2021, with the mining operations meeting our production plans… Revenue, cash flow and earnings were all sharply higher in Q1, 2021 compared to Q1, 2020.”
EXK shares hit a multi-year high in early June and returned 15.6% year-to-date (YTD). Forward P/E and P/S ratios are 98.04 and 6.16, respectively. Those ratios indicate an overvalued stock.
But on the other side of the argument is the growth potential offered by new mining assets. If silver prices were to increase in the months ahead, the stock would likely benefit. Long-term investors could consider buying the dips.
Gevo (GEVO)
52-Week range: $0.51 — $15.57
Englewood, Colorado-based Gevo produces energy-dense liquid hydrocarbons and renewable chemicals. This alternative energy group reported first quarter financial results on June 22.
Total revenue was $0.1 million, versus $3.8 million same quarter previous year. Net loss totaled $10.1 million versus a loss of $9.3 million a year ago. Basic and diluted loss per share was 5 cents, compared to a loss of 63 cents in Q1 2020. Cash and equivalents stood at $525.3 million.
CEO Dr. Patrick R. Gruber commented: “The FEED engineering work is going well and is on schedule. The RNG plant is expected to be online in 2022 and begin to generate cash then. The interest in our product and the customer pipeline has increased significantly, which is extremely positive.”
GEVO stock has returned 59% since the beginning of the year. P/S ratio stands at 448.12. The frothy valuation and lack of profits are of concern to long-term shareholders. Yet others point out to the company’s long-term growth potential.
Those readers who can include a high-risk/high-return stock in their portfolios could consider investing in GEVO around $5.
One Stop Systems (OSS)
52-week range: $1.81 — $9.50
One Stop Systems designs and manufactures custom edge computing systems. International Business Machines (NYSE:IBM) defines edge computing as, “a distributed computing framework that brings enterprise applications closer to data sources such as IoT devices or local edge servers. This proximity to data at its source can deliver strong business benefits: faster insights, improved response times and better bandwidth availability.”
One Stop Systems announced first quarter financial results on May 13. Revenue was $13.3 million while non-GAAP net income was $643,000. Adjusted net income per diluted share was 3 cents. Cash and equivalents ended the period at $19.6 million.
CEO David Raun stated, “We drove a $2 million improvement in adjusted EBITDA over the first quarter of 2020 on similar revenues… We also produced first quarter GAAP net income as another first for the company.”
For the second quarter of 2021, management expects revenue of approximately $14.4 million which would be an increase of 8.3% sequentially and 24% versus the same year-ago quarter.
YTD, OSS stock is up 49%. Forward P/E and current P/S ratios of 34.6 and 1.94, respectively. If you believe the company has a solid footing as a provider of edge computing solutions, then the shares should have a place in your portfolio.
Quest Resource Holding (QRHC)
52 week range: $1.26 — $7.72
Texas-based Quest Resource Holding provides waste and recycling services to a wide range of businesses. Services offered include the collection, processing, recycling, disposal and tracking of waste streams and recyclables.
The company announced Q1 figures on May 17. Net Revenue was $35.1 million, a 38.6% increase from same period in the prior year. Net income per share was 6 cents compared with a net loss of 2 cents a year ago.
CEO Ray Hatch stated: ‘’This year is off to a great start with growth from new and existing customers,particularly in the industrial end market… Importantly, we demonstrated the operating leverage in our business model while driving 390% improvement in Adjusted EBITDA.”
QRHC stock has returned more than 210% so far in 20201. Forward P/E and P/S ratios are 79.37 and 1.23, respectively. If you are among those investors who believe the company’s business model will lead to sustainable revenue and high returns, then QRHC shares should be in your portfolio.
Sirius XM (SIRI)
52 week range: $4.95 — $8.14
Dividend yield: 0.91%
Sirius XM transmits satellite and online radio services. It also offers built-in car radios and has partnerships with celebrity hosts including Drake and Howard Stern.
The company announced Q1 earnings in late April. Revenue was $2.06 billion, an increase of 5% YOY. Net income came at $220 million. Diluted EPS was 5 cents, or 7 cents excluding one-time items.
CEO Jennifer Witz stated, ‘’I am pleased to announce SiriusXM has started the year impressively – we added 126,000 self-pay net subscribers, an 83% increase… Our advertising revenue grew 24%, driven by robust monetization of both on- and off-platform opportunities.”
SIRI stock is up 1.5% in 2021. Forward P/E and current P/S ratios are 25.84 and 3.45, respectively. Many on the Street believe shares could see robust growth if auto sales recover further in the coming quarters.
Socket Mobile (SCKT)
52 week range: $1.11 — $35.00
Socket Mobile produces data capture products (such as barcode scanners or contactless readers for credit cards) that can be integrated into mobile applications used in mobile point of sale (mPOS) devices in a range of segments and commercial enterprises. These products can connect to apps on a tablet or smartphone.
The group reported earnings in late April. Net revenue was $4.8 million, up 14% from $4.2 million in the first quarter of 2020. Net income was $203,000, or 3 cents per share, compared to a net loss of $90,000, or 1 cent per share, in the first quarter of 2020.
On the results, CEO Kevin Mills cited: “We are seeing strong demand but are also experiencing supply chain and logistics issues. Our operations team is taking every measure to cope with supply interruption and to protect our supply and margins.”
YTD, SCKT stock is up over 170%. Forward P/E and current P/S ratios are 11.11 and 2.6, respectively. As our economy continues to open up, the company could achieve higher sales.
United States 12 Month Natural Gas Fund (UNL)
52 week range: $7.24 — $10.33
Expense ratio: 0.9% per year
Our final choice is an exchange-traded fund (ETF), namely the United States 12 Month Natural Gas Fund. It tracks the price of natural gas delivered at the Henry Hub in Louisiana.
Over the past year, fundamentals have remained bullish for natural gas and this ETF has recently seen a multi-year high. YTD, the fund is up over 34%.
As the U.S. economy returns to normal, increasing commercial demand could potentially provide further tailwinds for UNL.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education 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.
