- Banco Santander Brasil (NYSE:BSBR): Healthy upside with its geographically diverse operations
- Lloyds Banking Group (LYG): Massive profits point to higher shareholder rewards
- Sirius XM (SIRI): Free cash flow-generating machine with a commitment to shareholder rewards
- Ambev (ABEV): Re-opening tailwinds point to a strong comeback this year
- Latch (LTCH): Disruptive business which is just getting started in its growth story
- Nokia (NOK): A potential 5G king, which can push on to greater heights
- Telefonica (TEF): After its restructuring, the business is more streamlined than ever
The S&P 500 index is off to a lackluster start. Since January, the index has shed close to 5%, while the opposite was true from the prior-year period. Hence, you are likely to see a plethora of cheap stocks trading for less than $10 due to the market pullback. Not all of these are worth a wager, though I’ve curated a list of hidden gems that could offer tremendous returns down the line.
Stocks trading at lower price points are usually speculative. However, plenty of names have fallen out of favor with investors for unfounded reasons. Hence, picking up cheaply valued stocks with robust outlooks is perhaps the best strategy to gain substantial upside benefits. With all of these priced at under $10, maybe it’s time to follow the advice of the man whose picture is on the bill and “take your shot.”
|BSBR||Banco Santander Brasil SA (ADR)||$7.70|
|LYG||Lloyds Banking Group||$2.41|
Stocks Under $10 to Buy: Banco Santander Brasil SA (ADR) (BSBR)
Banco Santander (NYSE:BSBR) is one of the top banking institutions globally, across multiple countries. It dominates its key markets and is a leader in commercial and loan services in countries such as Spain, Poland and Italy.
With its acquisition of Sovereign Bancorp, it also has its presence in the United States. Additionally, it has a healthy market share in terms of deposits in the United Kingdom with its partners. Also, it has strong exposure to Latin America, which includes some of the top emerging markets.
The bank’s fundamentals are solid, boasting double-digit growth in its net income margin and sales growth this year. Additionally, cash from operations for the trailing twelve months is a remarkable $56.7 billion.
Hence, with its geographically diverse operations and encouraging performance of late, it is one of the few European banks with tremendous upside potential.
Lloyds Banking Group (LYG)
Lloyds Banking Group (NYSE:LYG) is one of the leading British financial services organizations with GBP 886.5 billion ($1.16 trillion) in total assets.
Last year’s performance showed immense promise, spurred by the faster-than-expected recovery in the U.K. economy. As a result, the bank generated a mammoth GBP 8.04 billion in underlying profit compared with GBP 2.19 billion during the same period last year. Moreover, it generated over 10% returns on common equity for its investors last year.
The impressive turnaround is likely to translate into strong growth this year despite the headwinds. It plans to implement a GBP 2.0 billion share buyback by December, and higher dividend payouts should follow suit.
It boasts a spectacular forward dividend yield of over 5.3%, which dwarfs most in its sector.
Stocks Under $10 to Buy: Sirius XM (SIRI)
Sirius XM Holdings (NASDAQ:SIRI) is an American satellite and music streaming service. The company was formed via a merger of Sirius Broadcasting and XM Satellite Radio a decade or so ago.
Since then, its business has been booming, with revenues growing consistently. Last year, it capped off with an impressive 8% jump in sales to $8.7 billion. Moreover, it swung from a massive $677 million loss in 2020 to a profit of $318 million last year.
Furthermore, the company has grown its audience of paying subscribers by at least a million in the past decade. It started the year off with a record 32 million users, and its recently released guidance calls for a million new additions this year.
Also, Sirius XM has been a money minting machine generating a marvelous $1.83 billion in free cash flows last year. It plans to return a huge chunk of its money to its shareholders through buybacks and distributions.
In doing so, it recently announced a $1 billion special dividend. Moreover, SIRI stock trades at a steal at just 2.9 times forward sales.
Brazil-based Ambev (NYSE:ABEV) is the biggest brewer in the Latin American region. The company benefits from the vigorous demand for its portfolio of beverages across Latin America and Brazil. It boasts a rock-solid balance sheet and recurring profitability, which gives it an edge over its competition.
The coronavirus-led headwinds weighed down its performance considerably in the past couple of years. However, as the pandemic fades, it’s likely to build strong momentum with the reopening of its commercial channels such as restaurants and bars.
Moreover, it maintains an attractive dividend policy paying at least 40% of its adjusted earnings. Also, it yields over 4%, which is another added sweetener.
Stocks Under $10 to Buy: Latch (LTCH)
Latch (NASDAQ:LTCH) develops integrated software and hardware systems for apartment buildings and offices.
Business skyrocketed last year, with bookings up 118%. Moreover, revenues were up 129% to $41.4 million in 2021. The company’s business model is that it builds the hardware for its customers and combines that with its software offerings to offer a recurring revenue stream. Hence, LTCH stock ticks off all the right boxes into a disruptive growth stock.
Though its business is still relatively small, it could see incredible top-line expansion if it can grow its business across North America and internationally.
Once a market-leading mobile developer, Nokia (NYSE:NOK) has become a juggernaut in the global telecom equipment market.
It has a 15% market share in the telecom equipment market, which continues to grow every year. 5G has proven to be a game-changer for the company. According to Nokia, 5G could contribute up to $8 trillion to the world’s GDP by 2030.
The company has quickly established its presence in the sector, with multiple multi-year contracts lined up. For instance, it extended its partnership with T-Mobile Polska in modernizing its network infrastructure. That’s just one of over 200 commercial deals it’s signed in the past couple of years which will boost growth for the foreseeable future.
To be sure, it may have some explaining to do as it exits business operations in Russia, while leaving in place the equipment and software that connect Moscow’s largest telecommunications network with the Kremlin’s digital surveillance apparatus. But that’s not likely to have a significant — if any — impact on NOK stock.
Stocks Under $10 to Buy: Telefonica S.A. (ADR) (TEF)
Telefonica (NYSE:TEF) is one of the top telcos in the European and Latin American regions. In most of its markets, the company occupies a leadership position. Moreover, in most of its legacy markets, such as Spain, the U.K., and Germany, it sees a strong uptick in revenue growth.
In the past few years, the company has struggled with the sheer size of its business and the lack of a strategic direction. It has restructured its business in correcting these issues, spinning off its non-Brazil Hispanic American assets.
Moreover, its 50:50 merger with Liberty Global in British telecommunications provider O2 U.K. is a testament to its superior capital allocation skills. As we advance, the company plans to invest heavily in infrastructure and its tech competencies to solidify its positioning in its core businesses.
With TEF stock trading at under one times forward sales, it seems worth the bet.
On the date of publication, Muslim Farooque 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.