For investors looking for value, there’s plenty more value today than there was at the beginning of the year. We’re in a bear market, in most major indices. Accordingly, finding what many consider to be cheap stocks under $10 isn’t as hard as it once was.
Many may hope fore a pandemic-style rebound from this latest decline. And while it’s looking more and more like we’re headed into a prolonged recession, there’s more value out there than there has been in some time.
Picking top undervalued stocks in this market still isn’t easy, though. Surging inflation and rising rates means valuation expansion may not materialize for some time. And when investors can’t see the bottom – that’s when investing gets scary.
That said, the whole “buy low, sell high” thing requires buying stocks when no one else wants to. Here are seven stocks I think are worth considering under $10.
|ERIC||Telefonaktiebolaget LM Ericsson||$7.33|
|NYCB||New York Community Bancorp, Inc.||$9.42|
|OTLY||Oatly Group AB||$3.78|
|PBI||Pitney Bowes Inc.||$4.11|
|ARLO||Arlo Technologies, Inc.||$7.13|
|CNTY||Century Casinos, Inc.||$8.10|
Cheap Stocks: Ericsson (ERIC)
Ericsson (NASDAQ:ERIC), or Telefonaktiebolaget LM Ericsson, is a Stockholm-based organization that supplies the telecommunications industry with network infrastructure and services. The company sells software, hardware and services primarily to communications service providers. The three major operating segments of this organization include digital services, managed services and networks.
Analyst Jun Zhang Tan believes that Ericsson’s Networks business is witnessing sales growth momentum because of the global investment in the 5G network upgrades. The analyst states that the 5G investment cycle is in its early stages even now, and there will be more investment in comparison to previous upgrade cycles. I tend to agree.
Recently, Ericsson, along with two other companies, Thales and Qualcomm, announced a collaboration to develop and test 5G connectivity by the use of Low Earth Orbit (LEO) satellite constellations. As per Ericsson, this project can result in worldwide coverage for wideband data at the time of using a 5G smartphone.
New York Community Bancorp (NYCB)
New York Community Bancorp (NYSE:NYCB) is the largest thrift bank in the U.S., with a market capitalization around $4.4 billion at the time of writing. This bank specializes in non-luxury, multi-family and rent-regulated lending. New York Community Bancorp has 237 branches in New Jersey, New York, Florida, Arizona and Ohio and is the parent of New York Community Bank.
The company’s liability-sensitive balance sheet, an attractive valuation and growing profitability are some of the things which make NYCB stock a lucrative play. All these have indeed made analysts bullish on this stock as well.
Importantly, this bank has a pending buyout of Flagstar Bancorp. Various analysts point to the fact that this buyout has the potential to help NYCB recognize considerable cost savings, pursue share buybacks and produce additional earnings.
This Flagstaff deal is expected to close in mid-to-late 2022. Forecasts are for revenue growth to accelerate to the 30% to 40% range, due in part to this deal.
Oatly Group (OTLY)
Oatly Group (NASDAQ:OTLY) is the largest oat milk producer in the world. Anyone who picks up a latte with oat milk at their local coffee shop has probably consumed Oatly products. Accordingly, this company is more ubiquitous than many think.
As of late-June, this stock was trading under $5 per share. This incredibly low share price, relative to Oatly’s 52-week high of more than $20 per share, has astounded many investors and analysts. Much of the reason for this is the secular trends underpinning food alternatives.
Recently, this plant-based dairy company posted Q1 revenue, which surpassed expectations. Revenue of Oatly came in at $166.2 million – an impressive increase from $140.1 million in 2021.
This organization has forecasted a 50% hike in production by the end of this year. Oatly expects that for this year, revenue will range between $880 million to $920 million. Sundaram anticipates that revenue growth will accelerate to 40% this year and 55% in 2023.
Notably, Oatly looks forward to moving completely to sustainable ground transportation by 2029. Accordingly, the company has added five heavy-duty electric trucks to its fleet in the United States.
Cheap Stocks: Pitney Bowes (PBI)
Pitney Bowes (NYSE:PBI) is a global mailing and shipping organization which offers logistics, technology, and financial services to over 90% of Fortune 500 companies.
Analyst John Freeman believes that Pitney Bowes has considerable valuation upside even if its turnaround plan is just “moderately successful.”
The mailroom automation business of Pitney is challenged. But the company has made bold moves in terms of divesting underperforming businesses and streamlining the ones in decline. That has indeed helped Pitney to focus on investing in robotics and e-commerce cloud apps. And it’s worth noting that these investments are showing signs of success already. Freeman forecasts a three-year compound annual revenue growth of 7%.
Another factor driving investor interest in PBI stock of late is the company’s announced dividend of 5 cents per share. Based on this payment, the dividend yield will be 4.2%. That’s still more than the industry average, and attractive for most income-seeking investors.
Arlo Technologies (ARLO)
Arlo Technologies (NYSE:ARLO) offers a cloud-based platform across the Middle East, the Americas, Asia Pacific and Europe. This company’s business model involves security cameras and other monitoring devices. Interestingly, Arlo announced at the beginning of this year that the company had 877,000 paying accounts, 5.82 million registered accounts and supplied 21.6 million devices. That’s some impressive market share.
Various analysts view Arlo as a lucrative pick at a sub-$10 per share valuation. That’s mainly due to Arlo’s business model, which has shifted more toward higher-margin services.
In Q1, Arlo reported annual recurring revenue of $101 million and 1.27 million paid accounts, which is a 132% hike from a year ago. Rising average revenue per user is another key factor investors and analysts alike approve of. Accordingly, with expected revenue growth of more than 15% this year, there’s a lot to like about Arlo’s trajectory right now.
Telefonica SA (TEF)
Telefónica SA (NYSE:TEF) is a Madrid-based company which happens to be Spain’s leading telecommunications company. Telefonica offers fixed and mobile communication services in Latin America and Europe. In recent years, this company has invested heavily in transforming and deploying its network to provide remarkable connectivity in terms of coverage, security, capacity and speed.
This company has made several structural adjustments which have helped streamline its business and lower its debt load. This has made the company exceedingly attractive as a growth player in an otherwise slow-growth sector.
The organization recently divested the company’s Central America business, choosing to acquire GVT in Brazil and E-Plus in Germany. Also, Telefónica has combined its U.K.-based assets with that of Liberty Global PLC in a deal to form a joint venture which included a payment of $3 billion for Telefónica.
Recently, the company posted its first-quarter revenue, which topped expectations. Given the company’s dividend yield of more than 6%, there’s a lot to like about the potential upside with this sub-$5 stock.
Cheap Stocks: Century Casinos (CNTY)
Last, but not least, we have Century Casinos (NASDAQ:CNTY).
Century Casinos Inc. is a North America-based casino entertainment company. It focuses on developing, operating and investing in regional mid-size casinos in North America.
Notably, the company has two catalysts that make it an attractive sub-$10 stock to consider.
First, the company has been growing. Century’s latest casino acquisition indeed provides note-worthy upside. Earlier in 2022, Century Casinos completed a deal for the Nugget Casino. One specialty of Century Casinos is that it buys existing gaming properties at a low valuation and then improves their profitability. And the company’s management team appears to have a solid plan to do that with the Nugget Casino as well.
Secondly, many believe Century is undervalued, relative to the average market multiple this stock typically trades at. Should valuation multiples expand over time, there’s plenty of upside potential with CNTY at these levels.
On the date of publication, Chris MacDonald 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.