Today, we’ll be looking at the best stocks under $15 to buy for the new year. The $15 threshold is interesting. It’s not necessarily penny-stock territory, as that typically denotes a share price of $5 or less. You won’t find many household or blue-chip names trading below this level either (though there are a few).
What this threshold provides is the chance to purchase shares of undervalued and underappreciated companies that have the potential to deliver outsized investing returns over the medium to long term. However, due to the more speculative nature of stocks with relatively low share prices, you must be able to separate the wheat from the chaff, especially in the face of mounting economic headwinds.
Thus, I based my assessment of the best stocks under $15 to buy on financial strength/stability, risk profile and valuation.
Best Stocks Under $15 to Buy: FutureFuel (FF)
Headquartered in Clayton, Missouri, FutureFuel (NYSE:FF) is a developer and producer of chemicals and biofuels with a market cap of $368 million. The stock has significantly outperformed the broader market over the past year, rising 6%.
After struggling in the first half of 2022, the company delivered strong third-quarter results with a 20% year-over-year increase in revenue and a 71% jump in net income. According to GuruFocus, the company has 10 consecutive years of profitability under its belt.
Fundamentally, what really stands out, though, is the company’s war chest. With $210 million in cash and just $400,000 in debt, FutureFuel’s cash-to-debt ratio stands at 525, beating out over 91% of its peers. In addition, its equity-to-asset ratio of 0.82 ranks above 86% of the industry. As well, its Altman Z-Score pings at 5.7, reflecting very low bankruptcy risk.
In another bullish sign for the stock, hedge funds have collectively been increasing their position in FF since the fourth quarter of 2021. If shares can retake their 52-week high, made in May, investors stand to gain more than 25%.
Sandstorm Gold (SAND)
Based in Vancouver, British Columbia, Sandstorm Gold (NYSE:SAND) is a gold royalty company with a market cap of $41.7 billion. According to the company, a gold royalty “is a contract that gives the owner (a gold royalty company) the right to a percentage of gold production or revenue in exchange for an upfront payment.” The upfront payments are used to fund mining operations.
2022 was a tough year for investors in gold-related equities, with gold prices peaking in mid-April and falling through late October. During this time frame, SAND lost around 45% of its value. But since bottoming on Oct. 13, shares have rebounded 26%. While some believe higher interest rates have a negative impact on gold prices, it’s possible that the recent rally in SAND and other gold-related names represents a response to growing macroeconomic uncertainty and a flight to safety. This could continue as market volatility persists in 2023.
Profitability metrics are where Sandstorm Gold shines. Its net margin stands at over 63%, beating out more than 95% of the competition. Meanwhile, its gross margin of 49.8% and its operating margin of 33.8% are better than 82% and 88% of the industry, respectively.
Finally, analysts rate SAND a “strong buy” with a consensus price target of $8.39. That implies upside of more than 47% from the current level.
Best Stocks Under $15 to Buy: Sirius XM (SIRI)
Broadcasting firm Sirius XM (NASDAQ:SIRI) is one of the more well-known names on this list of the best stocks under $15 to buy. It is the leading provider of satellite radio and online radio services in the United States. The stock is volatile, with several large swings in 2022. On the whole, though, shares were down a little more than 3% for the year.
The company could benefit from more remote workers returning to the office this year, especially as the economy and labor market weaken. That’s because a rise in the number of commuters should boost demand for the company’s services.
Admittedly, the company could use some shoring up in terms of stability on its balance sheet. However, it ranks highly in terms of key income statement metrics. For example, Sirius’ three-year revenue growth rate stands at 18.4%, rating better than nearly 86% of companies listed in the diversified media industry. On the bottom line, SIRI features a net margin of 13%. This compares very favorably to the industry median of 2.3. As well, the company’s return on asset pings at 11.5%, well above the industry median of 1.6%.
Finally, GuruFocus ranks SIRI as “modestly undervalued.” For under six bucks a share, you might not get a better deal.
Tencent Music Entertainment (TME)
Tencent Music Entertainment (NYSE:TME) develops music streaming services for the Chinese market. At the time of writing, it has a market cap of $13.5 billion. Shares gained an impressive 21% last year and are off to a strong start in 2023 as well, gaining more than 7%. Since hitting a low of $3.14 on Oct. 24, TME has skyrocketed 183%.
The recent run-up was kickstarted by better-than-expected third-quarter results that reflected pockets of resilience within the Chinese consumer base. Despite revenue declining on a year-over-year basis, Tencent saw the number of paying users increase, as well as a rebound in advertising sales.
The company enjoys stability in the balance sheet. For instance, its equity-to-asset ratio of 0.7 is better than nearly 62% of the competition. Additionally, hedge funds have collectively been increasing their position in TME over the past two quarters.
Best Stocks Under $15 to Buy: Marine Products (MPX)
Based out of Atlanta, Marine Products (NYSE:MPX) designs and manufactures premium-branded boats, including those geared for watersports and fishing. Presently, it has a market cap of almost $397 million. Shares lost less than 2% of their value in 2022 thanks to a resurgence in the final months of the year. Since hitting a 52-week low of $7.75 on Oct. 3, MPX is up nearly 50%.
Marine Products may seem like an odd choice in the current economic environment with rising inflation and waning consumer sentiment causing people to rein in discretionary purchases. Yet, by the nature of its products, the company caters to a wealthier clientele, and spending among the wealthy tends to be more resilient than among people with lower income levels.
Marine Products boasts a strong balance sheet including zero debt. Admittedly, a no-debt profile isn’t always a positive attribute during bullish cycles. But in the face of economic headwinds, having limited liabilities offers incredible flexibility.
On the income statement, the company benefits from excellent profit margins. For example, its net margin stands at 10.6%, beating out 86% of the competition. As well, its return on equity of 35.6% reflects a high-quality business.
MPX trades at just 10.6 times trailing earnings. This compares favorably to the sector median of 15.6.
United Microelectronics (UMC)
Taiwan-based United Microelectronics (NYSE:UMC) is a leading global semiconductor foundry company with a market capitalization of $16.5 billion. UMC was decimated along with other semiconductor stocks in 2022, falling 40%. But since bottoming out in October, shares are up 23% as investor sentiment in the sector has brightened.
The company reported better-than-expected results for its fiscal third quarter. While some raised concerns about management’s outlook and demand forecast, this problem is not unique to United Microelectronics. The entire sector is feeling the impact of a cyclical downturn in demand. The resumption of demand growth is a question of when, not if, given the importance of semiconductors in nearly every aspect of modern life.
UMC trades for 8 times forward earnings, representing a significant discount relative to the industry’s median of 16.9. Moreover, United features excellent profitability margins, with a net margin of 29.5% beating out 92% of the competition.
Analysts rate the stock a “moderate buy,” yet their consensus price target of $9.90 is 50% above the current share price. That sounds like a strong buy to me.
Best Stocks Under $15 to Buy: Epsilon Energy (EPSN)
Headquartered in Houston, Epsilon Energy (NASDAQ:EPSN) is an independent oil and natural gas firm specializing in onshore projects with a market capitalization of $144.2 million. As you might guess, shares performed well in 2022 with the rest of the energy sector, gaining more than 21%. While shares are down 5.6% so far in the new year, this may present a good opportunity to buy on a pullback.
Fundamentally, what stands out the most about Epsilon is its overall excellent fiscal profile. According to GuruFocus, the company has nine good signs with no warning signs. Having used this investment resource for years, I can tell you that’s a rarity. Among Epsilon’s positive attributes are its fiscal strength, low bankruptcy risk and undervalued shares.
Its return on equity stands at 40.5%, meaning it enjoys superior conversion of equity financing into profits. Other notable attributes include a zero-debt balance sheet, strong revenue growth and outstanding profit margins. For all this, the market prices EPSN at just 4.4 times trailing earnings, below the sector median of 7.9.
On the date of publication, Josh Enomoto 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.
