[Editor’s Note: 10 Cheap Stocks to Buy Under $10 is regularly updated to include the most relevant information available.]
For new investors, looking at companies like Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and even fast-casual restaurant Chipotle (NYSE:CMG) can be disconcerting. That’s because these well-respected names come with massive price tags. Although these stocks have long histories of solid returns and great growth potential still ahead, they may not be realistic first investments for someone just starting out. However, these cheap stocks to buy for less than $10 offer both learning opportunities and huge upside potential.
What’s more, there’s also something exciting about investing in cheap stocks. It seems like everyone wants to find the few names that will truly soar, in turn bringing in unbelievable returns in one month or one year. But many of these names are highly volatile, and for good reason. In fact, some even deserve to fall further. These cheap stocks are often cannabis or biotech plays, banking on hot market concepts or a drug still waiting for U.S. Food and Drug Administration approval. While many of these will fall, some will soar.
But remember, when evaluating cheap stocks to buy, it is important to look at more than just the price. For instance, what is the company? What is its potential to grow and profit in the coming years? How does Wall Street feel?
Chitru Fernando, professor of finance at the University of Oklahoma’s Michael F. Price School of Business, told InvestorPlace that there are some obvious risks when investing in cheap stocks.
“No company likes its stock price falling below a dollar,” Fernando said in an email. “And stocks with prices below $5 are stigmatized as ‘penny stocks.’ A very low stock price is almost always a symptom of an underperforming firm.”
But beyond the risks there is potential for big reward. In no particular order, here are 10 cheap stocks to buy right now:
- Summit Hotel Properties (NYSE:INN)
- Constellium (NYSE:CSTM)
- Vonage (NYSE:VG)
- Plug Power (NASDAQ:PLUG)
- Ovid Therapeutics (NASDAQ:OVID)
- X4 Pharmaceuticals (NASDAQ:XFOR)
- Sequans Communications (NYSE:SQNS)
- B2Gold (NYSEMKT:BTG)
- Identiv (NASDAQ:INVE)
- Dasan Zhone Solutions (NASDAQ:DZSI)
These 10 stocks all have “strong buy” consensus ratings and price targets that imply greater than 20% upside from their current share prices. Best of all, they’re cheap stocks with rich paths ahead. So read on, as I go into more detail about each of these excellent and inexpensive picks below.
Cheap Stocks to Buy: Summit Hotel Properties (INN)
Projected 12-Month Upside: 31%
It’s no secret that the novel coronavirus has hit the travel industry hard, and Summit Hotel Properties is no exception. As a consequence, the hotel-focused real estate investment trust (REIT) faces a year-to-date loss of 51%.
Just like many others in the space, the pandemic has forced Summit Hotel Properties to furlough staff, cut executive pay and undertake a slew of other cost-cutting measures. But also like many others in the space, INN stock will rebound as travel demand returns to pre-pandemic levels.
Summit Hotels holds a variety of high-end hotels in top travel destinations like Boston, Miami and New Orleans. Plus, it doesn’t just hold any hotels. It partners with recognizable and well-loved brands like Marriott (NASDAQ:MAR) and Hilton (NYSE:HLT).
After lockdowns ease and travel becomes safer, consumers will face a difficult choice. Will trends toward Airbnb and other short-term rentals remain strong? Or will consumers opt for regularly cleaned, luxury hotels, for instance? Morgan Stanley’s Brian Pfeifler says he thinks the latter will win out.
In short, Summit Hotels faces its face share of near-term problems. But with a 12-month price target of $8 and a strong buy consensus rating, it’s clear good things are ahead.
Projected 12-Month Upside: 55%
One thing we all probably take for granted is aluminum. But boy, it really is everywhere. For Constellium, that truth is the heart of a business.
Paris-based Constellium makes aluminum products for all sorts of industries. It’s behind beer cans, cars, next-generation armored vehicles and airplane fuselage. Clearly the company has a diversified clientele.
There’s a lot to like about Constellium, but it’s having a rough 2020. CSTM stock is down almost 40% for the year, which is worse than the broader market. Shares were trending higher until February 2020, and then they crashed. Why?
Well, Constellium has had to reduce or suspend work at several of its plants. CEO Jean-Marc German says the company is well-positioned to survive the pandemic, but investors don’t react well to shuttered factories.
Plus, the industries it supports are struggling. Constellium’s clients include Boeing (NYSE:BA) and Ford (NYSE:F), two companies particularly hard hit by the pandemic. With that in mind, it makes sense CSTM stock is down so far.
Investors should view the current share price near $8.10 as a blessing. Aluminum isn’t going anywhere, and neither is Constellium. You don’t want to miss out.
Cheap Stocks to Buy: Vonage (VG)
Projected 12-Month Upside: 27%
Vonage is getting a makeover, and boy, does it need one.
After the company’s 2006 IPO, Vonage customers filed a class-action lawsuit after early investors lost money. By the end of the year, VG stock was down almost 60%.
And 2019 wasn’t much prettier, bringing a 20% share-price decline. But things might finally be looking up. Since the start of the new year, VG shares have gained almost 28% while other stocks have tanked. And after a long history of transformations and failures, Vonage shareholders are probably crossing their fingers that this makeover sticks.
From a residential telecommunications provider to a voice over internet protocol (VoIP) services provider, Vonage is a company that had already transformed once. Now, inspired by big names like Salesforce (NYSE:CRM) and Oracle (NYSE:ORCL), the company is switching to the software-as-a-service world.
On Oct. 30, Vonage announced several new products, a new logo and a fresh marketing campaign designed to make one thing very clear: The company plans on being a leader in this new software era.
These days, it looks like Wall Street agrees with CEO Alan Masarek’s plans to reinvent global communications. Plus, the notion of disrupting existing technology is now more than a buzz-worthy notion — it’s something investors are actively looking for in cheap stocks to buy.
If Vonage can manage to pull off this transition, it just might reach its $12.06 12-month price target, implying 30% upside.
Plug Power (PLUG)
Projected 12-Month Upside: 45%
Unlike some names on this list, Plug Power stock is actually up year-to-date, to the tune of 33%. But that’s not it for PLUG stock. It sits near $4.22 now, but analysts think it could shoot as high as $6.13 in the next year.
That’s still over 40% upside.
Plug Power produces and designs hydrogen fuel cell systems that replace conventional batteries. Essentially, whereas traditional batteries take several hours to recharge, PLUG systems recharge in just minutes. The company’s hydrogen fuel cells are used in forklifts — and attract customers like Nike (NYSE:NKE), Home Depot (NYSE:HD) and Walmart (NYSE:WMT).
In 2017, PLUG stock topped $3 — a key level of resistance — for the third time. In April of that year, Amazon purchased over 50 million shares of Plug Power, agreeing to use its fuel-cell technology in its warehouses. It was a good month for PLUG.
Since then, Plug Power has hit the $4 level and is climbing higher. Analysts, however, believe it can exceed $6. That would be rather exciting.
As InvestorPlace’s David Moadel uncovered, automobile manufacturers are jumping on the fuel-cell bandwagon. In a research study from the University of California, Berkeley’s Jonas Meckling and Johns Hopkins University’s Jonas Nahm, automakers are increasingly pursuing electric vehicles and fuel-cell technology.
As automakers increasingly become interested in this trend, Plug Power’s customer basis will continue to grow. And as that happens, PLUG stock should grow, too.
Cheap Stocks to Buy: Ovid Therapeutics (OVID)
Projected 12-Month Upside: 199%
It would be almost impossible to talk about promising cheap stocks to buy without mentioning at least one biotech name. That’s because these high-risk, high-reward companies perfectly underline both the pros and cons of this type of investing. Just as a biotech company could bring in 100%-plus returns, it could crash and burn with negative trial results.
But looking at cheap biotech stocks, Ovid Therapeutics looks to be a strong buy for a reason. Highlighting its “Bold Medicine” approach that focuses on transforming the lives of its patients, Ovid seems to take a more moralistic approach to biopharma. The company specializes in developing treatments for rare neurological disorders, and has a robust pipeline with four candidates.
The company continues to have positive updates on OV935, which is in co-development with Takeda Pharmaceutical (NYSE:TAK). According to Ovid’s management, in a current trial, the therapy has been found to reduce seizure frequency in the difficult-to-treat patient population.
While it’s true that none of the company’s drugs are on the market yet, clinical trial results are worthy of optimism. As long as these trials continue to go well, then Ovid Therapeutics should be safely on its way to reach its $20 price target.
That 12-month price target implies over 195% upside from its current share price near $6.70.
X4 Pharmaceuticals (XFOR)
Projected 12-Month Upside: 111%
Another great — and cheap — biotech stock to buy is X4 Pharmaceuticals. Plus, this company is increasingly relevant right now.
Covid-19 is drawing attention to immunocompromised individuals, and the work that biopharmaceutical companies are doing to help them. That’s where X4 Pharmaceuticals comes in.
Here are the basics. Primary immunodeficiency diseases (PID) are a group of disorders where part of the body’s immune system doesn’t work. The immune system is supposed to defend the body from different germs, so if part of the system doesn’t work, the body is more at risk. One specific PID is known as WHIM syndrome. It’s name is an acronym for the symptoms it causes, which are warts, hypogammaglobulinemia, infections and myelokathexis.
Unfortunately, there are no FDA-approved treatments for WHIM syndrome. But X4 Pharmaceuticals has mavorixafor, which is in Phase 3 clinical trials. According to the company, this drug could help protect individuals with WHIM syndrome and treat the symptoms of the disease.
So far, things look good for mavorixafor, and analysts are optimistic. In the last month, XFOR stock has received four buy ratings. One analyst even gave it a 12-month price target of $27. As a result, that’s almost 190% of upside from its current share price.
Cheap Stocks to Buy: Sequans Communications (SQNS)
Projected 12-Month Upside: 82%
Sequans Communications was one of the leading providers of 4G and 4G LTE chips for smartphones. After it went public in 2011, it received recognition from Verizon (NYSE:VZ) in 2013. And many considered it one of the top three suppliers of a specific type of LTE chip.
And just as Sequans led the 4G wave, it’s preparing to lead the 5G wave as global adoption of the next-generation technology takes hold. Analysts and consumers alike are bullish on the name. In the last month alone, three analysts have reiterated “buy” ratings.
According to the company’s website, its chips really are the best. Many of its 4G and 5G offerings are designed specifically for the internet of things (IOT). Plus, its different chips each serve different needs — targeting residential, enterprise and industrial uses.
Yes, the pandemic is calming the international hype around 5G. But the pandemic won’t last forever, and the world will move ahead with the new technology. Sequans Communications has offices all around the world, for instance, and it’s likely to benefit from 5G in a big way.
SQNS stock trades for around $5.05, and its 12-month price target implies over 80% upside. You don’t want to miss out.
Projected 12-Month Upside: 22%
With a $5.3 billion market capitalization, B2Gold (NYSEMKT:BTG) is not the largest in the gold-mining realm, but it’s picking up sparkle. In the last month, several analysts have hopped on board with “buy” recommendations for the Canadian company, citing its potential.
Now B2Gold holds mining properties in Nicaragua, the Philippines, Mali, Colombia, Burkina Faso and Namibia. BTG stock has almost doubled in the past five years, and returned almost 40% gains in 2019.
But analysts think it can grow another 20% or so in 2020, with a 12-month price target of $6.25.
That’s not surprising. Gold has been a hot topic in the last two months, thanks to its reputation as a safe haven investment. Combine a market-wide selloff with inflationary fears, and gold bugs are in heaven.
It’s clear gold is headed higher in 2020. So is BTG stock, to the tune of 27%. Coronavirus fears aren’t disappearing anytime soon, so 2020 should be extra rich for B2Gold investors.
Cheap Stocks to Buy: Identiv (INVE)
Projected 12-Month Upside: 62%
It’s no secret that Covid-19 is changing how millions of Americans think about their jobs. Businesses that had never previously considered remote work adopted it en masse. While this quick shift to telework is great for many, it also introduces a whole set of safety concerns.
And what about all of the essential, security-minded businesses that couldn’t send work home? How will those companies handle preventing — or mitigating — the spread of infection?
It turns out that Identiv has all the necessary solutions. Since early March, the company has reported a spike in demand for its smart card readers and tokens. These devices help employees securely log in, and are much more effective than a username and password combo. This type of security is necessary to facilitate working from home.
Additionally, the California-based company has the perfect suite of mobile security solutions. Its apps provide secure PDF signing, two-factor authentication and the ability to encrypt and decrypt emails. This app ecosystem allows you to work from the comfort of your couch without risking key information.
Lastly, Identiv doesn’t ignore those companies that can’t embrace the work-from-home life. Customers that use its Hirsch Velocity software, a way to manage access to certain facilities, now can use Identiv’s contact tracing solution. This way, if an employee or visitor ends up having Covid-19, the business can proactively identify other individuals they may have come in contact with.
With a 12-month price target of $6.75, you don’t want to miss out on INVE stock.
Dasan Zhone Solutions (DZSI)
Projected 12-Month Upside: 70%
The last of my cheap stocks to buy is a different sort of play on the work-from-home trend. Millions of consumers are spending more time than ever streaming entertainment and video conferencing with friends, family and coworkers. Just think about the tech companies that must be making that possible!
Dasan Zhone Solutions has been a standout provider of telecommunications equipment since 1999. After a dozen acquisitions and a rocky ride in 2020, it looks like DZSI stock is ready for a comeback. Shares are up 13% in the last month, and they’ve found some support on Wall Street.
B. Riley analyst Dave Kang has long been bullish on DZSI and, as such, he’s set his most recent price target at $10.50. In July 2019, he even argued that the company was set to take market share from China’s controversial Huawei. As 5G adoption picks up, that means Dasan Zhone Solutions could be a winner.
Plus, CEO Yung Kim thinks the company is particularly well-positioned to benefit from Covid-19. In its May 11 earnings call, he elaborated on how the pandemic is making Dasan Zhone’s solutions critical.
“That said, while Covid-19 has created several unexpected and near-term tactical challenges in our business, it is also shining a light on the need for enhanced broadband service capacity in general and the 5G and next-generation fiber access solutions, in particular.”
Analysts agree that DZSI stock will see 70% of upside. Expect the company to make a solid comeback, and then start to soar as attention returns to the world of 5G.
Sarah Smith is a Web Editor for InvestorPlace.com. As of this writing she did not hold any of the aforementioned securities.