As we get closer to the post-pandemic reality, it is ideal for investors to restock their portfolios. With markets hitting all-time highs, it’s tough to find cheap stocks with significant upsides. Additionally, the reopening of the economy in various parts of the world will only add fuel to the fire.
Companies with low stock prices are usually considered to be risky bets. Therefore, investors sometimes consider the cheapest stocks to be more like a lottery. These include companies of different sizes and in various stages of their lifecycles.
However, stocks that are within the $5 to $10 range tend to be less risky than penny stocks. Investors are likely to have heard a lot more about them as well. It does not take away the fact, though, that they are considerably more speculative than higher-priced stocks.
Moreover, cheap stocks are typically those with a low price-to-earnings ratio in comparison to the market. Others might look for small-cap stocks with a significant upside. However, that’s not a given — mid-cap, and large-cap stocks could also be trading cheaply. The list below includes a wide variety of cheap stocks valued below $10:
- ASE Technology (NYSE:ASX)
- Gold Fields (NYSE:GFI)
- Sirius XM (NASDAQ:SIRI)
- Nokia (NYSE:NOK)
- Casper Sleep (NYSE:CSPR)
- Plains All American Pipeline (NYSE:PAA)
- ADT (NYSE:ADT)
Cheap Stocks Under $10: ASE Technology (ASX)
ASE technology is a Taiwanese company that provides semiconductor testing and packaging services to its customers. Covid-19-induced tailwinds have created a mismatch of demand and supply in the chip manufacturing industry. Additionally, the 5G mania, the adoption of Wi-Fi 6 standards, and other growth drivers will continue to push ASX stock higher.
ASE has been a direct beneficiary of the current environment, posting year-over-year revenue growth of 28% in the fourth quarter. This comes on the back of a 11% revenue growth in the previous quarter. Additionally, earnings per share have risen handsomely throughout the year, comfortably beating analyst estimates. Margins have improved due to rising demand in its SiP (system-in-package) division. The tailwinds mentioned above will continue to bolster demand for ASE’s products for the foreseeable future.
Gold Fields (GFI)
Gold Fields is a South African gold producer with nine operational mines in Chile, South Africa, Ghana, Australia, and Peru. Its mines have an annual gold-equivalent production of roughly 2.2 million ounces. Despite Covid-19 related headwinds, the gold producer has done incredibly well in growing organically and controlling its costs. GFI stock is up almost 65% in the past 12 months.
The company recently announced its full-year and fourth-quarter results. Annual production reached 2.24 million ounces, up 2% on a year-over-year basis. Revenues grew 27% year-over-year, and operating margins were up an impressive 38% due to the higher average realized gold prices. Lower production from its Cerro Corona in Peru was more than offset by the strong performance by its Gruyere Mine in Australia.
Additionally, higher metal prices and higher production in 2021 will continue to expand margins. Moreover, GFI stock has a fantastic dividend yield of 3.4%.
Sirius XM (SIRI)
Leading satellite radio services provider Sirius XM has had a rough 2020 due to the Covid-19 induced slowdown. However, in the past couple of quarters, SIRI stock appears to be pulling things back with strong revenue growth. In its fourth quarter, revenues improved more than 6% on a year-over-year basis. The company has multiple years of growth ahead with its exclusive partnerships, relationships with auto manufacturers and service reliability.
Sirius has a unique product that provides a comprehensive audio service covering sports, news, podcasts, and music. It has exclusive partnerships with the entertainment world’s bigwigs, such as comedian Kevin Hart and rapper Drake. Its acquisition of Stitcher last year gives it more exposure to the podcasting world. Additionally, the recovery in auto-sales strengthens its long-term outlook. It will have to improve its product quality and expand its partnerships consistently throughout the year to reach higher value.
Finnish telecom giant Nokia had a tough 2020 with the pandemic affecting its 5G rollout plans. Additionally, it has lost ground to its peers in Ericsson (NYSE:ERIC) and Huawei in securing major contracts in the past year. However, in the past few months, it appears that it’s back in the game with several new contract wins and investments in its 5G competencies.
The company signed a 5G contract with T-Mobile US (NASDAQ:TMUS) along with Ericsson. Additionally, it has signed several agreements with telecommunications providers in Austria, Italy, Sweden, and other European countries. It ended its most recent quarter with over 190 commercial 5G contracts. Things are likely to be challenging for NOK stock this year, but it will reward the patient investor.
Casper Sleep (CSPR)
Specialty mattress maker Casper Sleep has had an understandably difficult 2020 due to supply chain issues and low consumer demand. However, things are starting to pick up again with a return to double-digit growth in the fourth quarter. Despite the circumstances, CSPR stock’s 12-month return is at a healthy 85%.
Casper provides several reasons to be bullish about it this year and beyond. The company’s total addressable market for sleep products is estimated to be above $400 billion. Additionally, its premium pricing and branding have generated roughly 50% gross margins in 2020. It expects to hit adjusted EBITDA profitability this year, boosted by higher sales with its retail partners. On top of that, its digital sales continue to rise, marked by a massive increase in its website traffic.
Plains All American Pipeline (PAA)
Plains All American Pipeline is one of the largest midstream operators in the US and Canada. It provides logistics and transportation for crude oil, natural gas and natural gas liquids (NGLs). Due to the turmoil in the oil market throughout 2020, PAA’s stock price at one point dropped 50%. However, with higher oil prices and improved activity in the Permian basin, I expect a turnaround for PAA stock.
Despite the weaknesses this year, the company has done well to maintain its strong financial positioning. The value of its assets comfortably exceeds its liabilities. Though its debt remains high, it will be looking to pay about a substantial portion of it through asset sales this year. Moreover, with improved completion activity in the Permian basin, unit prices should rise by at least 50% over the next few years. Another major positive for the stock is its incredible dividend yield of 7.47%, with a healthy payout ratio of over 50%.
Florida-based ADT provides security, automation, and smart home solutions for its customers. Despite the challenges presented by the pandemic, the company has done well to maintain its profitability and generate healthy cash flows. With Americans increasingly feeling unsafe anywhere but home and strategic partnerships with tech giants such as Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google, ADT stock has plenty of upside left.
The company’s willingness to innovate is what sets it apart from the competition. Apart from its Google partnership, it’s working with InvisaWear in providing monitoring technology for their wearable devices. Its also working with Lyft (NASDAQ:LYFT) in developing an emergency feature that discreetly connects ADT. Moreover, the company has also invested in Percepta Labs, enabling companies to detect shoplifting incidents. Therefore, ADT will provide handsome gains for its customers with so much on its plate in the coming year.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.