There Aren’t Many Stocks Under $10 Worth Buying Right Now. These are Three Exceptions.

Before I get into the best stocks under $10 to buy right now, let me start with this disclaimer: share price doesn’t really matter.

As Warren Buffett is fond of saying, “Price is what you pay, value is what you get.” That’s true. Still, for someone starting a portfolio with just a couple thousand dollars, investing in 50 shares of a $10 stock seems way more appealing than investing in one share of a $1,000 stock.

If you want to diversify, you don’t want to devote half your portfolio to one share of Amazon (AMZN) or Google (GOOG). You can create a portfolio of 10 stocks even if you only have $2,000 or $3,000 to invest.

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To do it, however, you need to find low-priced stocks.

From there, it depends on what you’re looking for in your investments: long-term gains or a quick return in a prime turnaround stock candidate.

If you want to find the best stocks under $10 that you can buy and hold for a while, you should start with stocks that have already been trending upward for some time. A strong chart, after all, is one of the best indicators of future gains. For that, I screened for stocks with share prices under $10, that are up double digits this year. There weren’t many that met that criteria.

Here are the three companies with the highest valuations that made the list:

Best Stocks Under $10: Energy Transfer LP (ET)

This one might not be trading for less than $10 for much longer. After rising 42% already this year, it’s up to 8.78 per share as of this writing. Riding the coattails of the energy stock rally in the first half of the year, Energy Transfer is a master limited partnership (MLP) based in Dallas that transports natural gas and propane pipelines. Revenues are expected to improve 63% this year, while earnings per share – in the red a year ago – are supposed to reach $2.01, according to analyst estimates. Because of that massive growth, the stock trades at a measly 6 times forward earnings estimates.

As for the stock, it peaked exactly three months ago, in late June, above 11 (so it wouldn’t have made this list then!), but has since retreated to the lows 9s and high 8s. Monday’s dip, along with what could perhaps be the start of a deeper market correction, tested that support, so this is worth keeping an eye on. If it can hold support and start to get going again, ET is worth a nibble on the next uptick.

Best Stocks Under $10: Barclays (BCS)

Shares of this large multinational London-based bank have been trending well of late, a reflection of a global economy that has been putting back the pieces in a post-vaccination world. You could see the bounce-back in Barclays’ latest earnings report: second-quarter sales were up 14%, just the second quarter since 2018 that the company managed to grow its top line by double digits. Meanwhile, earnings per share grow a jaw-dropping 787%, though that is inflated by its comparison to the nightmarish Q2 of 2020.

Since reporting those encouraging numbers in late July, the stock has taken off; BCS shares are up 9.5% in the last two months, even after a big drop on Monday. I’d wait for the bleeding to stop before buying, but the long-term trajectory for this company looks bright as the bank recovers in lockstep with the global economy.

Best Stocks Under $10: Prospect Capital Corp. (PSEC)

Prospect Capital sounds a bit generic in a George Costanza “Human Fund” kind of way; it’s a business development company (BDC) that makes debt and equity investments in U.S. middle market businesses across a range of industries. Not the most exciting-sounding company, but it’s performing quite well: PSEC stock is up 41% year to date, boasts a whopping 9.2% dividend yield, and trades at a mere 3.2 times earnings. Oh, and the share price is just 7.68 as of this writing. You may not have heard of this small-cap stock, but there’s a lot to like here, despite the recent pullback.

What are the best stocks under $10 that you’re buying now? 

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Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.

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*This post has been updated from an original version, published in 2017.