The List of Best Stocks Under $10 Worth Buying Isn’t Long. But These 3 Look Like Rare 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 31% in the last year, it’s up to 9.51 per share as of this writing. Riding the coattails of the recent energy stock rally, Energy Transfer is a master limited partnership (MLP) based in Dallas that transports natural gas and propane pipelines. 2021 full-year revenues are expected to improve 68%, while earnings per share are on track for $1.96 – a decisive bounce-back from a 24-cent per-share loss in 2020. Both top- and bottom-line growth is expected to slow, or possibly stagnate, in 2022. But the stock trades for a measly 5 times forward earnings estimates, so the risk is pretty low.

Speaking of the stock, it peaked last summer, in late June, above 11 (so it wouldn’t have made this list then!), retreated to the lows 8s in early December, with a steep drop when the Omicron variant news emerged. Now it’s back with a vengeance along with most other energy titles, trading above its moving averages and looking poised for more gains.

Best Stocks Under $10: DigitalBridge Group (DRBG)

DigitalBridge Group is a mid-cap real estate investment trust (REIT) based in Boca Raton, Florida that has more than $40 billion assets under management. The real estate it invests in is quite niche: it owns cell towers, data centers, fiber, small cells and edge infrastructure. Those are all areas of high growth these days, which is the company more than doubled (115%) its revenues in the latest quarter, and is expected to grow close to double digits (9%) in 2022. Profits remain elusive, but losses are narrowing rapidly: after a $5.81 per-share loss in 2020 due the early stages of the pandemic, analysts anticipate just an 87-cent per-share loss in 2021 and a mere 15-cent per-share loss in 2022.

As losses have narrowed and sales have improved, DRBG shares have skyrocketed. The stock is up 61% in the last year, but has been trading in a range between 7.55 and 8.34 for the past two months. Having just bounced off the low end of that range, DRBG may well pick up steam once the market gets back in gear. You could buy here or wait for it to push meaningfully back above its 50-day moving average before dipping a toe.

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 57% in the last year, boasts a whopping 8.2% dividend yield, and trades at a mere 3.3 times earnings. Oh, and the share price is just 8.78 as of this writing, with some nice momentum in the last month. You may not have heard of this small-cap stock, but there’s a lot to like here.

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.