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 – no easy task in today’s coronavirus-dominated market. A strong chart, after all, is one of the best indicators of future gains. For that, I screened for U.S. stocks with share prices under $10, that are up so far in 2020 and up double digits in the last year. As you might expect in this historically volatile year, there aren’t many that meet that criteria.
Here are the three U.S. companies that made the list:
Best Stocks Under $10: Fitbit (FIT)
One thing the COVID-19 global pandemic has not prevented people from doing is exercising. In fact, many people are probably exercising more than they ever have before, if only for the needed break from self-isolation and stay-at-home orders. To track their progress, many of them are likely buying Fitbits, the watch-like devices that fit around your wrist and track your daily/weekly/monthly steps, heart rate, calories burned, etc. We won’t know how many people bought Fitbits in the past couple months until first-quarter earnings are released in a couple weeks. But the perception on Wall Street is that coronavirus has been good for business at this smartwatch maker. As a result, FIT stock shares are up 3.2% this year, versus a 12% drop in the S&P 500. And shares have been in an upward trend for nearly a month, with the share price approaching 7.
And if you go back even further, Fitbit stock looks even better; it’s up more than 18% after a huge, earnings-fueled gap up last October. Analysts aren’t expecting big things from the company in 2020 (negative sales and earnings growth), but those estimates came mostly before coronavirus, setting up a good chance at more earnings surprises ahead.
Best Stocks Under $10: Plug Power (PLUG)
What is Plug Power? I had to look it up myself. It’s a New York-based electric equipment manufacturer that makes hydrogen fuel cell systems that replace conventional batteries used in equipment and vehicles powered by electricity. It’s a small-cap stock, with a mere $1.3 billion market cap; and it’s cash poor – the company has never turned a full-year profit in 23 years of existence, nor has it generated any operating free cash flow. However, losses have narrowed, and sales are expected to grow 24% this year and another 31% next year. And you can’t argue with this one-year chart…
PLUG shares are up 65% in the last year, and 35% already this year despite getting hit as hard as most stocks in during the February and March market crash. Now it’s trending in the right direction again, though the share price is still just 4. I wouldn’t go adding PLUG stock to your long-term portfolio. But it could be a nice short-term play based on recent momentum.
Best Stocks Under $10: Zynga (ZNGA)
Yep, Zynga. This maker of social media video games was a complete disaster in its first year as a public company, in 2011-12. After rising to 14 in the first two months following its IPO, ZNGA completely cratered, dipping all the way to 2 by the end of 2012. It was below 2 as recently as 2016; now it’s up to 7 for the first time since its first year of trading, and is up 18% in 2020 alone.
Meanwhile, the company expects to grow sales by 12.6% and earnings per share by 3.8% this year. That’s a very good trend!
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.Sign up now!
*This post has been updated from an original version, published in 2017.