Wall Street looks ready to push the S&P 500 to new all-time highs in the coming days and weeks as long as earnings results and guidance comply. Therefore, investors likely want to remain exposed to the market and buy stocks in 2024.
Today, we dive into an area of the stock market that appeals to many investors seeking diversification: cheap stocks that trade for $10 a share or less. Along with the cheap price tags, the stocks boast strong Zacks Ranks, driven by improving earnings outlooks.
Let’s take a look at the screen and a few of the over 50 highly-ranked cheap stocks to consider buying in January.
Penny Stocks
One dollar or less used to be the common threshold for what we call “penny stocks.” Today, the SEC has expanded penny stocks to securities that trade for less than $5 a share. Many investors avoid these stocks because they are speculative in nature.
Meanwhile, penny stocks often trade infrequently and hold wide bid/ask spreads. These stocks also carry many other traits that, in many cases, cause excessive volatility. With that said, some penny stocks perform incredibly well, which helps them remain attractive.
Stocks Under $10
Moving on, let’s briefly discuss the next class of cheap stocks. Stocks that trade in the $5 to $10 range are generally less risky than their penny stock counterparts. Investors might be more likely to have heard of these companies or seen the tickers. They are, however, still inherently more speculative than many other higher-priced stocks.
Investors can obviously find winning stocks for under $10 if they are extremely selective. So today, we narrowed the list of thousands of these more speculative stocks down to a more manageable group of $10 and under stocks that might help boost your portfolio.
Screen Parameters
• Price less than or equal to $10
• Volume greater than or equal to 1,000,000
• Zacks Rank less than or equal to 2
(No Holds, Sells or Strong Sells.)
• Average Broker Rating less than or equal to 3.5
(Average Broker Rating of a Hold or Better.)
• # of Analysts in Rating greater than or equal to 2
(Minimum of at least two analysts covering the stock.)
• % Change F1 Earnings Estimate Revisions -- 12 Weeks greater than or equal to 0
(Preferably upward earnings estimate revisions, but definitely no downward revisions.)
Here are two stocks out of the roughly 55 highly-ranked names trading under $10 a share that made it through the screen today…
Fusion Pharmaceuticals Inc. ((FUSN - Free Report) )
Fusion Pharmaceuticals is a clinical-stage oncology firm committed to creating the next generation of radiopharmaceuticals as precision medicines for cancer treatment. The firm joins together its Targeted Alpha Therapies platform with its proprietary Fast-Clear linker technology to “connect alpha particle emitting isotopes to antibodies and other targeting molecules to selectively deliver the therapies to tumors.”
Fusion Pharmaceuticals is part of a cutting-edge area of oncology and it believes that radiopharmaceuticals will eventually greatly improve the “lives of patients with cancer.” FUSN reported a much smaller than projected loss last quarter and it boosted its bottom line outlook to help it land a Zacks Rank #2 (Buy). FUSN is expected to trim its losses in FY23 and FY24 on the back of 53% and 400%, respective revenue growth to climb from $1.46 million to $11.20 million.
Image Source: Zacks Investment Research
Wall Street is very optimistic about the long-term upside for Fusion Pharmaceuticals in the world of oncology and pharmaceuticals, with 12 of the 13 brokerage recommendations Zacks has at “Strong Buys,” next to one “Buy.” FUSN stock has climbed by 151% in the last 12 months, including a 120% gain in the trailing three months. Yet, Fusion Pharmaceuticals currently trades 50% below its average Zacks price target.
Rolls-Royce ((RYCEY - Free Report) )
Rolls-Royce is a historic engine manufacturer that makes complex power and propulsion solutions for aircrafts, ships, and more. Rolls-Royce is expanding its all-electric and hybrid-electric segments. The company is also utilizing its expertise in nuclear propulsion systems for submarines to push forward new-age nuclear energy efforts via its own small modular nuclear reactor technology.
Rolls-Royce aims to quadruple its profit in the next five years and complete other key initiatives aimed at turning around the firm after its stock tumbled from 2013 until late 2022. Rolls-Royce CEO Tufan Erginbilgic is leading the charge after the former oil industry executive took over in January 2023.
Image Source: Zacks Investment Research
Rolls-Royce is projected to grow its revenue by 19% this year and another 8% next year. Better yet, its adjusted earnings are projected to skyrocket by 700% from $0.02 a share to $0.16 per share and climb another 25% next year. Rolls-Royce’s upward earnings revisions help it land a Zacks Rank #2 (Buy) right now.
RYCEY stock has soared 180% in the last year and 45% in the past three months. Yet is still trades 38% below its average Zacks price target. Rolls-Royce trades at a discount to its two-year median and nearly in line with its industry at 23.8X forward 12-month earnings.
Note: RYCEY trades OTC in the U.S., meaning the U.K.-based firm (listed on the London Stock Exchange under RR) is traded via a broker-dealer network stateside and not on a major U.S. exchange. RYCEY is traded rather heavily in the U.S., with an average volume of 3.3 million.
Get the rest of the stocks on this list and start screening for the best stocks under $10 for yourself. And don't forget to backtest your strategy so you'll know how successful it's been before you put any of your money at risk.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at:https://www.zacks.com/performance_disclosure
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Now, let's dive into the concepts mentioned in the article you provided.
Cheap Stocks
The article discusses the concept of cheap stocks, specifically those that trade for $10 a share or less. These stocks are often sought after by investors looking for diversification. While they may have a low price tag, the article highlights that some of these stocks have strong Zacks Ranks, indicating improving earnings outlooks.
Penny Stocks
The article mentions that penny stocks used to be defined as stocks trading for one dollar or less. However, the Securities and Exchange Commission (SEC) has expanded the definition to include stocks trading for less than $5 a share. Penny stocks are often considered speculative and can be volatile. While some penny stocks perform well, they may not be suitable for all investors.
Stocks Under $10
The article also discusses stocks that trade in the $5 to $10 range. These stocks are generally considered less risky than penny stocks but are still more speculative than higher-priced stocks. The article suggests that investors can find winning stocks in this price range if they are selective.
Screen Parameters
The article provides a set of screen parameters for identifying potential stocks to consider. These parameters include:
- Price less than or equal to $10
- Volume greater than or equal to 1,000,000
- Zacks Rank less than or equal to 2 (Buy)
- Average Broker Rating less than or equal to 3.5 (Hold or better)
- Number of Analysts in Rating greater than or equal to 2
- % Change F1 Earnings Estimate Revisions -- 12 Weeks greater than or equal to 0 (preferably upward revisions)
These parameters are used to filter the list of stocks and identify those that meet the specified criteria.
Fusion Pharmaceuticals Inc. (FUSN)
Fusion Pharmaceuticals is a clinical-stage oncology firm focused on creating radiopharmaceuticals as precision medicines for cancer treatment. The company combines its Targeted Alpha Therapies platform with its proprietary Fast-Clear linker technology to selectively deliver therapies to tumors. Fusion Pharmaceuticals reported a smaller than projected loss last quarter and has a Zacks Rank #2 (Buy). The company is expected to reduce its losses in FY23 and FY24, with significant revenue growth projected.
Rolls-Royce (RYCEY)
Rolls-Royce is a historic engine manufacturer that produces power and propulsion solutions for aircraft, ships, and more. The company is expanding its all-electric and hybrid-electric segments and utilizing its expertise in nuclear propulsion systems for submarines to advance nuclear energy efforts. Rolls-Royce aims to quadruple its profit in the next five years and has a Zacks Rank #2 (Buy). The company is projected to experience revenue growth and significant increases in adjusted earnings.
Please note that the information provided above is based on the article you shared, and I have cited the relevant snippets from the search results . It's always a good idea to conduct further research and consult with a financial advisor before making any investment decisions.
