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[Editor’s Note: 10 Cheap Stocks to Buy Under $10 is regularly updated to include the most relevant information available.]
For new investors, looking at companies like Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) can be disconcerting. That’s because these big names come with massive price tags, and they may not be realistic first investments for someone just starting out. However, these cheap stocks to buy for less than $10 offer both learning opportunities and huge upside potential.
What’s more, there’s also something exciting about investing in cheap stocks. It seems like everyone wants to find the few names that will truly soar, in turn bringing unbelievable returns in one month or one year. But many of these names are highly volatile, and for good reason. In fact, some even deserve to fall further. These cheap stocks are often cannabis or biotech plays, banking on hot market concepts or a drug still waiting for U.S. Food and Drug Administration approval.
But remember, when evaluating cheap stocks to buy, it is important to look at more than just the price. For instance, what is the company? What is its potential to grow and profit in the coming years? How does Wall Street feel?
Chitru Fernando, professor of finance at the University of Oklahoma’s Michael F. Price School of Business, told InvestorPlace that there are some obvious risks when investing in cheap stocks.
“No company likes its stock price falling below a dollar,” Fernando said in an email. “And stocks with prices below $5 are stigmatized as ‘penny stocks.’ A very low stock price is almost always a symptom of an underperforming firm.”
But beyond the risks there is potential for big reward. In no particular order, here are 10 cheap stocks to buy right now:
- Dynavax (NASDAQ:DVAX)
- Constellium (NYSE:CSTM)
- Vonage (NYSE:VG)
- Summit Hotel Properties (NYSE:INN)
- Ovid Therapeutics (NASDAQ:OVID)
- X4 Pharmaceuticals (NASDAQ:XFOR)
- Sequans Communications (NYSE:SQNS)
- B2Gold (NYSEMKT:BTG)
- Iteris (NASDAQ:ITI)
- LiveXLive (NASDAQ:LIVX)
These 10 stocks all have “strong buy” consensus ratings and price targets that imply greater than 15% upside from their current share prices. Best of all, they’re cheap stocks with rich paths ahead. So read on, as I go into more detail about each of these excellent and inexpensive picks below.
Cheap Stocks to Buy: Dynavax (DVAX)
Source: Shutterstock
Projected 12-Month Upside: 108%
The first company on my list of cheap stocks to buy has been on my radar for just about a month now, but I’m seriously excited about its potential. Dynavax is solidly in the race to find a novel coronavirus vaccine, and even InvestorPlace Markets Analyst Luke Lango thinks it’s a top contender.
In mid-May, I reported for InvestorPlace’s live blog how Dynavax was rallying on vaccine news. The company has partnerships with the University of Queensland, the Coalition for Epidemic Preparedness Innovations, Valneva, Sinovac Biotech and Clover Biopharmaceuticals.
So how does it work? Dynavax offers its adjuvant — also used in its hepatitis B vaccine. The partner companies pull in their own unique skills and technology, and Dynavax’s adjuvant should boost the effectiveness of the many vaccine candidates.
Why is DVAX stock so hot right now? Well, in a recent filing with the U.S. Securities and Exchange Commissions, Dynavax said it anticipates at least one of its partners will move into a Phase 1 vaccine trial by July.
DVAX stock is up 29% in 2020 and over 40% in the last month. Wall Street analysts have a 12-month price target of $15.33 on the shares, implying more than 100% upside.
Constellium (CSTM)
Source: Shutterstock
Projected 12-Month Upside: 57%
One thing we all probably take for granted is aluminum. But boy, it really is everywhere. For Constellium, that truth is the heart of a business.
Paris-based Constellium makes aluminum products for all sorts of industries. It’s behind beer cans, cars, next-generation armored vehicles and airplane fuselage. Clearly the company has a diversified clientele.
There’s a lot to like about Constellium, but it’s having a rough 2020. CSTM stock is down almost 40% for the year, which is worse than the broader market. Shares were trending higher until February 2020, and then they crashed. Why?
Well, Constellium has had to reduce or suspend work at several of its plants. CEO Jean-Marc German says the company is well-positioned to survive the pandemic, but investors don’t react well to shuttered factories.
Plus, the industries it supports are struggling. Constellium’s clients include Boeing (NYSE:BA) and Ford (NYSE:F), two companies particularly hard hit by the pandemic. With that in mind, it makes sense CSTM stock is down so far.
Investors should view the current share price near $8 as a blessing. Aluminum isn’t going anywhere, and neither is Constellium. You don’t want to miss out.
Cheap Stocks to Buy: Vonage (VG)
Source: STEFANY LUNA DE LINZY / Shutterstock.com
Projected 12-Month Upside: 32%
Vonage is getting a makeover, and boy, does it need one.
After the company’s 2006 IPO, Vonage customers filed a class-action lawsuit after early investors lost money. By the end of the year, VG stock was down almost 60%.
And 2019 wasn’t much prettier, bringing a 20% share-price decline. But things might finally be looking up. Since the start of the new year, VG shares have gained almost 33% while other stocks have tanked. And after a long history of transformations and failures, Vonage shareholders are probably crossing their fingers that this makeover sticks.
From a residential telecommunications provider to a voice over internet protocol (VoIP) services provider, Vonage is a company that had already transformed once. Now, inspired by big names like Salesforce (NYSE:CRM) and Oracle (NYSE:ORCL), the company is switching to the software-as-a-service world.
On Oct. 30, Vonage announced several new products, a new logo and a fresh marketing campaign designed to make one thing very clear: The company plans on being a leader in this new software era.
These days, it looks like Wall Street agrees with CEO Alan Masarek’s plans to reinvent global communications. Plus, the notion of disrupting existing technology is now more than a buzz-worthy notion — it’s something investors are actively looking for in cheap stocks to buy.
If Vonage can manage to pull off this transition, it just might reach its $12.94 12-month price target, implying 32% upside.
Summit Hotel Properties (INN)
Source: Shutterstock
Projected 12-Month Upside: 33%
It’s no secret that the novel coronavirus has hit the travel industry hard, and Summit Hotel Properties is no exception. As a consequence, the hotel-focused real estate investment trust (REIT) faces a year-to-date loss of 53%.
Just like many others in the space, the pandemic has forced Summit Hotel Properties to furlough staff, cut executive pay and undertake a slew of other cost-cutting measures. But also like many others in the space, INN stock will rebound as travel demand returns to pre-pandemic levels.
Summit Hotels holds a variety of high-end hotels in top travel destinations like Boston, Miami and New Orleans. Plus, it doesn’t just hold any hotels. It partners with recognizable and well-loved brands like Marriott (NASDAQ:MAR) and Hilton (NYSE:HLT).
After lockdowns ease and travel becomes safer, consumers will face a difficult choice. Will trends toward Airbnb and other short-term rentals remain strong? Or will consumers opt for regularly cleaned, luxury hotels, for instance? Morgan Stanley’s Brian Pfeifler says he thinks the latter will win out.
In short, Summit Hotels faces its face share of near-term problems. But with a 12-month price target of $7.67 and a strong buy consensus rating, it’s clear good things are ahead.
Cheap Stocks to Buy: Ovid Therapeutics (OVID)
OVID)" width="300" height="169">Source: Shutterstock
Projected 12-Month Upside: 118%
It would be almost impossible to talk about promising cheap stocks to buy without mentioning at least one biotech name. That’s because these high-risk, high-reward companies perfectly underline both the pros and cons of this type of investing. Just as a biotech company could bring in 100%-plus returns, it could crash and burn with negative trial results.
But looking at cheap biotech stocks, Ovid Therapeutics looks to be a strong buy for a reason. Highlighting its “Bold Medicine” approach that focuses on transforming the lives of its patients, Ovid seems to take a more moralistic approach to biopharma. The company specializes in developing treatments for rare neurological disorders, and has a robust pipeline with four candidates.
The company continues to have positive updates on OV935, which is in co-development with Takeda Pharmaceutical (NYSE:TAK). According to Ovid’s management, in a current trial, the therapy has been found to reduce seizure frequency in the difficult-to-treat patient population.
While it’s true that none of the company’s drugs are on the market yet, clinical trial results are worthy of optimism. As long as these trials continue to go well, then Ovid Therapeutics should be safely on its way to reach its $15.33 price target.
That 12-month price target implies over 115% upside from its current share price near $7.
X4 Pharmaceuticals (XFOR)
XFOR)" width="300" height="169">Source: Shutterstock
Projected 12-Month Upside: 88%
Another great — and cheap — biotech stock to buy is X4 Pharmaceuticals. Plus, this company is increasingly relevant right now.
Covid-19 is drawing attention to immunocompromised individuals, and the work that biopharmaceutical companies are doing to help them. That’s where X4 Pharmaceuticals comes in.
Here are the basics. Primary immunodeficiency diseases (PID) are a group of disorders where part of the body’s immune system doesn’t work. The immune system is supposed to defend the body from different germs, so if part of the system doesn’t work, the body is more at risk. One specific PID is known as WHIM syndrome. Its name is an acronym for the symptoms it causes, which are warts, hypogammaglobulinemia, infections and myelokathexis.
Unfortunately, there are no FDA-approved treatments for WHIM syndrome. But X4 Pharmaceuticals has mavorixafor, which is in Phase 3 clinical trials. According to the company, this drug could help protect individuals with WHIM syndrome and treat the symptoms of the disease.
So far, things look good for mavorixafor, and analysts are optimistic. In the last month, XFOR stock has received four buy ratings. One analyst even gave it a 12-month price target of $22.
Cheap Stocks to Buy: Sequans Communications (SQNS)
Source: Shutterstock
Projected 12-Month Upside: 40%
Sequans Communications was one of the leading providers of 4G and 4G LTE chips for smartphones. After it went public in 2011, it received recognition from Verizon (NYSE:VZ) in 2013. And many considered it one of the top three suppliers of a specific type of LTE chip.
And just as Sequans led the 4G wave, it’s preparing to lead the 5G wave as global adoption of the next-generation technology takes hold. Analysts and consumers alike are bullish on the name. In the last month alone, three analysts have reiterated “buy” ratings.
According to the company’s website, its chips really are the best. Many of its 4G and 5G offerings are designed specifically for the internet of things (IOT). Plus, its different chips each serve different needs — targeting residential, enterprise and industrial uses.
Yes, the pandemic is calming the international hype around 5G. But the pandemic won’t last forever, and the world will move ahead with the new technology. Sequans Communications has offices all around the world, for instance, and it’s likely to benefit from 5G in a big way.
SQNS stock trades for around $6.55, and its 12-month price target implies over 40% upside. You don’t want to miss out.
B2Gold (BTG)
Source: Shutterstock
Projected 12-Month Upside: 19%
With a $5.6 billion market capitalization, B2Gold is not the largest in the gold-mining realm, but it’s picking up sparkle. In the last month, several analysts have hopped on board with “buy” recommendations for the Canadian company, citing its potential.
In 2007, after Kinross Gold (NYSE:KGC) acquired Bema Gold, B2Gold’s story started. After the acquisition, a few executives from Bema founded BTG, and began making mine purchase around the world.
Now B2Gold holds mining properties in Nicaragua, the Philippines, Mali, Colombia, Burkina Faso and Namibia. BTG stock has almost doubled in the past five years, and returned almost 40% gains in 2019.
But analysts think it can grow another 20% or so in 2020, with a 12-month price target of $6.41.
That’s not surprising. Gold has been a hot topic in the last two months, thanks to its reputation as a safe haven investment. Combine a market-wide selloff with inflationary fears, and gold bugs are in heaven.
It’s clear gold is headed higher in 2020. So is BTG stock, to the tune of 35%. Coronavirus fears aren’t disappearing anytime soon, so 2020 should be extra rich for B2Gold investors.
Cheap Stocks to Buy: Iteris (ITI)
Source: Shutterstock
Projected 12-Month Upside: 83%
When examining cheap stocks to buy, it’s hard to overlook Iteris. I first recommended this company in November 2019, and it still has the strong support of the analyst community. Although it is far from September 2019 highs, ITI stock starting to seriously rebound.
Plus, it boasts a 12-month price target of $8.83, implying over 83% upside potential.
The company uses sensors to collect data for farms, roads and highways. In its own words, Iteris turns “big data into big breakthrough solutions.” One branch of the company focuses on selling traffic signal controllers. Another focuses on designing, developing and implementing equipment that reports real-time traffic conditions. A third branch focuses on roadway maintenance solutions in response to weather and climate changes.
What’s key here? Data. Data is at the heart of all Iteris does. And this data-rich company is attracting the attention of major partners. Colorado’s Department of Transportation is working with ITI to collect and use weather data to determine road maintenance solutions. That’s in addition to partnerships with similar departments in South Carolina, Illinois, Georgia and Florida.
Another recent headline looks likely to contribute to ITI stock’s future growth. Earlier in June, the company reported that revenue grew 18% year-over-year, despite the impact of Covid-19. According to CEO Joe Bergera, Iteris is riding long-term trends that just keep accelerating. He also thinks the company will continue to see significant growth in revenue and profits moving forward.
With this news in mind, Iteris looks like a great stock to buy, as more partnerships are likely in its future.
LiveXLive (LIVX)
Source: Postmodern Studio / Shutterstock.com
Projected 12-Month Upside: 52%
If I put my headphones in and close my eyes, I can almost imagine that I’m at my favorite concert venue. OK, maybe that’s a bit of a stretch. Nothing beats the atmosphere of a concert — the crowds, the sound, being so close to a band or artist you love.
Unfortunately, a pandemic makes enjoying concerts and music festivals more than a little tricky. And while there’s plenty of music on Spotify (NYSE:SPOT) and YouTube, sometimes streaming just doesn’t cut it. That’s where LiveXLive comes in.
One of the company’s main focuses is music and video streaming — specifically as it relates to top artists. But it made a smart pivot. Now it streams pay-per-view live concerts and virtual music festivals. And these virtual concerts are surprisingly popular.
According to a company press release, the virtual pay-per-view model was important for artists in need of a different revenue model. But it’s also important for LiveXLive and LIVX stock. After dramatically plummeting early in the spring, shares are now up more than 100%.
It’s hard to predict exactly what large events will look like in the post-pandemic world, but it will likely be a while before music festivals attract large crowds. Virtual concerts will stay in demand at least throughout 2020, which makes LIVX stock a good buy here.
Analysts agree. Their 12-month price target of $5.46 implies more than 50% upside.
Sarah Smith is a Web Editor for InvestorPlace.com. As of this writing she did not hold any of the aforementioned securities.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
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