In the ever-evolving world of the stock market, investors are constantly seeking lucrative opportunities to grow their portfolios. One such avenue that garners significant interest is investing in cheap stocks. These stocks, with prices under $10, present an enticing opportunity for both novice and seasoned investors to capitalize on potentially high returns. In this article, we will explore the ten best cheap stocks to consider for investment in 2023.
Table of Contents
What Are Cheap Stocks?
Cheap stocks, often referred to as penny stocks, are shares of companies that trade at a low market price. They are usually associated with smaller or newer companies and are perceived to have high growth potential. Due to their affordability, investors can purchase a substantial number of shares even with a limited budget, amplifying the potential gains if the stock appreciates.
Benefits of Investing in Cheap Stocks
Investing in cheap stocks offers several advantages to investors:
- Affordability: As mentioned earlier, the primary advantage of cheap stocks is their low price, making them accessible to a wide range of investors.
- High Growth Potential: Cheap stocks are often linked to companies with promising growth prospects. If these companies succeed in their ventures, the stock’s value can skyrocket, leading to substantial returns.
- Diversification: Adding cheap stocks to a diversified portfolio can mitigate risk. They can act as a buffer against potential losses from other high-priced investments.
Risks of Investing in Cheap Stocks
Despite their alluring benefits, cheap stocks come with inherent risks:
- Volatility: Cheap stocks tend to be highly volatile, experiencing rapid price fluctuations. Investors must be prepared for sudden ups and downs in the stock’s value.
- Lack of Information: Smaller companies may not have as much publicly available information as larger, established firms. This lack of data can make it challenging to perform thorough research.
- Liquidity Concerns: Cheap stocks often have lower trading volumes, which can make it difficult to buy or sell shares at desired prices.
Factors to Consider When Choosing Cheap Stocks
Before investing in any cheap stocks, consider the following factors:
1. Company Fundamentals
Evaluate the company’s financial health, including revenue growth, earnings potential, and debt levels. Look for positive trends and signs of a strong business model.
2. Industry Trends
Examine the industry the company operates in. Is it growing or facing challenges? Understanding the industry dynamics can provide insights into the stock’s future performance.
3. Market Sentiment
Stay updated on market trends and sentiment towards cheap stocks. Positive news and overall market optimism can boost these stocks’ prices.
4. Analyst Recommendations
Consider analyst opinions on the stock. Positive recommendations from reputable analysts may indicate the stock’s potential upside.
It is always advisable to invest in a dividend paying companies as they are more stable and reliable to invest in.
10 Best Cheap Stocks to Buy Under $10 in 2023
Now, let’s explore the ten best cheap stocks that show promise for 2023 & could be an excellent buying opportunities for investors in 2023 for frugal investors:
| Companies | Updated Stock Price(as of August 2023) |
|---|---|
| Telecom Italia S.p.A (TIIAY) | $ 2.71 |
| Nokia Corp. (NOK) | $ 3.50 |
| Tencent Music Entertainment Group (TME) | $ 6.10 |
| Telefonica SA (TEF) | $ 3.79 |
| iQiyi Inc. (IQ) | $ 5.82 |
| Aegon NV (AEG) | $ 5.34 |
| Crescent Point Energy Corp. (CPG) | $ 8.05 |
| Rocket Lab USA Inc. (RKLB) | $ 6.35 |
| Oatly AB (OTLY) | $ 1.45 |
Telecom Italia is the leading fixed line and wireless telecommunications provider in Italy. The company plans to split off its network business into a separate company. The telecommunications sector isn’t known for growth numbers, but Telecom Italia’s 21.7% gain through June 16 this year has outpaced the S&P 500. Analyst Adrian Ng says Telecom’s focus remains on asset divestitures and debt reduction. In the near term, Telecom Italia will likely continue to struggle with declining revenues in its main markets, but Brazil has been a strong growth source. CFRA has a “buy” rating and $3.50 price target for TIIAY stock, which closed at $2.77 on June 16.
Nokia Corp., commonly known as Nokia, is a renowned multinational telecom equipment and digital map data technology corporation based in Finland. Established in 1865, the company has witnessed significant transformations over the years, contributing significantly to the mobile and telecommunications industry.
Nokia’s strategic focus on 5G, IoT, and cloud services presents potential growth opportunities. Its expansion into new markets and technologies could drive future success
Analyst Keith Snyder projects that 2023 will be a rebound year for Nokia specially after the company lost market share and tackled pricing pressures in its North American mobile networks business in 2022. CFRA Research has projected a “buy” rating and $6.50 price target for Nokia (NOK) stock, which closed at $4.28 on June 16.
Tencent Music Entertainment Group (TME):
Tencent Music Entertainment is a leading online music platform in China and is the parent company of QQ Music, KuGou Music and WeSing. Crackdowns by Chinese and U.S. regulators have tightened restrictions on U.S.-listed Chinese tech stocks in recent years, weighing on Tencent Music’s performance.
However, analyst Ahmad Halim says online music streaming sales may recover in 2023. Halim is bullish on the outlook for Tencent Music’s margins and average revenue per paying user, and he projects 7% year-over-year revenue growth this year. CFRA has a “buy” rating and $10 price target for TME stock, which closed at $8.03 on June 16.
Telefonica SA, commonly known as Telefonica, is a leading Spanish multinational telecommunications company founded in 1924, making it one of the oldest telecom companies in that world that has left an indelible mark on the global telecommunications industry.
This company’s stock pays an 8.4% forward dividend yield making it rare choice among companies with stocks priced under $10. The company has done few successful acquisitions counting E-Plus in Germany and GTV in Brazil and exited the Central American market. In addition, Telefonica will receive $3.2 billion from combining its U.K. telecom assets in a joint venture deal with Liberty Global PLC (LBTYA). CFRA has a “buy” rating and $4.50 price target for TEF stock, which closed at $3.86 on June 16.
iQiyi is a leading Chinese streaming video platform that is often compared to U.S. streaming platform Netflix Inc. (NFLX). Analyst Nazira Abdullah says iQiyi’s tiered membership offerings, premium on-demand content and innovative business model make its services appealing to a wide range of customers. After investing in subscriber growth and content for the past five years, Abdullah says iQuiyi is positioned to turn a profit in 2023.
Looking ahead, Abdullah says iQuiyi’s ad-supported basic subscription package on iQiyi Lite will be a meaningful growth driver. CFRA has a “buy” rating and $8.50 price target for IQ stock, which closed at $5.50 on June 16.
Aegon is a Dutch insurance company that offers insurance, savings, pension and investment products and services around the world. The U.S. regional banking crisis has weighed on Aegon shares in 2023. However, analyst Jeff Lye says Aegon has a proven track record of executing and hitting its financial targets, and he expects 2023 to continue that pattern. The company is prioritizing deleveraging its balance sheet and focusing on strategic assets generating attractive return on capital.
Lye estimates 2023 cash yield to shareholders of greater than 20%. CFRA has a “buy” rating and $7 price target for AEG stock, which closed at $4.79 on June 16.
Crescent Point Energy Corp. (CPG):
Crescent Point Energy is a Canadian oil and gas exploration and production company that has assets in Western Canada, Utah and North Dakota. Global energy shortages coupled with commodity price inflation led to record energy sector profits in 2022, allowing companies like Crescent Point to reduce debt and improve their balance sheets.
Analyst Jonnathan Handshoe says Crescent Point has guided for 6% production growth and 9% capital expenditures growth in 2023. Handshoe projects the company will generate $905 million in excess cash flow this year. CFRA has a “buy” rating and $7.92 price target for CPG stock, which closed at $6.77 on June 16.
Rocket Lab is an aerospace and defense company that specializes in launch services, spacecraft engineering and design, components manufacturing, and other spacecraft management solutions. Snyder says Rocket is a top launch provider for customers with small payloads. The company has a better track record of successful launches than other smaller competitors and provides more mission customization than SpaceX and other larger competitors.
Snyder says the reusability of Rocket’s Electron rocket will help reduce launch costs. He projects 41.7% revenue growth in 2023. CFRA has a “buy” rating and $8 price target for RKLB stock, which closed at $5.60 on June 16.
Oatly is the world’s largest oat milk producer. Oatly shares are down 50.4% in the past year through June 16, the worst performance of any stock on this list. At under $2 per share, analyst Arun Sundaram says Oatly is attractively valued given oat milk has been gaining market share from dairy and other plant-based milk for several years now.
Sundaram says Oatly’s recent $430 million financing round will help alleviate liquidity concerns. He projects revenue growth will more than double from 12% in 2022 to 25% in 2023. CFRA has a “buy” rating and $4 price target for OTLY stock, which closed at $1.87 on June 16.
Conclusion
Investing in cheap stocks can be an exciting way to diversify your portfolio and potentially achieve substantial returns. However, it’s essential to approach these investments with caution and conduct thorough research. Remember that cheap stocks can be highly volatile and may not be suitable for every investor’s risk tolerance.
To make informed decisions, carefully evaluate the company’s fundamentals, industry trends, market sentiment, and analyst recommendations. By doing so, you can maximize your chances of success in the world of cheap stock investments.
FAQs
Q: Are cheap stocks riskier than high-priced stocks?
A: Yes, cheap stocks tend to be riskier due to their higher volatility and potential lack of information.
Q: Can I make significant profits from cheap stocks?
A: Absolutely. If you invest wisely in the right cheap stocks with strong growth potential, you can achieve substantial profits.
Q: What should I consider before buying a cheap stock?
A: Before investing, assess the company’s financial health, industry trends, market sentiment, and expert recommendations.
Q: Are cheap stocks suitable for long-term investment?
A: Some cheap stocks may be suitable for long-term investment if they demonstrate stable growth and a sound business model.
Q: How often should I monitor my cheap stock investments?
A: It’s advisable to monitor your investments regularly to stay informed about any significant changes or developments.
