Not all cheap stocks are superior stocks. But many investors have seen the value of their portfolios decline as the S&P 500 Index has dropped by double digits so far in 2022.
And the existence of more affordable stocks is one opportunity that results from a less favorable environment on Wall Street. For good reason, some investors choose to steer clear of stocks priced under $10.
These stocks carry a high degree of risk, are erratic, and frequently have weak fundamentals. Others, however, favor inexpensive stocks because of their affordability and capacity to generate significant returns quickly (though, this also means investors can suffer big losses in a hurry).
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1. Payoneer Global Cheap Stocks
Perhaps the most aggressive name on this list of bargain stocks is Payoneer Global (PAYO, $6.52). A mid-sized provider of technology solutions, PAYO is currently operating at a slight loss while making investments in expansion. As it continues to connect with new customers, it is also projecting a 20% growth rate in revenue for both this year and the following year.
In this digital age, where mobile and cashless transactions are on the rise, PAYO has a strong competitive advantage. The company is not like the consumer-facing brand PayPal Holdings (PYPL), but raher is concentrated on B2B activities. In particular, Payoneer’s technology is designed for managing a digital business, making international payments, and getting funding to seize new opportunities.
2. Sirius XM
The development of smartphones and streaming media has upended numerous business models, but satellite radio provider Sirius XM Holdings (SIRI, $6.11) has proven that it is a stock with staying power. SIRI is still relevant in a time when consumers have countless content options to choose from.
After the pandemic first appeared in 2020, it ran into some difficulties because a large portion of its business depends on customer trials in new vehicles. The bottom line was seriously impacted by a downward sales trend and higher cancellation rates due to people staying at home.
However, with more than 34 million paid subscribers today, Sirius XM is doing pretty well, an increase from the 30 million at the beginning of 2020. This demonstrates that it has expanded its fan base rather than just wrangling old listeners back.
Although sales and profits are increasing at relatively slow rates, these cheap stocks expect to generate more than $1.5 billion in free cash flow this year, so margins are excellent. With this much, the company can continue its $2 billion stock buyback program and pay shareholders a respectable dividend of 1.4%.
3. Oaktree Specialty Lending
The financial company Oaktree Specialty Lending (OCSL, $6.92), which makes money from investments in other businesses, was founded on the principles of renowned junk bond investor Howard Marks.
It is organized as a business development company (BDC), which conducts business similarly to a hedge fund or a private equity firm. The distinction, of course, is that it is a publicly traded cheap stocks for under $10, allowing even novice investors to participate in the strategy’s gains.
Financing middle-market companies in that strategy. In other words, “goldilocks” firms that range in size from $100 million to $750 million each but aren’t too small to be overly risky or too big to need a lot of capital.
4. Prospect Capital
Some asset management firms have experienced a less-than-ideal environment over the past few years, which is perhaps understandable. The once-booming initial public offering (IPO) market has all but disappeared, the stock market has turned “risk off,” and rising interest rates have made borrowing for large-ticket purchases much more expensive than in the good ol’ days of ZIRP (zero-interest-rate policy).
Prospect Capital (PSEC, $7.25) is one of the cheap stocks, but it still has value for investors looking for a way to play the Wall Street investment banking sector.
The current portfolio has nearly 130 companies in it, spread across 39 different industries, giving investors deep diversification to help them ride out any hiccups.
5. ASE Technology
ASE Technology Holding (ASX, $5.74), a Taiwanese semiconductor manufacturer, is not a well-known, recognizable chipmaker like Intel (INTC) or Broadcom (AVGO). Instead, ASE provides services like circuit testing and packaging. Furthermore, these cheap stocks doesn’t really cpecialized semiconductors on its own.
The big profits that come from owning a proprietary chip that generates enormous profits when it’s in demand don’t materialize from this lower-margin business. But ASX is one of the cheap stocks that have much more stability because it doesn’t have to worry about the research or marketing of patented semiconductors.
5. NL Industries
Given that it is a rather unremarkable manufacturing company with a market cap of only about $450 million, you might assume that NL Industries (NL, $8.96) isn’t a particularly wise investment in these cheap stocks right now. However, NL has demonstrated that it has the numbers to pique investor interest despiteven thougheneral equities market in 2022 hasn’t been particularly kind to risky small caps.
NL and its affiliate CompX primarily manufacture locksets and automobile components. There are traditional locks for doors and filing cabinets, electronic locks, and complex systems for use in medical facilities and automobile applications, among others.
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6. Kosmos Energy
A company that explores oil and gas in deep waters is called Kosmos Energy (KOS, $7.08). As a result, it has had a good year for these cheap stocks as a result of high energy prices. Furthermore, KOS can continue drilling at profitable margins for the foreseeable future thanks to the “new normal” of steadily rising crude oil prices, even in the wake of recent rollbacks.
Drilling offshore is significantly more expensive than drilling on land, as you might expect. Kosmos, based in Dallas, conducts business all over the world near the Atlantic Ocean.
7. Yamana Gold
The mining company Yamana Gold (AUY, $4.51) is not particularly complex. The Canadian company is a direct play on precious metals thanks to its nearly 14 million ounces of proven gold reserves and additional 111 million ounces of cheap stocks of silver reserves.
There is a lot to be said about buying a gold stock like this in a time of raging inflation. As AUY brings those products to market, it will profit. Given the sizeable underground reserves it owns, there is little chance of it going out of business anytime soon.
8. ITUB Unibanco
Ita Unibanco (ITUB, $5.13), one of the few foreign corporations on this list of cheap stocks under $10, should be obvious from the name. In particular these cheap stocks, ITUB is a significant Brazilian bank.
ITUB provides consumer and business banking services in the area, ranging from straightforward credit cards and savings accounts to business solutions, mortgage lending, and investment management.
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