In this article we will take a look at the 10 best stocks under $10 in 2021. You can skip our comprehensive analysis of these companies and go directly to the 5 Best Stocks Under $10 in 2021.
The economic landscape is gradually recovering from pandemic disruptions, and this means investment opportunities will start to show up. Investors are actively looking for the best opportunities that will deliver the highest growth potential. One of the most obvious places to look is the small-cap segment, especially for the potentially best stocks under $10, which could deliver robust growth in the future.
Investing in the stock market and taking advantage of potential growth opportunities has become relatively easy, thanks to platforms like Robinhood. They pave the way for anyone, including students, to start their wealth-building journey as early as possible. Internet platforms such as Reddit are great for learning about prevailing market trends and potential opportunities.
People are already taking advantage of these opportunities in the retail trading scene. Retail trading accounted for 20% of all investments in the U.S equity market. Some of the industries that can potentially deliver a lot of growth include technology, renewable energy, and healthcare.
Why Investing in the Best Stocks Under $10 is a Great Idea
For beginner investors, it's feasible to invest in cheap stocks trading under $10 with strong growth potential. That's why in this article we shed some light on some great stocks that are cheap and have a strong room to run based on their products, services and growth catalysts.
A notable stock trading under $10 is Ford Motor Company (NYSE: F). The stock closed at $9.83 on January 15, and is now close to $11.54. The stock has doubled in 10 years. Ford shares have gained close to 140% in the last 12 months. Ford recently said it will assess capital allocation strategy in India, an essential market for the company for its Ranger SUV, and is planning 8% adjusted EBIT and strong cash flows. In another news, Ford Motor Company (NYSE: F) revealed it is close to a deal for Volkswagen AG’s electric car technology and is likely to develop an autonomous car in Cologne, Germany.
Another stock that has gained is Zynga Inc. (NASDAQ: ZNGA) which was trading at $5.44 on June 1, 2012, and closed at $10.82 in the last trading session. BMO analyst Gerrick Johnson rated the stock as "Outperform" with the price target of $15. Artisan Partners Limited Partnership increased its stake in Zynga Inc. (NASDAQ: ZNGA) in Q4 2020.
Nokia Corporation (NYSE: NOK) that is currently trading under $5 is also a good stock. The company has seen an impressive 5G strength in Q1. Network infrastructure business sales were up 28 to 1.7 billion. Chunghwa Telecom (NYSE:CHT) has selected Nokia Corporation (NYSE: NOK) for 5G network expansion in Taiwan. Nokia shares have gained 31% over the last 12 months. Recently, Nokia Corporation (NYSE: NOK) shares soared after the company posted upbeat first quarter results on the back of its strong 5G segment. The company also maintained its 2021 outlook which includes a 7-10% network infrastructure sales growth and about 9-12% growth for 2023
Investing in an undervalued high growth stock while its stock price is under $10 is a great way to grow your portfolio. A good example is Niu Technologies (NASDAQ: NIU) which traded at $7 at the start of its fiscal 2021 year and rallied to a $53.38 high just a few months later. Anyone who invested a substantial amount would have made a handsome profit from the Niu Technologies (NASDAQ: NIU) rally, thus highlighting the power of such stocks.
Finding the best stocks under $10 can be a daunting task, especially if you are not good at stock picking. It is a lot of work that involves sifting through a lot of data, and most of the cheap stocks will not deliver expected growth. Even the hedge fund industry is struggling to find good stocks lately. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here are the 10 best stocks under $10 in 2021.
Best Stocks Under $10 in 2021
Number of Hedge Fund Holders: 9
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is a Spanish bank that operates internationally with a presence in multiple countries, including Romania, Spain, Turkey, and some places in North America and South America.
The bank plans to start offering a crypto custodial and trading service in 2023, based in Switzerland. It recently signed a deal to sell its subsidiaries, BBVA USA Bancshares and BBVA USA, to the PNC Financial Services Group (NYSE:PNC) for $11.6 billion. PNC CEO William S. Demchak stated that the deal would boost his company's growth in the right direction. He also expects the acquisition to contribute 21% of the company’s performance in 2022, with an IRR of 19%. Estimates suggest that the deal will be worth 134% of BBVA USA’s book value on September 30.
BBVA Spain plans to slash 3,800 jobs in its home country as part of its plan to shut down 530 branches. This decision is on account of the low interest rates due to the pandemic's economic impact. Trimming its operations and offloading some of its assets is a strategy that the company is using to continue generating value for shareholders, which are measures that have earned it a spot in the top 10 stocks that have solid growth potential. BBVA Compass Bancshares reported a €0.16 GAAP EPS in Q3 and €4.11 billion in revenue, representing an 8.1% decline YoY.
9. Mizuho Financial Group, Inc. (NYSE: MFG)
Number of Hedge Fund Holders: 5
Mizuho Financial Group, Inc. (NYSE: MFG) is one of the top companies in Japan’s banking industry based in the Ōtemachi district in Chiyoda. The stock ranks 9th in our list of best stocks under $10 in 2021.
The company’s latest financials revealed a GAAP EPS of ¥139.76, while its ordinary income was ¥2.31 trillion.
Mizuho might suffer a 10 billion yen ($90 million) loss from its investment in Archegos Capital Management. The latter collapsed after losing billions of dollars through leveraged investment in stocks. Some of the other companies facing losses include Mitsubishi UFJ Financial Group Inc., which will lose about $270 million, and Nomura Holdings Inc, which expects to lose around $2 billion. Mizuho Americas (NYSE:MFG) recently became a member of DirectBooks.
8. Banco Bradesco S.A. (NYSE: BBD)
Number of Hedge Fund Holders: 17
Banco Bradesco S.A (NYSE: BBD) is one of the largest banking companies in Brazil and South America. Seventeen hedge funds invested in the company in Q4 2020. The company noted that it anticipates favorable long-term growth largely courtesy of the strong uptake of its digital platforms. BBD ranks 8th in our list of best stocks under $10 in 2021.
The outlook is so positive that Banco Bradesco is using pre-COVID levels as its new performance baseline for the current financial year. This outlook highlights potential expected growth which may translate to more growth for the stock, hence getting a spot in the top 10 stocks under $10.
The company's net income in Q4 2020 was R$6.8 billion, while its net interest income for the same period was R$16.66 billion, an 8.0% YOY gain. The stock price rallied 44.16% in the last 12 months. Banco announced a $0.002 per share dividend in March, representing a 33.3% decline from the previous dividend payout.
7. Ambev S.A. (NYSE: ABEV)
Number of Hedge Fund Holders: 18
Ambev S.A. (NYSE: ABEV) is a company that largely deals with the production and sale of soft drinks, beers, non-carbonated and non-alcoholic products in South America. It also sells other products such as bottled water, ice tea, and isotonic.
Ambev’s Q4 2020 non-GAAP EPS was R$0.44, while its GAAP EPS for the same period was R$0.43. Its revenue for the quarter was R$18.56 billion, which represents more than 20.0% YoY gains. The company has ramped up its B2B and B2C services to leverage more growth. Ambev has plans to shift to renewable energy for its entire fleet and has already signed a contract to receive 1,000 trucks and vans from Agrale and FNM. The company’s current fleet consists of 5,300 trucks used to facilitate deliveries across Latin America. The company’s target is to have at least half of its trucks operating on renewable energy by 2023.
In one of their investor letters, Broyhill Asset Management spoke about Ambev S.A. (NYSE:ABEV). Here is what Broyhill Asset Management said:
"We also diversified our beer exposure during the quarter, adding a direct investment in Ambev (ABEV) to compliment our existing investment in Anheuser Busch Inbev (BUD). As the current environment has punished highly leveraged businesses like BUD (despite the company’s ability to generate strong and recurring cash flow), the opportunity to own ABEV, with net cash on its balance sheet and the highest returns on capital in the industry—at a lower multiple than its parent—was too good to pass up.
Together, these names represent roughly 20% of our capital today. Given their cheap valuations, combined with the fact that beer and tobacco consumption has historically increased during recession, one could argue that we should have even more exposure to these Sin Stocks. In principle, we agree, and given the opportunity, we’d be happy to increase our positions. But in the interim, we are highly sensitive to maintaining balance in the portfolio. At one end, we own high quality, defensive businesses that should fare well in almost any environment. At the other end, we’ve begun building a portfolio of more cyclical businesses, positioned to rebound sharply and gain share once the clouds clear. We discuss a few of these investments below.”
6. Itaú Unibanco Holding S.A. (NYSE: ITUB)
Number of Hedge Fund Holders: 19
Itaú Unibanco Holding S.A. (NYSE: ITUB) is a banking company that offers various services, including real estate credit, investment, financial banking, and commercial banking services, among others.
The company announced a dividend of $0.0026 on March 31, 2021. ITUB reported a GAAP EPS of R$1.93 for the full year 2020, while its operating revenue for the same period was R$100.2 billion, which was lower than its previous year's operating revenue by 14.4%.
The company reported a Q4 2020 EPS of R$0.78, a notable improvement from the R$0.46 EPS reported in the previous quarter. Its Q4 2020 operating revenue was R$29.2 billion, which was slightly above the R$28.4 billion operating revenue earned in Q3 2020.
Click to continue reading and see 5 Best Stocks Under $10 in 2021.
Disclosure: None. 10 Best Stocks Under $10 in 2021 is originally published on Insider Monkey.