Stocks surged on Monday to start the first full week of July on a high note, driven by Tesla TSLA, Amazon AMZN, and other big names. The Nasdaq then touched yet another new intraday record Tuesday, before falling in late afternoon trading. The S&P 500 is now up 40% and once again approaching its pre-coronavirus selloff levels.
Wall Street has seemingly decided to focus on the recent positive signs of an economic recovery in the U.S. Meanwhile, the headlines continue about spikes of coronavirus cases throughout the U.S., including in major economic hubs such as Texas and California.
Clearly, Covid-19 is something the market and the economy will be forced to live with for now, and it’s hard to imagine the political will for another broad-based lockdown exists—unless things turn far worse.
Therefore, Wall Street might be poised to remain in don’t fight the Fed mode in order to chase returns during the low interest rate environment. With this in mind, investors might want to hunt for stocks. So today we dive into three “cheap” stocks trading under $10 a share that might be worth buying for the second half of 2020…
Glu Mobile GLUU
Prior Close: $9.53 USD (end of regular trading Tuesday, July 7)
Glu is a mobile video gaming powerhouse, with a portfolio that features Deer Hunter, Kim Kardashian: Hollywood, Disney Sorcerer’s Arena DIS, and more. GLUU’s Q1 sales popped 12%, driven by a 15% climb in bookings for the period ended on March 31. The firm then impressed investors when it upped its Q2 bookings guidance at the end of May, citing better-than-expected sales during the coronavirus. Glu raised its Q2 bookings range to between $162.5 and $167.5 million, up from its prior $150 to $155 million guidance.
CEO Nick Earl said in prepared remarks at the time that several games were setting “new records for daily bookings.” Our Zacks estimates call for Glu’s Q2 sales to soar over 63%, with its adjusted quarterly earnings set to pop 33% to $0.08 per share. Peeking further ahead, Glu’s fiscal 2020 revenue is expected to jump over 25%, which would top last year’s 12% expansion. Meanwhile, its adjusted fiscal year earnings are projected to skyrocket 94% this year and another 30% in FY21. Glu’s strong earnings estimate revision activity also helps it grab a Zacks Rank #2 (Buy) right now.
More broadly, Glu is poised to expand within the booming global gaming industry that is projected to climb from $151 billion in 2019 to nearly $200 billion by 2023, with mobile contributing the most in terms of growth and total sales. Glu shares are up roughly 60% in 2020 to crush its peer group’s 22% that includes Electronic Arts EA, Take-Two Interactive TTWO, Activision Blizzard ATVI, and a few others. The stock has cooled off recently and Glu still sits 10% below its 52-week highs, which might give it room to run. And the stock trades at a solid discount against its own 12-month highs and its peer group.
Sandstorm Gold Ltd. SAND
Prior Close: $9.73 USD (end of regular trading Tuesday, July 7)
Sandstorm is a gold royalty firm that provides upfront financing to gold mining companies. The company then receives the rights to a percentage of the gold produced for the lifetime of that mine. SAND posted record full-year sales in fiscal 2019, with revenue up over 22% to $89.4 million. More recently, its first quarter FY20 revenue jumped 17%, driven by a 23% increase in the “average realized selling price of gold.”
Sandstorm's fiscal 2020 revenue is projected to climb 21%, with its adjusted earnings expected to soar 56%. SAND is then expected to follow up this expansion with another 8.3% top line growth and 15% higher earnings in fiscal 2021. The stock’s positive earnings revision activity helps it grab a Zacks Rank #2 (Buy) at the moment.
Sandstorm is part of our Mining – Gold industry that rests in the top 30% of our more than 250 Zacks industries. SAND shares have climbed over 30% in 2020 to outpace its industry’s 26% jump and crush the broader market’s slight decline. On top of that, the stock has soared over 110% in the last 24 months and it might continue to benefit from gold’s haven status amid the coronavirus economic uncertainty. SAND stock also popped again on Tuesday, after it released its Q2 sales numbers on Monday.
Zynga Inc. ZNGA
Prior Close: $9.89 USD (end of regular trading Tuesday, July 7)
Zynga is a mobile video game powerhouse with titles from FarmVille to Words with Friends. The firm also has strategic licenses with the likes of Game of Thrones and it recently bolstered its partnership with Snapchat SNAP. ZNGA, like Glu, is set to expand within the booming gaming market.
The company is coming off its strongest first quarter revenue and bookings in company history, for the period ended on March 31, with sales up 52%. Zynga also raised its full-year guidance back in early May, while many firms continue to pull their outlooks. This highlights its strength and ability to expand during the stay-at-home environment.
Investors should also note that Zynga officially completed its acquisition of Istanbul-based gaming firm Peak at the start of July. Zynga said it would once again update its full-year 2020 guidance to include the deal when it reports in early August. “With the addition of Toon Blast and Toy Blast, we are expanding our live services portfolio to eight forever franchises, meaningfully increasing our global audience base, and adding to our exciting new game pipeline,” Zynga CEO Frank Gibeau said in prepared remarks. “As a combined team, we are well positioned to grow faster together.”
Our Zacks estimates currently call for ZNGA’s 2020 revenue to jump 19%, with its adjusted earnings projected to skyrocket from $0.01 to $0.29 per share. These figures will be revised once ZNGA offers its new guidance to include Peak next month. ZNGA’s positive longer-term earnings revisions help its land a Zacks Rank #2 (Buy) right now. And the stock jumped again Tuesday as part of its 62% expansion in 2020 and a 175% jump in the last three years.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
TakeTwo Interactive Software, Inc. (TTWO) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report
Sandstorm Gold Ltd (SAND) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Electronic Arts Inc. (EA) : Free Stock Analysis Report
Zynga Inc. (ZNGA) : Free Stock Analysis Report
Glu Mobile Inc. (GLUU) : Free Stock Analysis Report
Snap Inc. (SNAP) : Free Stock Analysis Report
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