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Surprisingly, the year 2020 turned out to be a blissful one for investors, in spite of the economy encountering several bottlenecks. The U.S. equity market has had a bumpy ride with coronavirus snapping the Wall Street’s longest ever bull run in March, last year. But since then, the market has rebounded sharply. Markedly, the Dow Jones, the S&P 500 and the Nasdaq have appreciated 6%, 15.3% and 41.8%, respectively, in the past year.
It is quite apparent that the government’s timely intervention to provide financial support and fast tracking the development of COVID-19 vaccine helped offset much of the economic damage inflicted by the pandemic. Also, increasing risk appetite among investors helped propel major indices.
Well looking at the bullish run, market pundits are of the opinion that the indices may hit new highs in 2021 on the backdrop of still-low interest rate environment, swift vaccination and the new stimulus deal that aims to spark a lasting economic recovery. Notably, the Federal Reserve raised its 2021 real GDP forecast to 4.2% from 4%. The Jerome Powell-led Fed also now envisions unemployment rate to be 5% in 2021, down from the prior estimate of 5.5%.
Definitely challenges will be there, as strains of coronavirus pandemic will not fade out soon. But a constructive economic policy will play a vital role in steering the market in the new year. For now, the $900-billion stimulus package has given the economy a new lease of life. Economists cited that if business organizations and industries started to operate at an optimum level it will have a positive impact on revenues and profits.
Where to Invest?
Amid such a bullish backdrop, let’s focus on stocks that are trading under $10 a share. Well, low-priced stocks may not seem attractive to some because fewer people follow them and less has been said about them. But it is also true that these low-priced stocks could be greatly rewarding especially in terms of growth. Market professionals believe that a diligent selection of stocks based on fundamentals could help investors even double their investments.
That said we have highlighted three stocks on the basis of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.
3 Gems Trading Under $10
Community Health Systems, Inc. CYH, which owns, leases, and operates general acute care hospitals in the United States, is a solid bet. The company’s portfolio optimization strategy, margin improvement program and the targeted capital investments bode well. Management has also increased investments in high-return CapEx opportunities on both the inpatient and outpatient side of the business. Notably, the stock carries a Zacks Rank #2 with a Growth Score of A. The company has a trailing four-quarter earnings surprise of 58.3%, on average. It has a long-term earnings growth rate of 10.3%. Moreover, the Zacks Consensus Estimate for the bottom line for 2021 has improved over the past 60 days. Remarkably, the stock has rallied 184.7% in the past year.
We suggest investing in Lincoln Educational Services Corporation LINC, which provides various career-oriented post-secondary education services to high school graduates and working adults in the United States. The company is benefiting from students growing inclination toward acquiring new skills for in-demand essential careers. Markedly, the company has focusing on improving cash flows and reducing debt. The company has a trailing four-quarter earnings surprise of 113.6%, on average. The stock has a Zacks Rank #2 and a Growth Score of A. Moreover, the Zacks Consensus Estimate for the company’s 2021 earnings has been revised upward by 42.1% over the past 60 days. We also note that the company has long-term earnings growth rate of 15%. Impressively, the stock has soared 143.5% in the past year.
You may invest in Build-A-Bear Workshop, Inc. BBW, which has a Zacks Rank #2 and a Growth Score of B. This specialty retailer of plush animals and related products remains focused on accelerating digital transformation, evolving retail store experience, and improving financial stability. Markedly, the company has a trailing four-quarter earnings surprise of 98.4%, on average. Moreover, the Zacks Consensus Estimate for the company’s fiscal 2021 earnings has jumped 42.9% over the past 60 days. The stock has appreciated 32.2% in the past year.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>
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Community Health Systems, Inc. (CYH) : Free Stock Analysis Report
Lincoln Educational Services Corporation (LINC) : Free Stock Analysis Report
BuildABear Workshop, Inc. (BBW) : Free Stock Analysis Report
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