Here at Zacks, we don’t generally classify stocks as “cheap” or “expensive,” and rather than looking at the stock’s face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
That being said, low-priced stocks can be attractive to smaller investors that can’t necessarily afford large stakes in companies with higher priced shares. When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have.
Today we’ve highlighted five stocks that are currently trading for under $10 per share. All of these stocks currently sport a Zacks Rank #2 (Buy) or better ranking, and the selected companies are showing signs of outpacing the market in the upcoming calendar year.
Check out these five great stocks under $10 for 2018:
1. Zynga Inc. (ZNGA)
Prior Close: $3.89
Zynga is the world's largest social game designer, developing popular mobile titles like FarmVille, Words With Friends, and Mafia Wars. In the current fiscal year, the company surged into profitability. In the upcoming year, we expect EPS expansion to continue, with current estimates calling for earnings growth of 37%. And the stock has a PEG ratio of 1.29 right now, so investors are getting a great price for that growth. Meanwhile, ZNGA has a beta rating of 0.76 and could provide investors with a limited volatility option at this low price point. Zynga is currently a Zacks Rank #1 (Strong Buy).
2. SORL Auto Parts, Inc. (SORL)
Prior Close: $7.00
Sorl Auto Parts is a China-based maker of air brake valves and hydraulic brake valves, which it sells to a wide range of vehicle manufacturers. The stock is currently trading at less than 5 times trailing earnings, but its Zacks Rank #1 (Strong Buy) implies an improving picture for its earnings estimates. It is also worth noting that total sales are expected to improve by a respectable 7% in the upcoming fiscal year, after improving by double digits in recent quarters. SORL is also an interesting momentum pick, as shares have gained more than 112% in the past year. The stock is climbing, earnings estimates are improving, and shares are still cheap—that’s an ideal combo.
3. Avid Technology, Inc. (AVID)
Prior Close: $5.52
Avid develops and sells a portfolio of software products used to create digital media content, including professionally-used music and video creation solutions. The stock is currently sporting a Zacks Rank #2 (Buy), as well as “A” grades for Value and Growth. Avis has a P/S ratio of 0.53, which is great for a smaller tech firm. This proves that the customer base and revenue is there. Additionally, the firm is coming off a strong earnings beat and shares have surged nearly 19% over the last 12 weeks. It is also worth noting that Avid is trading at 21 times forward earnings, so investors are getting a decent price for the company’s expected upcoming profits.
4. Intelsat S.A. (I)
Prior Close: $3.43
Intelsat is a communications satellite services provider. Again, we love to look at the P/S ratio for these smaller companies, and with a P/S of just 0.19, Intelsat is looking undervalued. The stock is currently sporting a Zacks Rank #2 (Buy) and an “A” grade for Value. The company is in the red, but EPS figures are projected to improve by nearly 45% in the upcoming fiscal year. Like many telecoms, Intelsat has plenty of debt, and despite efforts to refinance that debt falling through, the company’s prospects have improved on the back of improved revenues.
5. SeaChange International, Inc. (SEAC)
Prior Close: $3.84
SeaChange develops products that help television and broadcast companies manage, store, and distribute digital video. In other words, the company builds the framework that other companies build their digital streaming and video sharing platforms on top of. The company’s most recent quarter resulted in earnings that crushed our consensus estimate by over 800%. The stock is now a Zacks Rank #1 (Strong Buy) and has soared nearly 48% over the past four months. Looking towards next year, the company is projected to witness EPS growth of 33%. A renewed focus on a SaaS business model has helped the company attract customers and become more efficient.
A stock’s market price is certainly not the most important factor to consider when considering whether or not to add it to your portfolio, and sales and earnings growth projections can prove to be tough to live up to.
Nevertheless, we can always use Zacks’ proven methods of finding quality stocks, and these five companies just happen to be showing strength while also trading for under $10 per share.
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Zynga Inc. (ZNGA) : Free Stock Analysis Report
SeaChange International, Inc. (SEAC) : Free Stock Analysis Report
SORL Auto Parts, Inc. (SORL) : Free Stock Analysis Report
Avid Technology, Inc. (AVID) : Free Stock Analysis Report
Intelsat S.A. (I) : Free Stock Analysis Report
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