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, 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. Westell Technologies, Inc. (WSTL)
Prior Close: $3.25
Westell Technologies designs a broad range of digital and analog products used by telcos to deliver services, primarily over telephone wires. The company sports an “A” grade in our Growth category. For its soon-to-be-reported full year ending in March, Westell is projected to post earnings growth of 225%. The company is also expected to start its next fiscal year off hot with further EPS growth of 100% in the first quarter. That strong earnings momentum should be enough to inspire positive trading throughout the rest of the year.
2. Flotek Industries, Inc. (FTK)
Prior Close: $6.05
Flotek Industries develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. FTK is a Zacks Rank #1 (Strong Buy) with great growth prospects. Earnings are expected to soar into the green, while sales are expected to improve by double digits in each of the next two fiscal years. The stock is also starting to generate positive momentum, gaining more than 18% over the past three months, despite broader market volatility.
3. Arcos Dorados Holdings Inc. (ARCO)
Prior Close: $9.05
Acros Dorados Holdings operates as a franchisee of McDonald's with its operations divided in Brazil, North Latin America division, South Latin America, and the Caribbean division. ARCO is currently sporting a Zacks Rank #1 (Strong Buy), and its earnings are expected to improve at an annualized rate of 19% over the next three to five years. But the stock has a PEG ratio of just 1.2, so investors are getting a great price for some of that near-term growth. Meanwhile, with a P/S ratio of 0.6, ARCO is also looking cheap based on its revenue picture right now. Acros is also offering an annual dividend of about 10 cents per share.
4. Houston Wire & Cable Company (HWCC)
Prior Close: $7.58
Houston Wire & Cable is one of the largest distributors of specialty wire and cable and related services in the U.S. electrical distribution market. The stock currently holds a Zacks Rank #1 (Strong Buy), as well as an “A” grade for Value in our Style Scores system. Shares are trading at a respectable 16.8x forward 12-month earnings. The stock also has a P/B ratio of 1.4 and P/S of 0.4, both of which are discounts to the respective industry averages of 2.0 and 0.8. HWCC is also projected to witness EPS growth of 200% this fiscal year, according to current consensus estimates.
5. Limelight Networks, Inc. (LLNW)
Prior Close: $3.99
LimeLight provides content delivery network solutions and partners with over 1,300 brands to deliver live and on-demand video around the world. The company is expected to witness decent growth this year, with earnings expected to improve 10% and revenue projected to improve 7%. Those figures are also projected to improve by 45% and 8%, respectively, in the upcoming year. Limelight has managed to surpass consensus estimates in five-consecutive quarters and will look to continue that momentum. The stock is now a Zacks Rank #1 (Strong Buy).
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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