It’s always hard to describe stocks that are trading under $10. Are they cheap stocks? Are they penny stocks? Are small-cap stocks bargains?
The fact is, a low-priced stock doesn’t necessarily mean anything other than that it’s low-priced. There’s no reason to take a flyer on a low-priced stock just because it’s low priced when a higher-priced stock (and few less shares) may get you a better stock.
I do the same amount of leg work on every stock, regardless of its price. Then, once they’ve been through my Portfolio Grader system, I can parse that list by industry, momentum, fundamentals or in this case, price.
The seven A-rated stocks under $10 featured here have everything going for them, just like their higher-priced brethren. They just cost you a little less to get into. Or, you can take a bigger stake than you could in say a $30 stock.
What’s more, small-cap stocks (usually one and the same as low-priced stocks) are doing well now — the Russell 2000 Index is the best indicator of the small caps, and it’s up more than 14% year-to-date. And since they have been in the shadows while the big names get the glory, they’re usually better values here as well.
Orion Energy Systems (OESX)
Orion Energy Systems Inc (NASDAQ:OESX) only has a market cap of $93 million. And while it had a pop in early 2017, it hasn’t done much until recently.
It’s in the lighting business. Basically it designs, manufactures and installs commercial lighting systems and energy management solutions. That may not sound like a big business, but it depends on who your clients are.
And recently it looks like OESX has landed a big client. Its stock is up 230% in the past 12 months and a whopping 477% YTD. And 100% in the past three months.
It has landed a big fish to be sure. And if it’s a big box retailer that’s retrofitting its stores with energy-saving lighting, this is going to be a run that will last for a while.
For now, however, few people are watching. Don’t chase it, just buy in a little at a time.
Sachem Capital Corp (SACH)
Sachem Capital Corp (NYSE:SACH) is an interesting company. It’s in the real estate investment trust (REIT) sector and is classified as a REIT. But it doesn’t hold properties, its holds first mortgages on properties.
It offers what’s know in the business as “hard money loans”, which are basically short-term (three years or less), secured non-banking loans for acquisition, renovation or development of properties in Connecticut, Massachusetts, New York and Rhode Island.
It has about a $105 million market cap, and its performance has been solid. Year-to-date it’s up 27%. And that should continue since both the REIT sector and the small cap sector are both doing well here.
The real kicker is its 9.6% dividend. If you’re looking for a long-term, small cap holding and a solid regional REIT play, look no further.
New York Mortgage Trust (NYMT)
New York Mortgage Trust (NASDAQ:NYMT) is another REIT, with all the benefits discussed earlier regarding being involved in two hot sectors at once.
It also focuses on the mortgages and financial assets of a development or builder rather than the physical assets. With rates this low and likely headed lower, this is a very good time for a firm like NYMT since many developers will grab properties while rates are low and then can develop over time.
In mid-July, the company offered an additional 20 million shares, which diluted current shareholders but has boosted its operating capital so it can make more deals while the market is hot.
Its stock performance is about breakeven at this point, but it has a huge 13.1% dividend. Its $1.3 billion market cap also means it has aspirations to build a bigger company over time.
Innovative Systems and Support (ISSC)
Innovative Systems and Support Inc (NASDAQ:ISSC) has been building avionics and instrumentation for the airline industry since 1988. Its customers are a who’s who of the major commercial airlines, logistics companies and governmental agencies.
With a $94 million market cap, this is a niche player in the sector, but that simply means it’s a reliable subcontractor to major contracts that are signed by various aviation companies.
This has been a very good year for the company — and its stock — it’s up 93% for the year and 150% YTD. With air travel expanding and online shopping continuing to grow, there’s no doubt that airlines will be in need of the products ISSC delivers for many years to come.
CorMedix Inc (NASDAQ:CRMD) is a commercial-stage pharmaceutical company that focuses on its taurolidine technology to build a non-antibiotic, antimicrobial that can prevent bloodborne infections and inflammation in patients that are on IVs and catheters.
It will be a contender with the long-time go-to, heparin.
Earlier this month, the stock got a boost when the company announced that the Food and Drug Administration determined that it had passed its Phase III trial and doesn’t need to expand its study further. That means CRMD is much closer to getting Neutrolin to market.
It currently has a $219 million market cap and the stock has been doing well for a while. It’s up 46% YTD and a whopping 214% in the past 12 months. CRMD has a good chance to be bought out or get a big licensing deal with a large pharmaceutical company.
Adesto Technologies (IOTS)
Adesto Technologies Corp (NASDAQ:IOTS) is a small chipmaker that specializes in non-volatile memory chips for the “Internet of Things” market.
This is a massive long-term trend and as it expands, it’s a great place for smaller chipmakers to grab a foothold. IOTS is a full stack IOT provider in the industrial, medical, consumer and communications sectors.
The IOT semiconductor space is looking at a compounded annual growth rate (CAGR) of 25% until 2022 and CAGR of 35% for industrial IOT building blocks demand.
It already works with the major players across its sectors and has a global presence. This means it will continue to grow with its partners.
Right now, its market cap is a mere $247 million, but it’s in a perfect position to grow alone or get acquired at a premium by a larger chip firm looking to gain market share in the sectors where IOTS thrives.
Fluent Inc (NASDAQ:FLNT) is an online marketing platform for businesses and publishers.
Remember, the old publishing model collapsed after the internet drove paper publishing into the ground. It also hit the direct mail business hard as well. Then, as everyone started filling your inbox with tons of junk mail, that became increasingly difficult as well.
That left companies looking for ways to build their customer lists and create effective advertising that customers would see. And digital agencies like FLNT were born to market to and acquire customers.
It has a $410 million market cap, so it has done well in the nine years since its founding and it continues to grow. Year-to-date it’s up 54% and over the past 12 months it has returned 135%, yet still trades at a trailing P/E of 44.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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