Finding the Next Big Winners: 7 Stocks You Can Snag for Under $10
If you’re on the hunt for stocks under $10, look no further. The stock market has been off to a scorching start in 2024. Indexes have been going virtually straight up and momentum stocks are flying. With the economy remaining strong and the Federal Reserve potentially set to cut interest rates, this is seemingly a best of all worlds scenario for the equity market. The enthusiasm is understandable.
But it does leave some investors wondering where the bargains are. After such a huge run in the major indexes, are there still cheap stocks worth buying today?
While many low-priced stocks have major fundamental issues, there are some real diamonds in the rough. Don’t overpay for promising companies today when these seven stocks to buy under $10 have solid fundamentals and could be poised for major gains in the weeks and months to come.
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Stocks Under $10: United Microelectronics (UMC)
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United Microelectronics (NYSE:UMC) is the world’s fourth-largest semiconductor foundry business by market share. While Taiwan Semiconductor Manufacturing (NYSE:TSM) tends to get all the attention, United Microelectronics has built a nice business for itself as well.
Indeed, with nearly $8 billion in annual revenues, United Microelectronics has proven itself more than capable of serving as a quality foundry firm for chip companies which need to diversify their supply chains away from being 100% reliant on TSM.
United Microelectronics is highly profitable. Shares trade for around 12 times earnings and at just six times Enterprise Value to EBITDA. That’s a steep discount for a tech company, especially one in a booming industry such as semiconductors.
As applications such as AI, internet of things, and connected cars continue to take off, there should be more and more demand for UMC’s foundry services. And to top it all off, UMC stock offers a 7% dividend yield as well.
Under Armour (UAA)
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Under Armour (NYSE:UA, NYSE:UAA) has fallen on hard times. The apparel maker saw shares top $50 each at one point back in 2015. Since then, Under Armour has been on a massive losing streak, with shares falling more than 80% from their heights.
With the stock now in the single digits, investors might be tempted to throw in the towel. But that’d be the wrong play; in fact, Under Armour seems set for a comeback.
Under Armour lost its way due to failing to make good endorsement deals and distribution decisions. In particular, an underinvestment in the direct-to-consumer channel left it in the dust compared to some other rivals. However, Under Armour’s stronger investments in direct store distribution could give it a leg up as consumers increasingly want an omnichannel experience with the opportunity to view apparel in-store.
Furthermore, Under Armour’s international channel is gaining steam, and the company’s cost-cutting efforts are bearing fruit. All this is setting up to give Under Armour a jump in profitability and get shares back on the upswing.
Morningstar’s David Swartz believes UAA stock is wildly undervalued. He assigns a fair value of $15.50 per share, which represents more than 100% upside from the current stock price.
Stocks Under $10: AvePoint (AVPT)
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AvePoint (NASDAQ:AVPT) is a cloud computing company which primarily manages data for its clients. The firm was built with the idea of building services to help manage installations of external software, such as Microsoft’s (NASDAQ:MSFT) 365 workplace productivity suite.
A client can come to AvePoint and have it set-up and maintain a firm’s 365 installation and integrate other data management, security, and interconnectivity needs on top of that.
At the time that AvePoint went public, investors were concerned that AvePoint was potentially too tied to Microsoft’s software ecosystem. However, as Microsoft has shown rapid growth – particularly in its Azure business – this has greatly expanded AvePoint’s addressable market as a key Microsoft partner.
AvePoint has grown revenues from $116 million in 2019 to $271 million in 2023, and should bring in about $315 million this year. In addition, the company recently reached profitability and should enjoy rapid EPS growth as it benefits from operating scale. With AVPT stock still selling at a 25 percent discount to its initial $10 SPAC offering price, there is plenty more upside ahead.
Evotec SE (EVO)
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Evotec SE (NASDAQ:EVO) is a German life sciences company. It is focused on drug discovery; specifically, it helps biotech and pharma firms with the development of new clinical products and therapies. Evotec has partnerships with many of the world’s leading pharmaceutical companies and Evotec is involved in research and development on a pipeline of drug candidates which cover a wide range of diseases and clinical targets.
The unique piece of the Evotec story is that it has multiple revenue streams. It gets paid up front for doing clinical research. But it also picks up royalties on the eventual commercial sales of the drugs on which it does research. This gives Evotec access to a long-lived revenue stream off a variety of FDA-approved drugs once they go to market.
There is already solid proof that the business model works. Evotec has grown revenues from $425 million in 2018 to an estimated $1.0 billion for 2024. EVO stock is down more than 40% year-to-date (YTD) and has fallen back to 2017 levels; this represents an excellent buying opportunity for this fast-growing life sciences firm.
Stocks Under $10: Petco Health and Wellness (WOOF)
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Petco Health and Wellness (NASDAQ:WOOF) is a specialty retail company focused on pet care. In addition to the sale of pet products, it offers vet care, grooming, training, and tele-health services. Petco also has substantial e-commerce operations.
Overall, Petco brings in about $6 billion in annual revenues. Yet the firm’s market cap is now down to less than $600 million following a brutal year in which Petco shares lost roughly three-quarters of their value.
The company has admittedly struggled as the pet industry slowed down after a boom in 2021 and 2022. But Petco remains around breakeven on a net income basis and revenues this quarter topped expectations. Given the firm’s depressed valuation, even a small improvement in operations could lead to a huge jump in the share price.
Our Muslim Farooque recently highlighted WOOF stock as one with potential to rally at least 35%. Farooque is upbeat about the firm’s recent move into the pet insurance market via a partnership with Nationwide. Analysts project a double-digit annualized growth rate for pet insurance, which could be just the thing to snap WOOF stock out of its current slump.
Valley National Bancorp (VLY)
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A couple of hot inflation readings recently have cast doubts on the Federal Reserve’s plans for 2024. However, if and when rate cut sentiment returns, certain categories of stocks should be set for big gains. Regional banks are one such group.
Valley National Bancorp (NASDAQ:VLY) has significant exposure to the interest rate curve, and as such, should be a big winner when the rate cuts start to occur.
In the meantime, however, VLY stock has slumped as investors await the Fed’s next move. Throw in rising concern around the state of the commercial real estate market, and Valley National Bancorp shares are down more than 30% YTD.
This has created a buying opportunity. Shares are going for less than eight times forward earnings and pay a fat 5.8% dividend yield. In addition, Valley National Bancorp announced a share repurchase program in February. This should allow the company to retire stock opportunistically while shares are at their current depressed price.
Sibanye Stillwater (SBSW)
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Last on the list of stocks under $10 is Sibanye Stillwater (NYSE:SBSW), a precious metals mining company. It produces platinum group metals including palladium, platinum, and rhodium along with gold and silver. The mining firm is geographically diversified with operations in the U.S., Canada, Argentina, South Africa, and Zimbabwe.
SBSW stock had a terrible time in 2023. The demand for platinum group metals plunged as the vehicle market slowed down. As these components are particularly vital in emission control, sentiment faded around SBSW stock as the electric vehicle sector lost steam.
However, the big decline in SBSW stock creates opportunity. The longer-term trend is still toward cleaner vehicles which will use more high-value mining inputs. In addition, the price of gold has rallied recently, which will help Sibanye Stillwater’s profitability. SBSW stock is trading at just 0.62 times book value, and shares look cheap compared to the firm’s typical levels of profitability.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.
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