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The market popped to start the week, with the Dow leading the charge, as buyers came back in following Friday’s big downturn. Stocks continued to storm back Tuesday, with the tech-heavy Nasdaq up over 3% through mid-afternoon trading, while the S&P 500 had popped 2% and the 30-stock index jumped roughly 1.5%.
Optimism that the new Omicron variant will be milder than some initially feared appears to be the catalyst. The recent spate of selling and volatility began during light trading volume on Black Friday, as Wall Street started to assess the covid news.
Investors also locked in on Jay Powell’s comments that ‘transitory’ could be an outdated phrase, as inflation possibly speeds up the Central Bank’s tapering timeline. The Fed issue is hardly novel, which means the wave of selling that pushed many former high-flyers to new 52-week lows last week was likely driven by lockdown-style fears, coupled with the opportunity to take home some winnings.
At one point last week, the Nasdaq had dropped nearly 7% from its records, but it never came close to its 200-day moving average and it’s now around 2% below its November highs. The S&P 500 didn’t fall as far and it’s trading within roughly 1% of its records.
Selling and volatility could certainly continue. However, long-term investors often utilize pullbacks as a chance to buy some of their favorite stocks at discounts. The last week alone helps showcase how vital it is to stay exposed to the markets.
Given this backdrop, investors likely want to consider adding stocks in December and heading into 2022. Today, we utilized a Zacks screen to find highly-ranked stocks trading for under $10 a share to consider amid the current market resurgence…
One dollar or less used to be the common threshold for what we call “penny stocks.” Today, the SEC has expanded penny stocks to securities that trade for less than $5 a share. Many investors avoid these stocks because they are speculative in nature.
Meanwhile, penny stocks often trade infrequently and hold wide bid/ask spreads. These stocks also carry many other traits that, in many cases, cause excessive volatility. With that said, some penny stocks perform incredibly well, which helps them remain attractive.
Stocks Under $10
Moving on, let’s briefly discuss the next class of cheap stocks. Stocks that trade in the $5 to $10 range are generally less risky than their penny stock counterparts. Investors might be more likely to have heard of these companies or seen the tickers. They are, however, still inherently more speculative than many other higher-priced stocks.
Investors can obviously find winning stocks for under $10 if they are extremely selective. So today, we narrowed the list of thousands of these more speculative stocks down to a more manageable group of $10 and under stocks that might help boost your portfolio.
• Price less than or equal to $10
• Volume greater than or equal to 1,000,000
• Zacks Rank less than or equal to 2
(No Holds, Sells or Strong Sells.)
• Average Broker Rating less than or equal to 3.5
(Average Broker Rating of a Hold or Better.)
• # of Analysts in Rating greater than or equal to 2
(Minimum of at least two analysts covering the stock.)
• % Change F1 Earnings Estimate Revisions -- 12 Weeks greater than or equal to 0
(Preferably upward earnings estimate revisions, but definitely no downward revisions.)
Here are two stocks of the over 40 highly-ranked names trading under $10 a share that made it through the screen today…
Coty is one of the world’s largest beauty firms. The company currently operates two divisions: Coty Luxury and Coty Consumer. The Luxury unit focuses on prestige fragrances and skincare. Meanwhile, Coty Consumer is based around mass color cosmetics, body care, and mass fragrances.
Coty crushed our Q1 FY22 earnings estimate in early November and its growth outlook appears strong. The stock has climbed 35% since mid-October and Coty has 20% more room to run before it hits its current Zacks consensus price target.
ADMA Biologics, Inc. ADMA
ADMA Biologics is an end-to-end commercial biopharmaceutical company committed to manufacturing, marketing and developing specialty plasma-derived products. ADMA is focused on the prevention and treatment of infectious diseases in the immune compromised and other patients at risk for infection.
ADMA Biologics topped our quarterly EPS estimate on November 10. ADMA’s revenue climbed 101% YoY and it posted its first-ever positive gross profit. At $1.38 per share, the stock is inherently more volatile than higher-priced names. Nonetheless, all five of the brokerage recommendations Zacks has for ADMA Biologics are “Strong Buys.”
Both stocks offer solid growth potential. Yet, it isn’t wise to pack your portfolio full of cheap, $10 or less stocks. Still, these stocks are certainly worth further investigation because grabbing a few of the top names from this list might bolster your returns. And let’s not forget that picking a few cheap stocks can also be quite fun.
Get the rest of the stocks on this list and start screening for the best stocks under $10 for yourself. And don't forget to backtest your strategy so you'll know how successful it's been before you put any of your money at risk.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.
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