Find Cheap Stocks Under $10 to Buy with the S&P 500 at Records

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Stocks climbed to new highs to start the second week of February after the market posted its strongest week since November to start the month. The benchmark S&P 500 index did dip slightly during regular trading Tuesday, while the Nasdaq inched higher.

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Overall, the strong start to February continues the post-November election run. Along with the vaccine roll out positivity and hope that things will be able to return to normal later in the year, Wall Street has grown more bullish on the likelihood of increased government spending under the Biden administration.

More tangibly, the fourth quarter earnings season has turned out far better than expected, as tech titans continue to blow away estimates and once again cement themselves as the most important players in the market.

Luckily, it’s not just tech companies that have reported solid financials and provided optimistic guidance. In fact, Q4 earnings estimates have turned positive for the S&P 500 and the outlook for 2021 has improved (also read: Q4 Earnings Growth Turns Positive).

Meanwhile, some economic numbers are pointing in the right direction and there is a ton of pent-up demand in the U.S. economy. With this in mind, some investors might want to add to their portfolios with the market at new highs. And today we screened for strong stocks that are trading for under $10 per share that might be worth buying…

Penny Stocks

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.

Screen Parameters

• 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 three stocks of roughly 30 highly-ranked stocks trading under $10 a share that made it through the screen today…

Marathon Oil Corporation (MRO)

Genco Shipping & Trading Limited (GNK)

Barclays PLC (BCS)

Overall, all three of these 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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