If you are looking to pick up some stock on the cheap, look no further. We are going to take a closer look at the top five stocks for under $10 for 2019.
Make no mistake about it, you can never judge a stock as being expensive or inexpensive simply by looking at its current price. There is a lot more to take into consideration before forming an opinion on a stock’s valuation.
You need to look at where the stock is trading versus its earnings, whether or not the company is expected to grow its bottom line moving forward, and the market’s recent sentiment on the stock.
If you can make the case that the company will grow moving forward, and the current valuation appears to be reasonable or undervalued, you can rightly assume that the stock itself is undervalued and deserves a closer look.
Each of the following stocks are under $10 at this time with the potential to rise to that mark and even higher.
Aurora Cannabis (ACB)
Marijuana stocks have been hot over the last year, and Aurora Cannabis (ACB) is currently testing its $10 resistance level at $9.64. Aurora is a marijuana grower in Canada. Canada legalized recreational marijuana on a national level last year, and as medical and recreational marijuana legislation expands in the U.S. the potential market is huge for the entire sector. We will continue to see more companies move into the sector and additional big investments from companies outside the sector such as tobacco and alcohol companies, and the growers that have established themselves as leaders will be the most enticing. Aurora is projected to be the largest producer in the world but has yet to land a major partnership. It will happen, and it will help drive the stock sharply higher.
Detroit automaker Ford (F) fell below $10 last summer, and while the stock has stabilized and has attempted to make a run at the $10 mark, it has failed on multiple occasions to break through solid resistance at $9.50. From a valuation perspective, F looks very attractive. The stock is trading at just 9 times past earnings, and 6.3 times future earnings. Earnings growth has been modest at just 2.9% per annum over the last five years, and profits are expected to rise at an annual rate of 3.8% over the next five years.
Right now, the auto market has cooled after years after record sales, and steel and aluminum tariffs resulting from the trade way between the U.S. and China are a concern. The two nations are trying to work out a trade deal which should reduce the negative impact of tariffs on the sector and allow the stock to trade higher. The auto sector is cyclical meaning it should do well when overall economic conditions are good. Right now, that is the case with low unemployment and wages slowly rising. Given its low valuation, and the possibility of a trade deal between the U.S. and China on the horizon, the second half of 2019 could be a strong period for Ford stock.
Consumer electronics maker GoPro (GPRO) has enjoyed a nice run so far in 2019. The stock hit a 52-week low of $4.00 in late December during the market correction but has since appreciated 58% to its current price of $6.34. The stock’s gains were fueled in part by a very strong set of quarterly numbers in February that topped estimates on both the top and bottom line and showed 13% year of year sales growth.
The stock is trading at 20-time future earnings and analysts expect profits to rise 10% per annum over the next five years. GoPro will next report earnings on May 18, with the consensus calling for a loss of 18 cents per share, but that is a big improvement over the loss of 34 cents during the same period last year. The quarterly loss has already been priced into the stock and should not result in a drop in share price as long as the loss is in-line or less than expected.
Nokia (NOK) stock struggled as the company was unable to make a splash in the smartphone market, but the stock has been trending higher over the last six months as earnings start to rise. Over the last five years earnings have remained basically flat, dropping 0.13% per annum, but this year analysts forecast earnings growth of 14.8% and over the next five years profits are expected to rise at an annual rate of 22.2%. NOK currently trades with a forward P/E of 13.8, which is low considering the expected growth rate. NOK is currently trading at $6.26 and analysts have an average price target of $7.16 on the stock.
Game maker Zynga (ZNGA) traded in a pretty tight sideways trend between $3.50 and $4.00 for all of 2018, but the stock found its footing in December and has risen to $5.30. ZNGA has a forward P/E of 19.6 and the company is expected to grow earnings by 30% per annum over the next five years, and 23.5% during the current year. Zynga reported weaker than expected numbers on both the top and bottom line each of the last two quarters, but the street overlooked the February miss and pushed shares to their highest level since early 2014.
The stock is moving higher on the back of improvements in mobile where mobile advertising revenue rose 23% year over year during its recent quarter, and bookings were up 20%. The company wrote in a letter to investors that its turnaround was complete and the company expected significant growth in 2019 and beyond. It forecast 2019 revenue to rise 27% year over year with bookings jumping 39% to $1.3 billion. If Zynga can cotniue to accelerate growth the stock has a lot of upside potential and should continue to move towards the $10 level.