To many investors, the price of stocks is less important than their performance. Growth, momentum, and value are desired over a cheap entry price. That doesn't mean, however, that less expensive stocks shouldn't be considered. Individuals and small investors will find a lot of value in stocks under 10 dollars if they look for the same growth and momentum they would look for in more expensive stocks.
For example, in 2001 Amazon was one of the stocks under 10 dollars. If you purchased a single share then, it's now worth over $2000. This article will look at 10 stocks under 10 dollars that might perform that way for you. As with any stock market investment though, there is an element of risk involved.
Stocks Under 10 Dollars FAQ
1. What Are the Benefits of Stocks Under 10 Dollars?
Let's say you're a small investor who wants to put $2000 into the stock market. You could purchase one share of Amazon with your money, or you could diversify and purchase 200 stocks at 10 dollars or less. As the saying goes, don't put all of your eggs in one basket. If you invest in strong, up-and-coming stocks, the returns could be great.
2. What Are the Drawbacks of Stocks Under 10 Dollars?
Companies whose shares trade under 10 dollars are less stable than those of larger, more established companies. There's more risk involved in each share you purchase, which makes diversification a vital strategy. If one of the companies you invest in tanks or de-lists, you still have plenty of other stocks that are hopefully thriving.
3. How Do I Decide Which Companies to Invest In?
The best strategy for success is to look for stocks that have been trending upward. This is one of the best ways to predict future gains. For this investment strategy to work, you have to do your research and look for stocks with a strong chart rather than just picking the cheapest options.
4. How Quickly Will I Profit?
That all depends on what strategy you use when researching which companies to invest in. You can look for long-term, slow-growth stocks that have the potential to blossom into major players, or you can look for turnaround stocks that have been blowing up lately. Both strategies have their benefits and drawbacks, and you may choose to go with a mix of the two.
How We Reviewed
These stocks were reviewed based on the company information available, their prior closing cost, and their year-to-date gain. We researched a huge number of the best-performing stocks under 10 dollars in 2018 and those that appear best positioned to begin or continue trending upward to create this unbiased list. Some are companies that started small and are ready to explode while others are companies that have had a temporary setback and are positioned to grow once again. That doesn't mean that all of these stocks will perform for you, but if you diversify, you should see solid gains.
Overall Price Range
These stocks range in price from as cheap as 4 dollars up to 10. That means you can diversify in a big way even if you only have a small amount of money to invest. If one of these stocks dips, others will grow and protect your portfolio. The stock market is always a risk/reward proposition, but by spreading your money around you can mitigate the risk and maximize your rewards.
What We Reviewed
Good Times Restaurants Inc. GTIM
Good Times Restaurants are a regional chain of fast-food restaurants that largely operate in Colorado. In addition to Good Times locations, the company also owns the fast-casual chain Bad Daddy's Burger Bar. With a price this low and strong year to date gains, Good Times is a great pick for stocks under 10 dollars that have some serious momentum. Expect this one to improve as much as 39% this year and 86% in the coming fiscal year.
Magic Software Enterprises Ltd. MGIC
This Israeli software company makes products that make it easier to deploy applications within existing systems. Magic Software's price/earnings ratio of 14.5 and their price/sales ratio of 1.1.6 are both above average in the software industry. Current estimates put earnings per share at 25% for the current fiscal year with sales growth at 12%. This company is a strong growth proposition whose stock may be undervalued despite its slightly negative year to date gain.
FGL Holdings FG
This holding company that sells life insurance policies and fixed annuities is the result of a merger between two other companies, CF Corp. and Fidelity & Guaranty Life, in late 2017. The stock took a hit after a recent earnings report disappointed, but it is now positioned as a strong value play at a low price.
On Deck Capital, Inc. ONDK
On Deck Capital's online platform sources, underwrites, and funds loans for small businesses using analytics and big data. They focus on medical and dental businesses, restaurants, and online-only businesses. Their earnings for the year may hit as high as 43 cents per share when they were stuck at just 1 cent in 2017. Their price/earnings ratio of 16.7 and price/sales ratio of 1.5 means that buyers are getting a good valuation along with the growth potential, making this a great pick for those shopping for stocks under 10 dollars.
Denbury Resources Inc. DNR
The natural gas and petroleum company Denbury Resources Inc. focuses mostly on the Rocky Mountain and Gulf Coast regions of the United States. With oil prices continuing to climb, Denbury Resources is looking at positive earnings estimates that make it a pick with strong gains potential at a rock-bottom price. Experts predict the company to post full-year earnings growth of a whopping 243%, and their year to date gains show them well on their way to achieving that. If you are looking for stocks under 10 dollars that could provide a quick profit, this is one to keep an eye on.
Arcos Dorados ARCO
Arcos Dorados is the largest franchisee of McDonald's in the world and a big-time presence in restaurant industry in Latin America. While they have posted a negative year to date gain in 2018, they gained 92% in 2017 and 74% in 2016, making their overall line trend upward at a steep angle. McDonald's is facing a tough market at the moment, but Arcos Dorados' stock should continue this upward trend in the coming years. If you're looking for stocks under 10 dollars you can hold on to for the foreseeable future, this one is a smart pick.
Sirius XM Holdings SIRI
Sirius XM Holdings proves that, while traditional radio is being overtaken by digital alternatives, internet radio is still a good investment opportunity. Satellite radio leaders Sirius and XM merged over a decade ago and Sirius XM is still growing today. They added a whopping 1.56 million subscribers in 2017, outperforming their own estimates by 160,000 to bring their subscriber total up to 27.5 million. Recent tax cuts are expected to add $900 million to the company's coffers over the next four years, putting them in an even stronger position. This is an established company that's still growing and looking to spread the wealth to its shareholders, making it a top pick among experts for stocks under 10 dollars.
The hotel comparison website Trivago has been doing a big marketing push in 2017 and 2018, raising their public profile and building a strong foundation for a company that's ready to grow. While it's still losing money, their efforts are paying off: revenues grew by 37% in 2017 and, thanks to some back-end optimization, they have cut losses by 75% in the past year. With results like that, don't be surprised if Trivago takes off and breaks through the $10 ceiling by the end of the year. It's not a sure thing, but this stock is poised to explode in the coming months. If your investment plan involves making some quick gains, this is a solid bet.
Pandora Media P
Like Sirius XM, Pandora is an internet radio company that has been adding subscribers and growing at a rapid clip. Their history as a public company is dark, but their stock hit its low earlier this year before jumping from $4 to $7 in the blink of an eye. That growth has continued, and the company now routinely closes days above the 9 dollar mark. Like Trivago, Pandora is still taking losses, but its subscriber base is expected to continue to grow at least through the end of the decade. Tons of investors looking to make quick gains have been flocking to Pandora, and you should be one of them.
lgonquin Power & Utilities AQN
Algonquin Power and Utilities is a Canada-based power generation, transmission, and distribution company with two primary businesses in the form of Liberty Utilities and Liberty Power. The former provides natural gas, water, and power, while the latter generates renewable solar, wind, and thermal energy, making the company's power generation extremely diversified. It made two major acquisitions in 2017 too and has gone global. This puts it in a good position to keep growing well beyond its current valuation, making it a great pick for long-term investment at a low price.
All of these stocks are strong choices for any individual or small investor. Some, like Trivago and Good Times Restaurants, don't even break the 5 dollar mark, making them great value picks. Others push the limit of stocks under 10 dollars and sometimes even close above 10 dollars these days, but don't let that scare you off. The real choice you have to make is whether you want to invest in stocks that have been showing rapid growth in the past year or two or those that are growing more slowly. You can always choose to invest in some of each, too.
If you are looking for stocks that are growing quickly and should provide you with solid gains within a short window of time, look first to internet radio companies Pandora and Sirius XM. Because they hail from the same industry and are both growing, not to mention the year to date growth they have shown in 2018, these are good bets to perform well. Denbury Resources' has huge year to date growth and a lowball valuation and Trivago is making a big push for growth in 2018 that will extend into 2019. Both are smart choices as well.
When it comes to longer-term investments, Arcos Dorados looks to explode soon. While it has had negative growth thus far in 2018, that has more to do with McDonald's itself making big changes than it has to do with Arcos Dorados, whose trend line points up. You may need to have patience but this stock should pay off, especially given its current bargain price. Algonquin Power and Utilities is another good pick for growth over the long term. Their recent acquisitions show they're serious about expanding for years to come, so don't be afraid of their negative year to date gain.
None of these stocks are guaranteed to pan out in the short- or long-term. That's why it's always best to diversify your portfolio when you buy stocks under 10 dollars. Choose an array stocks with positive trends, and the good should outweigh the bad. These picks will go a long way toward building a portfolio you can profit from for years to come.