Investments: What's Cheap Now?

There are a variety of cheap stocks available to buy now, but it's important to be cautious when investing in these companies as they may have underlying business model issues or a difficult near-term outlook. However, analysts have identified some high-quality cheap stocks that could be excellent buying opportunities.

- ExlService Holdings, Inc. (EXLS)

- O’Reilly Automotive, Inc. (ORLY)

- MSCI Inc. (MSCI)

- Inter Parfums, Inc. (IPAR)

- Kinsale Capital Group, Inc. (KNSL)

- The Bancorp, Inc. (TBBK)

- Super Micro Computer, Inc. (SMCI)

- NICE Ltd. (NICE)

- Globant S.A. (GLOB)

- Paycom Software, Inc. (PAYC)

- Aris Mining (ARMN)

- Rave Restaurant Group (RAVE)

- Arcutis Biotherapeutics (ARQT)

- Cellebrite DI (CLBT)

- Mitsubishi UFJ Financial (MUFG)

- Alarum Technologies (ALAR)

- Banco BBVA Argentina (BBAR)

- Silvercorp Metals (SVM)

- iQiyi (IQ)

- GoodRx Holdings Inc. (GDRX)

- Kinross Gold Corp. (KGC)

- Southwestern Energy Company (SWN)

- First Citizens BancShares, Inc. (FCNCA)

- Hertz Global Holdings, Inc. (HTZ)

- Community Health Systems, Inc. (CYH)

- Teekay Tankers Ltd. (TNK)

- International Seaways, Inc. (INSW)

- Stellantis N.V. (STLA)

- Vital Energy, Inc. (VTLE)

- PBF Energy Inc. (PBF)

Stocks under $5

Ambev SA (ABEV)

Brazil's dominant brewing company, Ambev, has made some key strategic decisions that distinguish it from its parent company, Anheuser-Busch InBev. Ambev maintains a net cash position, while A-B InBev is heavily indebted, and has avoided the culture war battles that caused boycotts of Budweiser products in North America. Despite these strengths, shares have recently fallen to multiyear lows due to skepticism about Brazil's economic outlook and competitive disruption in the alcohol industry. However, with a forward earnings multiple of just 12 and a 6.9% dividend yield, the stock could be an attractive investment opportunity.

Sirius XM Holdings Inc. (SIRI)

Sirius XM operates a leading satellite radio platform and also owns the Pandora streaming service. The stock spiked last summer during a short squeeze and potential takeover talks, but ultimately, nothing materialized, and shares have since fallen below $2.50. However, Warren Buffett's Berkshire Hathaway has recently added to its position, giving hope to investors. The stock currently trades at a forward earnings multiple of 8 and offers a generous 4.1% dividend yield.

Enel Chile SA (ENIC)

Enel Chile is one of Chile's largest independent power producers and is appealing for its focus on renewable energy. The company is one of the world's greenest utilities, with ample hydroelectric capacity and high-yielding solar farms. Chile also has the world's largest proven lithium reserves and is a major player in the copper market, which are crucial for electric vehicle batteries. Additionally, Chile's central bank has slashed interest rates, giving a boost to the economy and electricity demand.

LG Display Co. Ltd. (LPL)

LG Display manufactures thin-film transistor liquid crystal display (TFT-LCD) and organic light-emitting diode (OLED) technology-based display panels for TVs, laptops, navigation devices, and medical equipment. The company benefited from the pandemic-era electronics boom but has seen a decline in demand and revenues since. However, analysts are projecting a double-digit rebound in revenue this year, and the stock is down more than 43% over the past 12 months, providing a discounted entry point.

Latham Group Inc. (SWIM)

Latham Group is a designer and manufacturer of in-ground swimming pools that went public during the pandemic. The company's revenues soared from $318 million in 2019 to $696 million in 2022 as pool sales boomed. However, as the economy reopened, sales tapered off, and analysts are forecasting lower revenue for 2024. Despite this, Latham's downcycle appears to be ending, with shares leaping more than 20% in May after a better-than-expected first-quarter earnings report.

Planet Labs PBC (PL)

Planet Labs is a pioneer in the Earth observability industry, providing satellite imagery to governments and commercial customers. The company came about through a special purpose acquisition company (SPAC) merger and has seen its share of challenges, with shares down over 80% from their launch price. However, the company's most recent earnings report was upbeat, with revenues growing 11% year-over-year, and it expects to reach positive adjusted EBITDA later this year. With $299 million in cash on hand, Planet Labs has the resources to play the long game.

Grupo Aval Acciones y Valores SA (AVAL)

Grupo Aval is one of the three large Colombian banking and financial groups, with a combined market share of about 25% in the country. While Colombia's economy is heavily tied to oil exports, which have seen recent weakness, the bigger picture shows that commodity prices for key Colombian exports remain high. AVAL stock is currently trading near its pandemic lows, offering investors an opportunity to buy this quality banking franchise at a significant discount to book value.

Stocks under $10

Trxade Health Inc (MEDS)

Trxade Health is a health services information technology company that focuses on digitalizing the retail pharmacy experience.

Pieris Pharmaceuticals Inc (PIRS)

Pieris Pharmaceuticals is a clinical-stage biotechnology company that develops Anticalin-based drugs. Its product pipeline includes immuno-oncology, respiratory, and ophthalmology therapies.

Benitec Biopharma Inc (BNTC)

Benitec Biopharma is a development-stage biotechnology company that works on advancing novel genetic medicines. The company's proprietary platforms include DNA-directed RNA interference and DNA-directed RNA activation technologies.

Oncternal Therapeutics Inc (ONCT)

Oncternal Therapeutics develops novel oncology therapies for the treatment of cancers with critical unmet medical needs. Its product pipeline includes Zilovertamab and ONCT-216.

Sirius XM Holdings Inc. (SIRI)

Sirius XM operates a leading satellite radio platform and the Pandora streaming service. The stock has been under pressure due to concerns about the automotive market, but it has strong fundamentals and a generous dividend yield.

Enel Chile SA (ENIC)

Enel Chile is one of the world's greenest utilities, with ample hydroelectric capacity and high-yielding solar farms. It is well-positioned to benefit from the trend towards environmental, social, and governance (ESG) investing.

It is important to note that investing in stocks, especially those trading at low prices, carries risks. Before investing, it is always recommended to conduct thorough research and, if necessary, consult a financial advisor.

High-quality bargain stocks

While many companies priced at this level face issues like flawed business models or weak financials, there are some high-quality bargain stocks that could deliver outsized gains. Here are some examples:

Ambev SA (ABEV)

Ambev is Brazil's dominant brewing company and a subsidiary of global giant Anheuser-Busch InBev. Despite the strengths of its parent company, Ambev maintains a net cash position while avoiding the culture war battles that caused boycotts of Budweiser products in North America. Although shares have recently fallen to multiyear lows due to skepticism about Brazil's economic outlook and competitive disruption in the alcohol industry, Ambev's core South American market is more insulated from these risks than most rivals. At its current price, ABEV stock offers a dividend yield of 6.9%.

Sirius XM Holdings Inc. (SIRI)

Sirius XM operates a leading satellite radio platform and the Pandora streaming service. After spiking last summer during a short squeeze and potential takeover, Sirius XM shares quickly gave back their gains. However, Warren Buffett's Berkshire Hathaway has recently added to its position, giving hope to investors. SIRI stock currently offers a generous 4.1% dividend yield.

Enel Chile SA (ENIC)

Enel Chile is one of Chile's largest independent power producers and is appealing for its environmental credentials. It is one of the world's greenest utilities, delivering affordable carbon-free electricity thanks to its ample hydroelectric capacity and high-yielding solar farms. Chile's economy is set to benefit from higher commodity prices and the country's position as a major player in the lithium and copper markets for electric vehicle batteries.

LG Display Co. Ltd. (LPL)

LG Display manufactures thin-film transistor liquid crystal display and organic light-emitting diode technology-based display panels for consumer electronic devices. After getting caught up in the pandemic-era electronics boom, LG Display has seen revenues drop and inventories stack up. However, analysts are projecting a double-digit rebound in revenue this year, and the stock is currently discounted.

Latham Group Inc. (SWIM)

Latham Group is a designer and manufacturer of in-ground swimming pools that went public during the pandemic. Although sales have tapered off as the economy has reopened, Latham's downcycle appears to be ending, and the company is still much larger than it was in 2019. Analysts are forecasting improved profitability during the summer swimming season.

Planet Labs PBC (PL)

Planet Labs is a pioneer in the Earth observability industry, providing satellite imagery to governments and commercial customers. Although the company is currently unprofitable, it expects to reach positive adjusted EBITDA later this year and has $299 million in cash on hand to play the long game.

Grupo Aval Acciones y Valores SA (AVAL)

Grupo Aval is one of the three large Colombian banking and financial groups, with about a 25% market share in the country. Although Colombia's economy is heavily tied to oil exports, which have recently weakened, the country's exports remain at much higher levels than in previous years, and the recent bout of inflation should further bolster pricing power for Colombian firms. AVAL stock is currently trading at a significant discount to book value.

Cheap stocks with strong prospects

While there are some serious risks that come with buying penny stocks, finding good cheap stocks is possible if you know how to look for them. Here are some tips to help you get started:

Use a Stock Screener

You can use a stock screener to sort stocks by various criteria, such as annual sales growth, future earnings growth rate, and market capitalization. This will help you identify stocks that are undervalued or have strong growth potential.

Evaluate the Fundamentals

When considering a cheap stock, it's important to look beyond just the share price. Evaluate the company's financial health by reviewing its balance sheet, income statement, and management decisions. Ask yourself if the industry has a future and why the stock appears cheap.

Consider the Risks

Remember that smaller market capitalization stocks tend to be riskier. Be cautious when investing in penny stocks, as they may be cheap for a reason, such as flawed business models or weak financials.

• ExlService Holdings, Inc. (EXLS): Provides analytics and digital technology solutions with a strong history of revenue growth and favourable analyst predictions.
• O'Reilly Automotive, Inc. (ORLY): Aftermarket car parts manufacturer and distributor with attractive pricing and strong revenue growth.
• Inter Parfums, Inc. (IPAR): Perfume manufacturer for brands like DKNY and Abercrombie & Fitch, with impressive revenue growth and a favourable P/E ratio.
• Kinsale Capital Group, Inc. (KNSL): Insurance holding company focusing on underwriting hard-to-place risks, with strong earnings and revenue growth forecasts.
• The Bancorp, Inc. (TBBK): Provides banking services to non-banking companies, with a low P/E ratio and expected earnings growth.
• Super Micro Computer, Inc. (SMCI): Provider of computing solutions with impressive sales growth and expected earnings increases.
• Aris Mining (ARMN): A gold mining company that recently reported a 200% jump in earnings and has strong IBD ratings.
• Arcutis Biotherapeutics (ARQT): A biotech company that received FDA approval for its topical foam treatment, with significant revenue growth and a strong performance in the past year.

Cheap stocks for long-term investment

While the stock market rally has generated large profits for investors, there are still some cheap stocks that could deliver outsized gains. Here are some cheap stocks for long-term investment:

Ambev SA (ABEV)

Ambev is Brazil's dominant brewing company and a subsidiary of Anheuser-Busch InBev. It maintains a net cash position and has avoided culture war battles that have affected its parent company. Despite its strengths, Ambev's stock has fallen to multiyear lows due to investor scepticism about Brazil's economic outlook and competition in the alcohol industry. However, its core South American market is insulated from these risks, and the stock offers a generous dividend yield.

Sirius XM Holdings Inc. (SIRI)

Sirius XM operates a leading satellite radio platform and the Pandora streaming service. Its stock spiked during a short squeeze and potential takeover talks last summer but quickly gave back its gains when nothing materialised. Despite this, Warren Buffett's Berkshire Hathaway has recently added to its position, indicating that some investors still have faith in the company. Sirius XM's stock currently offers a generous dividend yield and is trading at a discount compared to its historical valuations.

Enel Chile SA (ENIC)

Enel Chile is one of Chile's largest independent power producers and is appealing for environmental, social, and governance (ESG) investing approaches. It is one of the world's greenest utilities, with ample hydroelectric capacity and high-yielding solar farms. Additionally, Chile has the world's largest proven lithium reserves and is a major player in the copper market, which is crucial for electric vehicle batteries. Chile's export-led economy and the central bank's recent interest rate cuts further boost the outlook for Enel Chile.

Latham Group Inc. (SWIM)

Latham Group is a designer and manufacturer of in-ground swimming pools. Its revenues soared during the pandemic but tapered off as the economy reopened. Analysts are forecasting lower revenue for Latham in 2024, but the company is still much larger than it was in 2019. Latham's downcycle appears to be ending, and it is positioned for improved profitability during the summer swimming season.

Grupo Aval Acciones y Valores SA (AVAL)

Grupo Aval is one of the three large Colombian banking and financial groups, with about a 25% market share in the country. Its stock is currently trading near its pandemic lows, offering investors a discount. While Colombia's economy is heavily tied to oil exports, which could be a drag on Aval's outlook for 2024, the bigger picture shows that commodity prices for key Colombian exports remain high, and the recent bout of inflation should further bolster pricing power for Colombian firms.

Other mentions

Other cheap stocks to consider for long-term investment include ExlService Holdings, Inc. (EXLS), O'Reilly Automotive, Inc. (ORLY), Inter Parfums, Inc. (IPAR), Kinsale Capital Group, Inc. (KNSL), The Bancorp, Inc. (TBBK), Super Micro Computer, Inc. (SMCI), and Paycom Software, Inc. (PAYC). These companies have strong fundamentals and are expected to continue growing their earnings and revenue.

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