The 3 Best Cheap Stocks to Buy Now Are All Under $10

Low cost and full of potential, these could be your next big winners…

This story was originally published here.

We all love cheap stocks.

In fact, it is a Wall Street catchphrase that everybody loves to throw around.

Rarely does anyone actually define what a cheap stock is when they use the phrase. There are several ways we can use the word cheap.

On price alone, a cheap stock might be one that trades below the penny stock cutoff of $5 a share.

We could also use “cheap stock” to describe a company that is trading at a low valuation measure. This could be the price/earnings (P/E), price to book value (P/B), or price to free cash flow (P/FCF).

It could be a company whose P/E ratio was less than its earnings growth rate. If analysts expect a stock to grow earnings over the next several years by 20% and the current P/E is just 10, then that company could be considered cheap based on a low price/earnings growth (PEG) ratio.

If we can properly define cheap stocks, we can build a universe of opportunities that might result in massive profits. If we can find cheap stocks that recover from whatever forces drove down the price in the first place, there could be enormous profit opportunities. If we can identify small, cheap growth stocks that are not yet recognized by the market, that could also result in life-changing gains…

Let's use all three types of variables to define cheap. We will start with stocks trading between $5 and $10 a share. Stocks trading under $5 are considered penny stocks, and we can address those another day.

Now to keep it simple, we will use the most widely known fundamental variable. We will limit our search to just those stocks trading with a P/E below 10.

We will only include profitable companies where the market is undervaluing future growth prospects. We only want to look at companies with a PEG ratio under 1 in our search for cheap stocks.

And finally, we will only include dividend-paying stocks. No one knows how the coronavirus will impact the markets as the spread accelerates part of the nation. Dividends could help soften the blow.

Editor's Note: Click here for the rest of the story.

Released today: new extra-income strategy

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