Top 5 cheap stocks to buy now, all priced under $15 a share
14:14, 4 May 2021
Less experienced stock market investors often gravitate towards the cheapest stocks to buy. But as many people discover to their cost, there is a stark difference between price and value.
The temptation is to invest heavily in inexpensive stocks in the hope they shoot up in value. But the cheapest stocks do not necessarily mean the best investment. A seemingly expensive stock at $100 a share could prove a better option than a $3 stock. This is especially true if the ‘expensive’ stock is in a stable and established company that pays dividends.
Savvy investors can find low-cost investment options that do represent value. Let’s check out the five best cheap stocks with the potential to grow into something substantial. Our focus is on companies with a current share price of below $15.
Nokia (NOK)
Nokia opens our list of low-price stocks to buy. The Finnish telecom company has had significant ups and downs this year. It enjoyed an initial rise in 2021, followed by a drop after a 5% year-on-year decrease in net sales for Q4 2020 was announced. Share price jumped by over 10% at the end of April. The main reason for the latest rise was the 5G-related gains in the company’s mobile networks businesses and network infrastructure.
According to MarketsandMarkets, the 5G market should grow at a compound annual rate of almost 70% across the next six years. Value is set to exceed $47bn by 2027.
While Nokia’s revenue fell 6% in 2020, gross and operating margins improved. Adjusted earnings grew by 18%.
By the end of 2020, Nokia had achieved 100 5G deals alongside 160 commercial 5G engagements, including paid trials. Most western nations do not trust Chinese rival Huawei to build their 5G networks. Nokia has the potential to secure that business.
The main downside is that Nokia still needs time to perform a turnaround on its flagging sales. 5G is quickly rolling out globally. The company needs to act fast. Even so, it is perhaps worth looking at for under $4.70 a share.
The median price target for Nokia stock in the next year is $5.77, according to 26 CNN analysts, which would represent an increase of over 22% on its current position.
Sirius XM Holdings (SIRI)
In 2008, a merger between XM Satellite Radio and Sirius Satellite Radio created Sirius XM Holdings. It granted the new company a monopoly as it became the only satellite radio company around.
Sirius XM rose gradually until February 2020. When the global pandemic hit, millions of people were forced to stay at home. Auto sales declined significantly across the board, especially in the United States. As a result, Sirius XM’s stock fell by around 15% in 2020.
As Forbes notes, SIRI lost paid promotional subscribers (subscriptions included with the purchase or lease of a car) “due to declines in shipments from automakers offering paid trial subscriptions”, resulting in fewer funnel leads for the subscription service. According to the company, the first-quarter total of trial subscriptions amounted to 9.1 million, down from the 9.3 million figure from the previous quarter.
Subscriber churn remained almost unchanged year-on-year – a sign that the company retains customers. Car sales are once again on the increase.
At present, Sirius has yet to claw back all the gains lost during the initial stages of the pandemic. This is a sign that there is plenty of growth potential for this particular stock at $6.10 a share. It was trading around $7.24 in February 2020.
According to the Gov Capital price predictor, Sirius XM’s share price could exceed $11 by the end of 2021. If this prediction comes to fruition, it will make Sirius one of the best cheap growth stocks to buy now.
Gevo (GEVO)
Gevo is a low-carbon fuel company. It aims to provide renewable alternatives to petroleum-based products. One of its most significant recent achievements was to develop a process that converts isobutanol, a high-octane fuel, into clean, renewable diesel. In the United States, the new Biden Administration is actively pushing cleaner energy and enhanced infrastructure. As such, Gevo is undoubtedly engaged in a growth industry.
Gevo is still a relatively small business, having generated just $420,000 in Q4 of 2020. It has yet to post a profit. Gevo is regarded as a higher risk stock because it trades at around 400 times the consensus revenues for 2021. At $6.78, it is a cheaper stock with a significant potential upside.
Customers appear keen on Gevo’s proprietary technology to the point where they have signed up to supply contracts worth approximately $1.5bn. The company’s share price was almost $15 in February 2021 after being less than $1 in September 2020. But Gevo’s share price has fallen to less than half that level in a matter of months.
In the short term, cautious investors could wait and see what happens next. In February 2021, when the stock price was $12, Amit Dayal, an H.C. Wainwright Analyst, increased his price forecast from $5 to $18.
Gevo raised around $350m from a stock offering in January 2021. That helps its chances of finishing its Net-Zero 1 renewable energy project in South Dakota. When completed, the hydrocarbon plant could produce an estimated 45 million gallons of gasoline and jet fuel each year. If that happens, Gevo’s share price could rise significantly, with some investors looking to seize the opportunity of buying in while it is still one of the cheapest stocks right now on the market.
Lineage Cell Therapeutics (LCTX)
The share price of this clinical-stage biotech company has risen sharply in the last few months. As late as November 2020, you could have purchased LCTX stock for less than $1 a share. At the time of writing, it had risen to $2.74. Lineage Cells Therapeutics may remain one of the best cheap shares to buy now.
In April 2021, the organisation announced a global licence agreement with Immunomic Therapeutics. LCTX stock rose by over 10% at one point on the day of the announcement. The two companies intend to join forces in creating a possible cancer therapy. It will come from Lineage’s VAC allogeneic cancer immunotherapy platform.
Lineage could receive payments of up to $67m. It will also receive royalties of up to 10% of the product’s sales.
The company does not yet have any products on the market and generates minimal revenue. But this looks set to change. Lineage expects to have lots of finance available to fund future clinical programs.
Six CNN Business analysts have a median 12-month price target of $5.50, a high estimate of $7 and a low of $4. Even at the lowest end of the scale, you would earn a profit of almost 46%.
Workhorse Group (WKHS)
While this is the most expensive option on the list, Workhorse Group is still potentially one of the hottest growth stocks. This may seem like a contradiction because the company’s share price has plummeted from almost $43 in February 2021 to less than $12.50 in May 2021.
February 23 was a black day for WKHS as its share price fell by almost 50% after the commercial electric delivery (EVs) vans maker missed out on a huge contract to replace the United States Postal Service’s fleet. This caused investors to engage in a mass sell-off.
There are plenty of other lucrative contracts up for grabs. President Biden has signed a ‘Made in America’ executive order, which means that the federal government’s fleet of around 645,000 vehicles will get replaced by American-made EVs. The global demand for electric delivery vehicles is set to skyrocket. By 2028, it is projected that two million commercial EV units will be sold per annum, compared to 129,000 in 2020.
The CNN Business analyst team believes that WKHS stock could hit $29 in the last 12 months, with a median of $18 and a low of $11. The median estimate would represent an increase of approximately 45% on the current price.
Final thoughts
The above options all potentially represent value stock options worth adding to your portfolio. However, there are no guarantees of financial success. Please ensure that you only ever invest what you can afford to lose. Regardless of what some analysts tell you, there are no ‘sure things’ in the stock market.
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