When people think of investing, especially in the stock market, the misconception is that high-priced stocks are the only ones worth considering. On the contrary, there’s considerable merit in surveying single-digit securities. Despite their lower prices, some of these underdogs can demonstrate exceptionally high growth potential.
Given the vast universe of publicly traded entities, it’s easy to overlook some of these potential diamonds in the rough. While they may be deemed risky due to their lower prices, a few have the potential to outperform their larger counterparts. Let’s delve into three top stock picks under $10 that deserve our attention this May.
Placed high on the list is VAALCO Energy (NYSE:EGY), a company primarily engaged in oil and gas exploration and production. VAALCO’s operations revolve around upstream efforts, notably dealing with crude oil, natural gas, and natural gas liquids, with key projects spread across Gabon, Egypt, Equatorial Guinea, and Canada.
However, it’s essential to note that industry prognostications for EGY may raise eyebrows. The potential downside is reflected in the forecasted earnings per share for fiscal 2024, which is predicted to be 60 cents on revenue of $455.07 million. This is a slight dip compared to the previous year’s EPS of 62 cents on the same revenue figure. Looking forward, projections hint at a further decline in the top line to $375.13 million in fiscal 2025.
Yet it might be time for a fresh perspective on EGY, valued under $7 per share at the time of writing. In the current geopolitical climate marked by rising global tensions, the demand for hydrocarbon exploration in politically friendly regions could surge, indirectly benefiting VAALCO. It bears mentioning that the company boasts a unanimous strong buy rating among analysts, signifying potential for growth.
Moving on from the energy sector, let’s dive into the communications services sector with iQIYI (NASDAQ:IQ), a Beijing-based enterprise specializing in entertainment. iQIYI’s services span a range of categories from online video, games, literature to animations.
Despite the appeal of its offerings, iQIYI’s viability hinges on the health of China’s economy, with specific concerns regarding its consumer market. Recent data indicates that retail spending grew by a modest 3.1% year-over-year in March, falling short of market expectations. However, analysts predict an upswing in iQIYI’s financials over the next two years.
In fiscal 2024, EPS is estimated to reach 41 cents, with revenue projected at $4.78 billion. These figures could climb to an EPS of 52 cents and revenue of $5.09 billion by 2025. In contrast, iQIYI reported earnings of 28 cents on sales of $4.48 billion in fiscal 2023. Considering its current reasonable 1.07X trailing-year revenue, IQ may be worth a punt for those seeking prime stocks under $10.
Our final contender under the banner of communications services is Taboola.com (NASDAQ:TBLA), a firm specializing in internet content and information. Leveraging artificial intelligence, Taboola collaborates with numerous websites and apps to push recommended content and advertisements.
While ads might be a nuisance, they are the bread and butter of digital content platforms. With a burgeoning number of internet users, Taboola holds a potential key to a massive market. Although there’s no assurance TBLA stock, currently trading below $5, will surge, it has established a firm foundation to build on.
Analysts echo a similar sentiment. They project an EPS of 29 cents on revenue of $1.92 billion for fiscal 2024, with earnings expected to jump to 44 cents on sales of $2.28 billion the following year. This represents a significant advance when compared to the EPS of 9 cents on revenue of $1.44 billion in fiscal 2023.
To sum up, the narrative that low-cost stocks equate to poor-quality businesses is far from accurate. Each of the discussed stocks under $10 demonstrates potential growth and stands poised to be part of a savvy investor’s portfolio.
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