The 5 Best Cheap Stocks (Under $10) to Buy Now

People love cheap stocks for their affordability factor and for their ability to generate big gains in a short period of time. This also means investors can suffer big losses in a hurry.

So it's important to remember that cheap stocks are not necessarily better stocks.

"False promises of quick and painless riches are easier to fall for when an investment can be made with so little money up front," writes Kiplinger contributor Dan Burrows in his feature on penny stocks.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

"An investor might think, 'How risky could it be?'" The answer, Burrows says, is plenty.

"Per the Securities and Exchange Commission: 'Academic studies find that OTC [over-the-counter] stocks tend to be highly illiquid; are frequent targets of alleged market manipulation; generate negative and volatile investment returns on average; and rarely grow into a large company or transition to listing on a stock exchange.' "

If you're interested in cheap stocks, it's vital to do your research beyond just looking at the latest print for prices. You need to take a hard look at risk metrics, recent performance and future outlook to invest responsibly.

Why should I buy cheap stocks? 

Some investors gravitate to cheap stocks because they see these companies as creating opportunities for larger returns.

Many folks simply don't have the cash to buy some of the priciest stocks on Wall Street, such as auto parts retailer AutoZone (AZO), which trades for roughly $2,900 a share at present.

One choice investors always have is to buy fractional shares of a stock whose price exceeds what they have available to invest.

Another is to find high-quality, cheap stocks. To be clear, this is referring to share price, not valuation metrics such as book value or the current price compared with earnings estimates that signal undervalued stocks.

But this process can be difficult for investors. Unlike the best value stocks that tend to boast strong balance sheets and a solid commitment to shareholders, cheap stocks often face weak fundamentals. They're also known to be risky and volatile, which understandably makes some folks hesitant to buy them.

If you only have a few hundred dollars or want to trade in round lots instead of a single share, then cheap stocks — or at least cheaper stocks — with strong fundamentals are one way to go.

Our methodology to find the best cheap stocks to buy

I've written extensively about the equity market and investing for nearly two decades. Along the way, I've learned how to separate legitimate investing opportunities such as those found in the best stocks to buy from those more likely to result in volatility or dubious performance.

When I put together this list of the top cheap stocks priced under $10 per share, I focused on companies that are well-liked by the analyst community and that have displayed strong fundamentals, including impressive top- and bottom-line growth.

The best cheap stocks to buy

With that in mind, here are five of the best cheap stocks to buy that are priced at or under $10 per share.

Note that one of the risks of buying cheap stocks is that they move quickly, so if you decide to invest in them, do so with small amounts of capital that you can afford to lose.

Data is as of September 10.

Kopin

• Sector: Information technology
• Market value: $792.0 million
• Analysts' consensus recommendation: Buy

It's a cheap stock today, and it made its all-time high a long time ago, at the end of the dot-com bubble era. But Kopin (KOPN) is making a comeback amid the "picks and shovels" phase of the artificial intelligence (AI) revolution.

Kopin uses semiconductor material technology to make components such as microLED displays for use in military, enterprise and consumer electronic applications.

And if AI infrastructure is the investment boom nobody's talking about, Kopin is well off just about everybody's radar. At the same time, there are six analysts following KOPN, according to S&P Global Market Intelligence.

And all six say the semiconductor stock is a Strong Buy. This works out to a consensus Strong Buy recommendation. They also expect KOPN to more than double in the next year or so, based on the average price target of $8.67.

As Stifel analyst Jonathan Siegmann notes, Kopin beat Wall Street expectations with its second-quarter results, including year-over-year top-line growth of 51%. And management said the company is on track to top its full-year revenue guidance.

"The microLED IBAS grant primarily drove the increase in the quarter," Siegmann explains of a new program with the Army, "assisted by preliminary Fabric.AI Neural I/o development revenue."

The analyst says a healthy revenue mix helped push gross margin to 14%, and management also talked about expansion opportunities through its automation program, in-housing OLED deposition and continued fixed cost absorption.

Siegmann has a Buy rating on KOPN with a 12-month target price of $6.50.

Eos Energy Enterprises

• Sector: Industrial
• Market value: $1.4 billion
• Analysts' consensus recommendation: Buy

Eos Energy Enterprises (EOSE) plunged more than 39% in February after the battery storage solutions specialist reported a big revenue miss and a wider per-share loss than Wall Street expected for the fourth quarter.

But Stifel analyst Stephen Gengaro anticipates brighter skies ahead after the company reported improving production and higher-than-expected revenue in its first quarter and followed up with solid second-quarter results.

Gengaro also calls Eos Energy's new venture with private-equity firm Cerberus Capital Management "a plus," with the two entities creating Frontier Power USA, an independent development and investment company.

"We believe EOSE is very well-positioned to benefit from the sharp expected rise in demand for longer-duration battery storage that's being driven by rising intermittent energy sources (wind and solar)," explains Gengaro. He has a Buy rating and a $10 price target on the industrial stock — representing implied upside of about 150%.

Gengaro isn't the only bull in EOSE's corner. Of the 11 analysts covering the stock who are tracked by S&P Global Market Intelligence, four rate it a Buy or Strong Buy, while seven have it at Hold. This works out to a consensus Buy recommendation.

Transocean

• Sector: Energy
• Market value: $6.4 billion
• Analysts' consensus recommendation: Buy

Wall Street expresses the full range of views on Transocean (RIG), an energy stock that's been volatile during the war between the U.S. and Iran, according to S&P Global Market Intelligence.

Five of the 13 analysts who cover the oil driller and well operator rate it a Strong Buy, and one says it's a Buy. Five rate RIG a Hold. And two say it's a Sell. That works out to a consensus Buy rating. That range of views includes an average 12-month target price of $6.55, upside of about 14% from its September 10 closing price.

Susquehanna analyst Charles Minervino, who reiterated his Positive (Buy) rating on RIG after management reported second-quarter results in August, sees the stock at $7 per share a year from now, upside of more than 21% from here.

As Minervino notes, management reported adjusted EBITDA (earnings before interest, taxation, depreciation and amortization) of $312 million, above his forecast for $279 million. Revenue was $966 million vs $957 million.

"RIG announced five new contracts and extensions during the quarter," Minervino adds, worth about $292 million and bringing its total backlog to approximately $6.7 billion. Management also raised its full-year revenue guidance, "reflecting contract extensions on several rigs previously expected to roll off this year along with the new Deepwater Proteus contract."

In addition to building its backlog, Transocean continues to repair its balance sheet as management prepares to close on the $5.8 billion acquisition of Valaris (VAL) later this year.

Dauch

• Sector: Consumer discretionary
• Market value: $1.6 billion
• Analysts' consensus recommendation: Buy

Wall Street anticipates strong bottom-line growth for automotive parts supplier Dauch (DCH), which was formerly known as American Axle & Manufacturing. According to S&P Global Market Intelligence, analysts forecast an average earnings-per-share growth rate of more than 30% over the next three to five years.

The company is already posting impressive results following its February acquisition of U.K. automotive firm Dowlais Group, with first-quarter earnings up 54% year over year, and revenue improving 69%.

DCH ended "its first full quarter as a combined company in what is setting up as a stable supply and demand environment," says BWS Financial analyst Hamed Khorsand. "Consumer demand for vehicles has been stable and slightly up from the year-ago period in multiple geographies."

The analyst adds that higher gas prices have not had a major impact on consumer spending and that Q2 and Q3 are "seasonally a peak period for DCH generating revenue." That should help Dauch hit the higher end of its full-year guidance.

Khorsand has a Buy rating on the consumer discretionary stock, and he's in good company. Of the 13 analysts covering DCH, seven say it's a Buy or Strong Buy and six have it at Hold. That works out to a consensus Buy recommendation.

ADMA Biologics

• Sector: Healthcare
• Market value: $2.1 billion
• Analysts' consensus recommendation: Buy

Biotech stocks are notoriously volatile, and ADMA Biologics (ADMA) is no exception. In the past 52 weeks, shares have traded from $7.21 to $20.46. ADMA tumbled to the low end of this range in early May after the company reported a massive revenue decline for its immunodeficiency treatment, BIVIGAM, in Q1.

But Wall Street doesn't seem too worried. The average price target among the five analysts covering the healthcare stock tracked by S&P Global Market Intelligence is $17, representing implied upside of roughly 80% from current levels. Additionally, the consensus recommendation is a high-conviction Buy.

Speaking for the bulls is Mizuho Americas analyst Anthony Petrone, who has an Outperform (Buy) rating on the small-cap stock and a $20 price target.

While the analyst admits that trends in the immune globulin market — which include excess inventories and price drops that contributed to the sharp decline in BIVIGAM revenue — remain "opaque," he notes that "April showed green shoots" for the treatment.

"More importantly," says Petrone, "ASCENIV orders hit another record in April, which keeps the $1 billion story on track for the company's core growth engine."

Related content

• Top Stocks Under $20 to Buy and Hold
• Analysts' Top S&P 500 Stocks to Buy Now
• 33 Stocks That Could Rally 33% or More