Best Cheap Stocks to Buy Now (Under $10)

Best cheap stocks to buy

NL Industries

• Market value: $324.3 million
• Dividend yield: 4.8%

NL Industries (NL, $6.64) has a long and complex history. Formerly known as the National Lead Company, the smelting company was one of the 12 original stocks in the Dow Jones Industrial Average in the late 1800s. It eventually got into the paint game – with lead paint before the health risks were well known, and then eventually via titanium dioxide pigments known for their brilliant white finish on appliances, cars and other goods.

NL is still in the machined metals game, with a subsidiary that manufactures exhaust systems, gauges, throttle controls and other hardware for the marine industry. It also has a security products business that focuses on various locks, cabinets and other products.

NL Industries, tied to cyclical manufacturing trends and with a modest market cap of just $320 million, is certainly one of the riskier bets on this list of cheap stocks. Indeed, the industrial stock fell more than 13% in 2023, compared with a total return (price change + dividends) of 26% for the S&P 500 in the same period. However, it's up 20% so far this year, outpacing the broad market's roughly 8% return.

ADT

• Market value: $5.8 billion
• Dividend yield: 2.6%

ADT (ADT, $6.26) debuted as a public company in 2012 as a spinout from industrial conglomerate Tyco to gain capital efficiencies and focus on its unique business model. But over the last decade or so, there hasn't been particularly huge growth for the security stock – particularly in the age of connected devices and doorbell cams, which many feel are adequate replacements for traditional home security systems.

But ADT has evolved, too, partnering with Alphabet's (GOOGL) Google Nest technology instead of trying to outdo its high-tech competitors. In fact, the ADT/Google deal announced in 2020 was backed by a $450 million ownership stake that equates to just under 7% of the company.

ADT might not knock your socks off with surging revenue, but it has what it takes to deliver steady growth over time. Plus, analysts expect the company to report earnings per share growth of 14% this fiscal year and 22% in fiscal 2025.

This fundamental strength, due in part to solid customer retention and recurring monthly revenue balances, is why ADT is on this list of the best cheap stocks to buy now.

Sirius XM

• Market value: $15.6 billion
• Dividend yield: 2.6%

When it comes to cheap stocks, satellite radio service provider Sirius XM Holdings (SIRI, $4.05) is an interesting one to consider because of two big advantages it holds over traditional media companies. First, it's a legal monopoly, with no realistic alternatives beyond terrestrial radio or using your cellphone. That means those who have come to rely on SIRI tend to be very sticky customers.

The second is that Sirius XM's operating model is not ad-driven – which allows it to forgo the army of salespeople used by traditional broadcasters and instead focus on on-air talent. Consider that even after the acquisition of Pandora Media back in 2019, less than a quarter of Sirius XM's $6.8 billion in revenue last year came from advertising. That lends reliability to operations, particularly if you think the U.S. economy may be at risk of recession in the coming months.

Last but not least, the communications services stock has a commitment to shareholder value that includes a solid capital-return program. It's doling out a 2.6% regular yield on top of a special 2022 distribution and consistent stock buybacks on top of that.

Organic revenue growth for SIRI has admittedly been slow going, but there's a lot to like about this company thanks to its unique business model and a robust listenership of some 34 million subscribers and counting.

Payoneer Global

• Market value: $1.6 billion
• Dividend yield: N/A

Payment and e-commerce platform provider Payoneer Global (PAYO, $4.27) is a small-cap stock in the tech sector valued at about $1.6 billion. It's recently reported a 23 cents per-share profit for fiscal 2023 vs a per-share loss the year prior. This is impressive given the company didn't exist until 2005 and only became publicly traded in 2021.

Amid the rise of mobile and cashless transactions, PAYO has a great long-term tailwind for its business. The firm is not like consumer-facing brand PayPal Holdings (PYPL), and instead is focused on B2B payment operations. Specifically, Payoneer's technology is built for international payments, managing a digital business, or accessing capital to open up new opportunities. Its cross-border payment solutions support an ecosystem of marketplaces in approximately 190 countries and territories worldwide.

There's assuredly risk here if we hit a widespread downturn in global spending, and thus reduced transaction volume. But PAYO, one of Wall Street's best cheap stocks to buy, could have a very bright future in a digital age. In 2022, it hired former Alibaba.com (BABA) executive John Caplan as its CEO, and it is looking to expand even further in the years ahead.

In fiscal 2023, Payoneer reported strong top-line growth of 32% on a year-over-year basis. The company expects revenue growth to slow to about 7% in fiscal 2024. 

"Over the past few quarters, revenue growth has been muted due to various factors including geopolitical issues (Russia/Israel), non-volume fee losses, and macro-related challenges," says Needham analyst Mayank Tandon. While these headwinds are likely to persist in the near term, the analyst notes, growth should improve once they abate. Tandon has a Buy rating and $8 price target on PAYO, representing implied upside of nearly 90% to current levels.

Prospect Capital

• Market value: $2.3 billion
• Dividend yield: 13.0%

Prospect Capital (PSEC, $5.56) regularly pops up on lists of the best cheap stocks for income investors. This company has a reputation for its internal investment prowess – which makes it a natural vehicle for other outside investors looking to share in its success.

PSEC is a business development company. BDCs function more like a private equity firm or hedge fund than your typical financial stock, taking in cash and then redeploying it wherever it thinks it can get the best return. All told, the company commands about $9 billion in assets under management. That cash is primarily invested in mid-sized corporations with less than $150 million in annual profits. This means they are "goldilocks" operations: not so big they require very deep pockets, but not so small a single executive departure or outside disruption can ruin things.

What's more, PSEC has made a business out of financing troubled companies that may not find it easy to get capital elsewhere. This is a bit of a risky proposition, but can result in windfall profits when things work out. Plus, its portfolio includes 130 companies spread across 37 separate industries, including packaged foods, healthcare, software and machinery. This provides investors with deep diversification to help smooth out any bumps in the road.

Shares have lagged the market over the last year or two as investors turned to riskier growth stocks. But PSEC is a monthly dividend stock that yields 13.0%, which makes the total return of this BDC worth a look.

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