Investing in stocks under $10 could significantly increase the returns on your portfolio, especially if you pick the right stock. Also, if you select the stocks of companies in promising industrial sectors or those that have a unique and popular product or service, you stand a much better chance of selling your stock for a tidy profit after the shares have had a chance to appreciate.
Overview: Best Stocks Under $10
Our diversified list of the best stocks in this category includes stocks representing a gold miner, a mobile gaming platform, a telecommunications company, a biopharmaceuticals firm, and an engineering products and industrial services company.
- Gold Fields Ltd. is an international gold producer that operates nine mines in Australia, Peru, Chile, and South and West Africa.
- Zynga Inc. is an online gaming platform and a leading developer of some of the most popular social games played on the internet. Millions of people use this gaming platform every day.
- Vonage Holdings Corp. is one of the original providers of the Voice over Internet Protocol (VoIP) that allows users to make telephone calls over the internet. Vonage provides an excellent unified communications platform for businesses.
- General Electric is one of the largest U.S. diversified industrial companies. The company’s primary business segments include aviation, healthcare, power and renewable resources.
- Misubishi UFG is Japan’s largest financial group. The company provides retail, corporate and investment services, asset management and other non-banking services.
Another advantage of stocks under $10 is that some of these stocks can make a good choice for short and medium-term trading strategies. Buying shares of a lower dollar amount also limits your exposure to risk, since the stock already sells for a low price. The lowest that price can go is zero. Investing in high-priced stocks means you generally have a lot more to lose in the event of a sharp stock market downturn as traders have seen in the recent past.
Investing in any stock carries the inherent risk of the insolvency of the company and other adverse events that can lead to a decline in the stock’s value. This can cause you to lose your entire investment. Some stocks under $10 can suffer from liquidity issues, which can adversely affect your ability to transact large amounts.
Best Online Brokers for Best Stocks Under $10
If you want to start buying stocks under $10, as well as stocks under $20 and stocks under $5, any reputable broker that can facilitate stock transactions on U.S. exchanges can buy stock for you. Some of them will even let you trade commission-free, such as Robinhood, for example.
Other commission-free online brokers you can buy stocks under $10 with include TD Ameritrade and E*TRADE. More experienced, well-funded and active traders can use Interactive Brokers, although that broker does charge inactivity fees and has a high minimum deposit requirement.
Features to Look for in Best Stocks Under $10
- Desirable product or service: When selecting a lower-priced stock, one of the first considerations for an investor is whether the company makes a product or service currently in demand and that holds promise for future earnings.
- Good financials: The financials of a lower-priced stock show the company’s assets and liabilities, so you want to look for a company with a solid financial situation. Reviewing financial statements might also indicate any challenges the company is facing that have caused the stock to sell off or if the company’s earnings per share (EPS) have yet to reflect future business possibilities.
- Liquidity: Since liquidity can be an issue with low-priced stocks, you should typically look for those with a minimum daily volume of at least 1 million shares. Liquidity in the stock allows you to transact shares quickly and it gives you the opportunity to trade short-term strategies that work well for inexpensive stocks.
Are Stocks Under $10 Worth Buying?
The answer to this question is a resounding “Yes!” A low-priced stock with a viable product or service, decent financials and a liquid market can provide you with a good store of wealth, an appreciating asset and/or an adequate vehicle for short-term trading.
You do have to choose carefully since some stocks under $10 are definitely headed for insolvency and you could lose your entire investment. Still, depending on your risk profile and your financial goals, buying stocks under $10 as an investment could make a lot of sense and could provide you with a handsome return if you pick the right stock.