In 2020, many investors focused on growth stocks. They were temporarily seen as a safe haven, turning away from the fossil-fuel industry and others that could have been harshly impacted by a possible economic crisis. However, many high-growth stocks, such as Tesla, suffered erratic drops in value and huge downturns even within one single trading day. With the financial markets currently recovering from the lows in 2020, there might be other attractive investment options.
Cheap stocks are shunned by many due to their high volatility, and the persistent economic uncertainty makes it even more pronounced. On the other hand, the main benefit of these unforeseen events is that they have also created numerous opportunities in different sectors that will grow significantly in the post-pandemic period. If you want to join the trend early and add some affordable assets to your portfolio, the following sections include a list of the best cheap stocks for you to buy in 2021, coupled with several reasons why you should invest in them.
Where Can I Trade Cheap Stocks?
You can buy cheap stocks using different methods. Some of the main options include a stockbroker, a Direct Stock Purchase Plan (DSPP), or adding an exchange-traded fund (ETF) that contains cheap stocks. We have selected the best cheap stocks that can be bought individually via an online broker, so we’ve also identified the best online stockbrokers that you can choose if you want to invest in cheap stocks.
What Are Cheap Stocks?
A cheap stock might be any company that currently trades at a price typically $20 or lower. These are not the same as penny stocks or dollar stocks since they sell for a maximum of $5 per share, but cheap priced stocks might also include penny stocks.
Investors consider these cheap stocks attractive opportunities because they allow for portfolio diversification. For instance, if an investor has a capital of $10,000 and decides to invest in stocks, they might prefer buying 1,000 shares worth $10 each in ten different companies rather than purchasing ten shares of $1,000 each in only one company.
The following sections contain a list of ten stocks, each worth $15 or less. These were hand-picked to ensure that there is enough room for growth in the post-pandemic period. At the same time, they were chosen from different industries to help you diversify your portfolio.
How to Trade and Invest in Cheap Stocks?
Open a Trading Account
The first step is to choose an online broker and create an account. You need to provide your personal information, such as name, address, and others, then upload identification documents as required.
Brokers offer access to numerous stocks. Select the ones you wish to purchase from the broker’s list or use our recommended companies. In both cases, make sure you make trading decisions only after doing your own research on each stock. You can also use the broker’s platform to find out more information about them.
Place Your Trade
The final step is to select the chosen stock on your broker’s platform. After reviewing all the information, type in the number of shares you wish to buy or the amount of money you want to invest in the stock and place your trade.
Top 10 Cheap Stocks to Trade
We have curated a list of the ten best cheap stocks to trade this year, as they are shown below. The next sections present a more detailed insight into five of our stock picks.
- Glu Mobile [Gluu]
- LimeLight Networks [LLNW]
- OrganiGram Holding Inc. [OGI]
- Full House Resorts [FLL]
- Drive Shack [DS]
- General Electric Company [GE]
- Zynga [ZNGA]
- CineWorld [CNNWF]
- Nokia Corp [NOK]
- Sirius XM Holdings [SIRI]
1. Glu Mobile [GLUU]
Glu Mobile develops and publishes games for iOS and Android devices. With a market cap of only $1.5 billion, this small company is positively cheap despite its 48% revenue growth in 2021. Apart from its most popular freemium games that each brings from $25 million to $75 per year in revenue, the company earns income from numerous acquisitions, such as PlayFirst and Crowster, generating up to $2.2 billion.
With a 3.8% increase in EBIT margins over 2020, Glu Mobile outperformed the S&P 500 by 13% versus only 8%.
2. LimeLight Networks [LLNW]
This tech company specialises in content delivery network services. Its market offerings include cloud security, large-scale data storage and support services, edge computing services, and real-time streaming. The transition to streaming services created the need for seamless real-time performance, quick downloads, and low latency.
The company’s stock price dipped 12% in April 2020 after releasing the first-quarter results. The new CEO appointed in February 2021 has taken over the company, so investors might be able to take advantage of this dip as the executives work on a restructuring plan during the summer.
3. OrganiGram Holding Inc. [OGI]
OrganiGram Holding Inc is a cannabis company that produces and sells marijuana for recreational and medical use. The Biden administration is viewed as pro-marijuana, and the popular opinion is that marijuana use will be legalised in more states. OGI share price is therefore strategically placed for take-off as this infant industry gathers pace.
OrganiGram Holdings finished Q2 2021 on February 28 with CA$232 million in cash after several equity financing rounds, shortly before British American Tobacco purchased 20% of its equity for CA$221 million.
4. Full House Resorts [FLL]
Full House Resorts is headquartered in Nevada and owns, develops, and manages facilities in the hospitality, gaming, and entertainment industry. In 2019, the company partnered with Wynn Resorts to provide mobile sports betting in addition to its online casino activities. This collaboration may turn into a launchpad for FLL’s stock price and, with the resumption of social activities, its other segments may also rebound.
Full House Resorts’ stock dropped in the first half of 2021, although the company’s sales growth estimate for the ongoing quarter is 199.8%, with a 52-week share price high of $11.92 and a low of $1.23 for the same period.
5. Drive Shack [DS]
Drive Shack is a public golf course company that offers social entertainment, golf-related activities, and outdoor events and games. As of December 2020, Drive Shack owned and managed 60 properties in nine states. Initially known as Newcastle Investment Corp, the company has a diversified revenue stream as it also invests in a broad array of securities and loans.
At the top of the leisure industry in March 2021, Drive Shack managed to outperform the S&P 500 by nearly 11%, and it was up by 213.60% over the past year compared to the market gain of only 64.65%.
Expert Tip on Investing in Cheap Stocks“ Cheap stocks can be an excellent choice if you are a small investor. However, it is important to research each stock thoroughly before making an investment. As cheap stocks come with high volatility, you can also use other techniques to lower your risk, such as investing in only one or two cheap stocks as part of a well-diversified portfolio. ”- VantagePointTrading Team
Why Invest in Cheap Stocks?
In some cases, the cheap stocks are small companies ready for massive growth or activating in new industries. In other words, they might be able to generate high returns for their investors.
However, the cheap price may be due to a valid reason, such as operational inefficiencies, a case in which you should treat the stock with caution. Most investors add cheap stocks to their portfolio to diversify their investment or if they consider that the company is on the right track regarding business performance. Regardless of these reasons, it’s important to perform due dilligence before allocating your capital to cheap stocks due to the high volatility associated with them.
Frequently Asked Questions
You can choose the best cheap stock from our recommended list once you consider the rest of your portfolio and your investment objectives. It is best to choose a company whose growth potential is clear to you once you research it.
Many investors have recently turned to cheap stocks after 2020 in order to avoid the dips associated with growth stocks. As long as your portfolio is diversified and you mitigate your risks, cheap stocks can be an excellent investment opportunity.
The strongest cheap stock company is General Electric, with a $105.39 billion market value.
Investors with trading experience are more likely to invest in cheap stocks as these come with higher risks. Also, individuals with lower capital may prefer cheap stocks as they can diversify their portfolio easily.
Cheap stocks might not be suitable for beginners because they should be associated with different strategies to mitigate risks, such as diversification, and chosen based on sound analysis.
Cheap stocks are popular especially among investors with high risk tolerance because of their potential quick returns.
Cheap stocks are available during the standard trading hours, such as from 8:00 A.M. to 4:30 P.M., Monday to Friday, on the London Stock Exchange (BST/GMT), or the equivalent for shares listed on the US stock exchanges.