Some investors don’t like stocks that are trading below $10 because they tend to have low liquidity and high volatility. Low liquidity means that the daily volume of shares and the number of transactions are low, which can cause delays in filling investors’ orders. High volatility means that the price swings very fast, probably because of low liquidity. While many low-cost stocks have liquidity and volatility issues, there are stocks under $10 that are very liquid and present good opportunities.
In this guide, we discuss low-cost stocks under $10 and how you can buy them. We also present our top 10 best stocks under $10.
Where Can I Trade Low-Cost Stocks Under $10?
Many low-cost stocks trade on the major exchanges, but some (i.e., penny stocks) are traded on the OTC market. Most stockbrokers and other online trading platforms allow you to trade under-$10 stocks via a standard trading account, and if you’re in the UK, you can trade in a tax-efficient Stock & Shares ISA or Self-Invested Personal Pension account. While all brokers offer stocks that are listed on the major exchanges, some also offer low-cost stocks that trade on the OTC marketplace.
What Are Low-Cost Stocks Under $10?
Low-cost stocks under $10 are stocks that are trading below $10-per-share. They are not exactly the same as “penny stocks” that cost less than $5 but they share some characteristics such as low liquidity and high volatility. Cheap stocks under $10 also differ from penny stocks because they are traded on major stock exchanges — such as the NYSE, Nasdaq, and LSE — rather than over-the-counter (OTC) in marketplaces such as Pink Sheets in the USA and the Alternative Investment Market (AIM) in the UK.
Most low-cost stocks are shares of micro-cap or small-cap companies, but stocks of some large-cap companies such as Nokia also trade below $10 per share. Some sub-$10 stocks are trading below their fair value, which makes them appealing to value investors as the stocks have a lot of room to run when they take off.
A low-cost stock may not necessarily be an undervalued stock, which is why investors need to perform fundamental analysis to know the intrinsic value of a stock before investing. However, “undervalued” doesn’t mean “worthless” because Amazon was trading below $10 in April 2001.
How to Trade and Invest in Low-Cost Stocks Under $10?
Create a Trading Account
You have to create a share-dealing account with an online stockbroker and fund it. Consider commissions and other service fees when choosing a broker. Other things to consider are the broker’s trading platform and payment methods.
Choose Low-Cost Stocks Under $10 to Trade
Do your research and look for emerging growth stocks or established brands that are temporarily undervalued. Make sure the stocks you choose have strong fundamentals. You may also perform technical analysis to finetune your entry.
Once you’ve chosen the stocks to buy, select them from your broker’s platform and hit the buy button. Be sure that your account is funded with the right amount before you start trading.
Top 10 Low-Cost Stocks Under $10
Considering their business models and the growth potential, these are the best low-cost stocks trading below $10 at the time of writing:
- Silver Sun Technologies (NASDAQ: SSNT)
- FinVolution Group (NYSE: FINV)
- Nokia (NYSE: NOK)
- LiveXLive Media. (NASDAQ: LIVX)
- Asure Software (NASDAQ: ASUR)
- CymaBay Therapeutics (NASDAQ: CBAY)
- iBio (NYSE: IBIO)
- Ribbon Communications (NASDAQ: RBBN)
- Radiant Logistics (NYSE: RLGT)
- Nomura Holdings (NYSE: NMR)
1. Silver Sun Technologies (NASDAQ: SSNT)
SilverSun Technologies, Inc. provides transformational business applications, IT services, and enterprise software to financial organizations. The software helps organizations manage accounting procedures and warehouses, train personnel, and give technical support to users. In February 2021, Silver Sun had a market capitalization of $32.8m and its shares had rallied by 123% in 2020.
2. FinVolution Group (NYSE: FINV)
FinVolution Group is an investment holding company that operates in the Chinese online consumer finance industry. The company connects underserved borrowers with banks that can lend them money. It focuses on the middle and working class, building platforms through which people in this demography can access finance. FinVolution has a market capitalization of $1.89bn as of February 2021 and in 2020 its shares of FINV appreciated by 245.6%.
3. LiveXLive Media (NASDAQ: LIVX)
LiveXLive Media, Inc. is a digital media company that acquires, distributes, and monetizes live music. The company offers an application that provides access to live events, audio streams, original episodic content, podcasts, video on demand, real-time live streams, and social sharing of content. Shares of LiveXLive appreciated by 216% in the year to February 2021.
4. Nokia (NYSE: NOK)
Nokia may have lost some of its shine in recent years, but the company is making a huge comeback. Nokia is one of the major 5G players, which could be a new beginning for the troubled mobile telecommunications company. It is already providing 5G solutions to various companies around the globe and has started making android phones. As of February 2021, Nokia’s market capitalization was $23bn, and its shares declined by 2.16% compared to the same period in 2020, so it might be a bargain.
5. Asure Software (NASDAQ: ASUR)
Asure Software, Inc. provides cloud-based human capital management and workspace management solutions worldwide. The company helps various small-sized and mid-sized businesses to develop human capital to get to the next level, stay compliant, and allocate time, money, and technology toward growth. At the time of writing, Asure has a market capitalization of $157m, and its stock had appreciated by 27% in the three months to February 2021.
Expert Tip on Investing in Low-Cost Stocks“ Many low-cost stocks are emerging companies with great growth potential. So if you’re looking to buy and hold for the long term it’s better to focus more on the company’s business model, the significance of its products or services, and the quality of management than financial statements and ratios because it may not have started making money. If you’re trading stocks under $10 for the short term, make use of technical analysis, and don’t forget to set your stop loss and take-profit parameters, because low-cost stocks’ share prices tend to be volatile. ”- Emmanuel Ekwomadu
Why Invest in Low-Cost Stocks?
Some low-cost stocks are emerging companies with great growth potential. You stand a chance of picking a company with a revolutionary product and sustainable business model, like Amazon in April 2001.
Also, the volatility in low-cost stocks can provide some quick profits if you’re a trader with a short-term outlook who just wants to make quick money. Lastly, low-cost stocks are relatively cheap, which makes it easy for investors with little capital to start investing.
Frequently Asked Questions
You might pick an emerging company with enormous growth potential. Imagine buying Amazon for $8.75 in April 2001 and holding it till now (2021).
Maybe; if you find one with strong fundamentals and growth prospects, it could be a good investment. What matters is to invest with an amount you can afford to lose.
Anyone of legal age can invest in low-cost stocks. But there is a need to have a basic knowledge of fundamental analysis before investing in such stocks.
No, they are not, considering their volatile nature and the skills needed to pick a potential long-term winner. But beginners with a disposable income may look for companies with revolutionary products and invest for the long term.
If you have a long-term outlook, use fundamental analysis but focus more on the company’s business model, the significance of its products or services, and the quality of management than financial statements and ratios. If you just want to trade, use a price action analysis.
In the US, low-cost stocks are traded during weekdays between 9 am and 4.30 pm when the major exchanges are open. For the UK market, the stocks are traded between 8 am and 4 pm when the London Stock Exchange is open.