Low-cost stocks are often snubbed by investors because of their low liquidity and high volatility. There is the premise that they are easily manipulated and susceptible to pump and dump schemes of unscrupulous investors. However, such stocks can bring significant gains to your portfolio. Because they are priced cheaply, such low-cost stocks often trade below their fair value. This can present an opportunity for substantial gain for bargain hunters. In this post, we have compiled a list of the best stocks under $10 that investors can buy and own in 2021.
What are low-cost stocks under $10?
Low-cost stocks are whose prices are below $10. These are different from penny stocks which are stocks that cost less than $5, though they may share similar characteristics. While most low-cost stocks are shares of micro-cap or small-cap companies, large-cap companies also have their shares priced below $10 — for example, Nokia.
A common problem is failing to differentiate between a cheap stock and an undervalued one. It’s an interesting aspect of human psychology. A stock that is trading at $1000 could decline by 25%, and investors will swoop in to buy the dip. However, if a $6 stock drops by 20%, it becomes untouchable.
Since they are cheap and possibly trading far below their fair value, low-cost stocks have a lot of room to run. But they are also extremely volatile and can experience sharp price movements. One way investors can hedge against this is by diversifying their investments rather than concentrating on a single stock. Stocks under $10 should make up a small portion of your portfolio, with the majority of your stock portfolio on solid, stable companies. However, low-cost stocks may present opportunities for a quick profit via swing trading.
How to trade and invest in low-cost stocks under $10?
Choose a user-friendly platform
The tools which you use to execute your trades can have an impact on your portfolio’s performance. A user-friendly trading platform would provide you with the necessary technical support to make the most of your trades. A platform that offers data analytics, research materials, an easy payment process, fast execution, and high-security features should be prioritized.
Choose low-cost stocks under $10 to trade
Here, you do your due diligence and look for the right stocks to trade. Finding a stock of fair value below $10 takes a lot of effort. Look for companies that have strong fundamentals. Check the price chart too, and try to get in at a swing low — never at the middle or top.
Once you are satisfied with your choice, you can go ahead and trade the stock. This can be done in a variety of ways, such as over-the-counter platforms, direct listing, or through a broker. However, it is always advisable to go through a broker and trade only exchange-listed stocks.
Where can I trade low-cost stocks under $10?
Low-cost stocks can be traded over-the-counter (OTC) or the main stock exchanges through a broker. OTC trading is a direct deal between two investing parties without the supervision of an exchange. Typically, trading low-cost stocks through OTC tends to be risky because no regulator guarantees invested capital safety. For a list of brokers where you can trade stocks under $10, see the table below.
Top 10 low-cost stocks under $10
These are the best low-cost stocks trading below $10 based on prospects, current price action, and business model. The top 10 low-cost stocks to trade in 2021 include:
- 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)
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. Silver Sun has a market capitalization of $32.8m, while the company’s shares have rallied by 123% over the past year.
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 these demography can access finance. FinVolution has a market capitalization of $1.89bn. Last year, shares of FINV have appreciated by 245.6%
LiveXLive Media (NASDAQ: LIVX)
LiveXLive Media, Inc. is a digital media company that acquires, distributes, and monetizes live music. The company is also involved in internet radio, podcasting, and music-related streaming and video content. The $342m 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 have appreciated by 216% in the last one year.
Nokia (NYSE: NOK)
Nokia may have lost some of its aurae in recent years, but the company is making a huge comeback. Nokia is one of the 5G players, which could signal the beginning of a turnaround from the troubled mobile telecommunications company. The company is already providing 5G solutions to various companies around the globe. Nokia has a market capitalization of $23bn, while its shares have fallen by 2.16% over the past year, presenting a bargain.
Asure Software (NASDAQ: ASUR)
Asure Software, Inc. provides cloud-based human capital management and workspace management solutions worldwide. The company helps various small- and mid-sized businesses to develop human capital to get to the next level, stay compliant, and allocate time, money, and technology toward growth. Asure has a market capitalization of $157m, and its stock has appreciated by 27% in the last three months.
CymaBay Therapeutics (NASDAQ: CBAY)
CymaBay Therapeutics, Inc. is a clinical-stage biopharmaceutical company that develops therapies for treating liver and other chronic diseases. The company also has a development and licensing agreement with Janssen Pharmaceuticals, Inc. to develop a treatment for type 2 diabetes. CymaBay has a market capitalization of 372.68 million. Shares of Cymabay have appreciated by 204% over the past year.
iBio (NYSE: IBIO)
iBio operates as a biotech business and contract development and manufacturing organization (CDMO). This implies that other drug companies contract it to get drugs through clinical trials and then manufacture the drug as trials ramp up. The company also has a vaccine candidate. iBio has a market capitalization of $429m, while its shares have appreciated by over 600% in the last one year.
Ribbon Communications Inc. (NASDAQ: RBBN)
Ribbon Communications Inc. provides software solutions for companies around the world. The company offers telecom software solutions to the wireless and wired sectors to help telecom providers maximize their systems. Its enterprise solutions include secure communications, real-time communications, Microsoft Skype for Business, and many other software solutions. Ribbon currently has a $1.4bn market capitalization, and its stock has rallied by 117% in the last six months.
Radiant Logistics (NYSE: RLGT)
Radiant Logistics, Inc. offers multi-modal transportation and logistics services in the United States and Canada. This includes domestic and international air cargo services, ocean freight forwarding services, freight brokerage services, including truckload and intermodal services. The company has a market capitalization of $177 million. Shares of Radiant Logistics have risen by 49% over the past year. The stock recently received a slurry of upgrades from analysts who are optimistic about improving business conditions
Nomura Holdings, Inc. (NYSE: NMR)
The company, formerly known as The Nomura Securities Co., Ltd., was founded in 1925 in Tokyo, Japan, before changing its name to Nomura Holdings, Inc. in 2001. It offers a variety of financial services to individuals, corporations, financial institutions, governments, and governmental agencies globally. Nomura operates through three segments, namely: retail, asset management, and wholesale. Nomura has a market capitalization of $17.9bn, and its shares have risen by 19% in the last one year.
Expert tip on investing in low-cost stocks
When trading stocks under $10, set your stop loss and take profit parameters. This is because low-cost stocks tend to be volatile and exhibit sharp price movement. Setting your S/L and T/P levels, guards against huge losses and ensures your trades are protected even when you are not available to monitor them.
Why invest in low-cost stocks?
Investing in low-cost stocks comes with a number of benefits. Firstly, some low-cost stocks present good opportunities for short- and medium-term trading strategies. This implies that investors can make a quick profit from trading these stocks in the short-term.
Secondly, investors may strike good bargains when trading low-cost stocks since some of them may not be fairly priced. A diligent investor may be able to find good stocks with huge growth potential.
Thirdly, low-cost stocks are relatively cheap, which makes it easy for traders with little capital to start investing.
Frequently Asked Questions
Nokia is a good one.
Maybe; if you find one with strong fundamentals, it could be a good investment.
Nokia is in great shape at the moment.
Anyone of legal age can invest in low-cost stocks
No, they are not, considering their volatile nature.
Low-cost stocks are popular because they present a significant opportunity for a sharp upward price movement.
Low-cost stocks are traded during weekdays between 9 am and 4.30 pm when the major exchanges are open.