Author: Craig Adeyanju
Estimated read time: 3 minutes
Publication date: 18th Jun 2019 11:02 GMT+1
Stocks that traders like to tag cheap — mostly because they trade at a small nominal amount like below $10 — are a double-edged sword.
On one side, this category of stocks can be prone to manipulation because they usually not widely as followed as blue-chip stocks. For instance, some institutional investors, steer clear of stocks that trade under $10.
On the other side, some stocks are trading under $10 because the market hasn't fully realized the full value of the business behind the stock.
We used the Finscreener stock screener to find technology stocks trading under $10, rated a strong buy by analysts and a strong buy on earnings. We picked stocks with at least 100,000 in volume. Here's what are the stocks screener returned.
The developer of social discovery and dating apps Meet Group (NASDAQ: MEET) has had it rough in the stock market over the past year despite exceeding earnings estimates in three of the last four quarters. As of June 17, MEET stock is down by nearly 24%, year to date. Still, consensus analyst rating says to buy the dip.
Meet Group is expected to grow its earnings by about 29.7% versus the industry average of 24.1%. The Meet Group's management is also efficient with assets that they generate $0.72 for every dollar in assets. The industry average is $0.7 for every dollar in assets.
Shares of semiconductor substrate manufacturer AXT Inc. (NASDAQ: AXTI) have been trending downward over the last two years. However, going by consensus analyst rating, the market might have been harsh on AXTI stock, with a strong buy rating. The company is relatively financially healthy, with a cash position that just about doubles its short-term liabilities.
Beyond that, the AXT's earnings growth, at 68%, is expected to exceed that of the semiconductor industry at large over the next three years. And it's exceeded earning expectations in the last four quarters.
As hinted earlier, it's worth noting that a stock with a low nominal figure isn't necessarily cheap. Buying smaller shares in more expensive companies may be a more efficient way to deploy your investment capital some time. For instance, if you invested $1000 separately in shares of AXT, Meet Group and Apple Inc (NASDAQ: AAPL) at the start of the year, your $1000 in Apple could have gained nearly 23%, as of June 17, while your $1000 in each of AXT and MEET stocks would have lost about 10% and 24% respectively. This emphasizes the need to always conduct your due diligence.
Disclaimer: Craig Adeyanju is an experienced financial consultant who writes for Finscreener.com. The observations he makes are his own and are not intended as investment or trading advice.