7 Dirt-Cheap Stocks Sitting in the Sweet Spot
While it’s always nice to get a discount, with cheap stocks, it may be better to go for enterprises sitting in the sweet spot; that is, publicly traded securities that are cheap but not too cheap where investors might fret about possible…
While it’s always nice to get a discount, with cheap stocks, it may be better to go for enterprises sitting in the sweet spot; that is, publicly traded securities that are cheap but not too cheap where investors might fret about possible value traps. On this list, I’m only going to target (as of the time of writing) equity shares that trade between $10 and $20.
Moreover, these cheap stocks aren’t just cheap for their own sake. Rather, they’re tied to compelling businesses that the market doesn’t really appreciate from a trailing earnings perspective. At the same time, they enjoy broader support among a consensus of Wall Street analysts. So, if you’re ready for some sweet deals, read on.
Based in China, Vipshop (NYSE:VIPS) operates an e-commerce website called VIP.com. It specializes in online discount sales. Per its public profile, Vipshop now represents the third-largest e-commerce site in its home nation. Presently trading hands at just under $15 a pop, VIPS got off to a decent start this year, gaining nearly 4%. However, in the trailing year, it’s up a staggering 58%.
Nevertheless, on a fundamental level, VIPS still has some legs remaining. Most notably, the market prices VIPS at a forward multiple of 8.15. As a discount to projected earnings, Vipshop ranks better than 87.38% of companies in the retail (cyclical) industry.
Another compelling factor boosting VIPS as one of the top cheap stocks to buy centers on its balance sheet. Specifically, it has a cash-to-debt ratio of 6.44, above the sector median of 0.49 times. Also, its Altman Z-Score pings at 4.62, indicating low bankruptcy risk. Finally, Wall Street analysts peg VIPS as a consensus moderate buy. Their average price target stands at $15.93, implying nearly 7% upside potential.
Core Molding (CMT)
Founded in 1988, Core Molding (NYSEAMERICAN:CMT) manufactures sheet molding compounds and molds fiberglass-reinforced plastics. While it might be a boring name among cheap stocks to buy, Core offers critical industrial services. Not surprisingly, then, its everyday relevance for the clients it serves boosted CMT to nearly 29% on a year-to-date basis. As well, it’s up 53% in the trailing year.
Despite these powerful stats, Core Molding remains one of the cheap stocks to consider. Primarily, the market prices CMT at a trailing multiple of 11.62. As a discount to earnings, Core ranks better than 64.17% of the chemicals industry. Also, CMT trades at 0.37 times sales. Here, the company beats out nearly 87% of the field. Notably, Core offers stakeholders a fairly stable balance sheet. In particular, its Altman Z-Score pings at 4.11, again indicating low bankruptcy risk.
Lastly, EF Hutton’s Chip Moore pegs CMT a buy. Also, the expert’s price target comes in at $19, implying nearly 13% upside potential.
Hailing from Tacoma, Washington, TrueBlue (NYSE:TBI) specializes in connecting people to work and discovering solutions to its clients’ workforce needs, according to its website. In other words, it’s a workforce solutions provider. Fundamentally, the Federal Reserve’s aggressive campaign against inflation should help TrueBlue eventually as desperation in the workplace rises. However, so far this year, TBI slipped more than 14%.
Still, for hardened speculators, TrueBlue could be an interesting opportunity among cheap stocks. Right now, the market prices TBI at a trailing multiple of 9.15. As a discount to earnings, the company ranks better than 78.09% of the business services sector. Additionally, TBI trades at 0.26 times (trailing) sales. Here, the company ranks better than 89% of its rivals. For prospective investors, TrueBlue enjoys decent stability in the balance sheet. In particular, its Altman Z-Score hits 4.03, indicating fiscal resilience. In closing, analysts peg TBI as a consensus moderate buy. Their average price target stands at $21, implying over 23% upside potential.
One of Canada’s largest oil and natural gas producers, Enerplus (NYSE:ERF) holds underlying property interest in the western side of its home country along with the U.S. Priced at $14.14 at the time of writing, on a technical level, ERF balances longer-term relevancies with nearer-term headwinds. Though rising global energy consumption should eventually boost ERF, shares slipped almost 13% since the start of 2023.
Nevertheless, I’m encouraged that over the trailing year, ERF gained almost 8%. As one of the intriguing cheap stocks to consider, Enerplus makes a strong case. Currently, the market prices ERF at a forward multiple of 4.81. As a discount to earnings, the company ranks better than 75% of the oil and gas space. Also, it trades at 4.93 times free cash flow (FCF). In contrast, the sector median is 7.42 times.
Just to note, Enerplus comes alive operationally. Its three-year revenue growth rate stands at 34.2% while its net margin pings at nearly 55%. Both stats dominate the sector. Turning to Wall Street, analysts peg ERF as a consensus moderate buy. Moreover, their average price target hits $20.43, implying over 44% upside potential.
Perdoceo Education (PRDO)
Headquartered in Illinois, Perdoceo Education (NASDAQ:PRDO) is a private company that owns four for-profit universities in the U.S.: American Intercontinental University, Colorado Technical University, California Southern University and Trident University International. Perdoceo previously held the name Career Education Corp. Since the January opener, PRDO fell 9%. However, in the past 365 days, it gained nearly 17%.
Carrying a price tag of just over $13, PRDO may attract market speculators. However, there would be substance to the speculation. For example, the market prices PRDO at a forward multiple of 6.9. As a discount to projected earnings, Perdoceo ranks better than 77.78% of the field. Also, PRDO trades at 6.66 times FCF. In contrast, the sector median value is 12.9 times.
Plus, the company enjoys other distinct attributes too. Perhaps most conspicuously, it enjoys a cash-rich balance sheet. As well, its Altman Z-Score pings at 4.55, reflecting low bankruptcy risk. Looking to the Street, Barrington’s Alexander Paris pegs PRDO as a buy. Further, the expert targets shares hitting $19, implying 45% upside potential. Therefore, PRDO could be one of the cheap stocks to buy.
Kiniksa Pharmaceuticals (KNSA)
Specializing in addressing debilitating diseases, Kiniksa Pharmaceuticals (NASDAQ:KNSA) scientifically offers an enticing angle among cheap stocks. However, this year, KNSA failed to generate upside momentum, shedding a worrying 23%. Still, it’s also fair to point out that in the trailing one-year period, KNSA gained nearly 12% of equity value.
Naturally, the higher-risk subsegment of the pharmaceutical space represents a cruel arena. However, for intrepid contrarians, KNSA might be enticing. Presently, the market prices KNSA at a trailing multiple of 4.29. As a discount to earnings, Kiniksa ranks better than 90.15% of the biotechnology industry. Also, KNSA trades at 3.57 times trailing sales. In contrast, the sector median stat is 9.73 times.
Notably, Kiniksa represents an incredibly profitable enterprise. Its net margin is 83.28%, outpacing 97.47% of the competition. Finally, Wall Street analysts peg KNSA as a unanimous strong buy. Their average price target stands at $21.50, implying almost 94% upside potential. With so much support, KNSA could be one of the cheap stocks to buy.
iTeos Therapeutics (ITOS)
Headquartered in Watertown, Massachusetts, iTeos Therapeutics (NASDAQ:ITOS) focuses on pioneering the discovery and development of highly differentiated immuno-oncology therapeutics for patients. As with Kiniksa Pharmaceuticals above, iTeos presents heavy volatility risks. For example, in the year so far, ITOS dropped nearly 30%. In the past 365 days, it’s down more than 59%.
For those looking for cheap stocks in terms of the ticker tape and the fundamentals, ITOS delivers. Primarily, the market prices ITOS at a trailing multiple of 5.11. As a discount to earnings, iTeos ranks better than nearly 88% of the biotech industry. Also, ITOS trades at 0.7 times its book value. In contrast, the sector median stat pings at 2.23 times. Also, it’s worth mentioning that iTeos benefits from a robust balance sheet. Its cash-to-debt ratio is 131.21 times, outpacing 77% of its peers. Lastly, analysts peg ITOS as a unanimous strong buy. Their average price target stands at $39.67, implying nearly 205% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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