Some of the best-performing stocks of tomorrow will be found by looking at the parts of the market that investors are avoiding due to years of underperformance.
Think about how energy stocks were universally hated with oil even falling to an unimaginable, negative price level for a brief moment in April 2020 as the pandemic led to a buildup of inventories and falling demand. Of course, this turned out to be a historic buying opportunity.
In today’s article, we are going to discuss 3 reasons why investors should be looking at the universe of stocks under $10 to discover the hidden gems of the future.
Reason #1: Incredible Upside (if the Ingredients are Right)
The first reason is pretty intuitive.
These stocks have the most potential for gains. In fact, I can guarantee that the best-performing stocks in the future will be found within this group.
These stocks tend to be under-owned and under-followed leading to their cheap stock status. Thus, they are ready to explode higher on even the slightest positive catalyst like a strong earnings report, an acceleration in economic growth, or some improvement in sector conditions.
Of course, the challenge is to identify the high-quality ones while filtering out the “junk”. To this end, we have the POWR Ratings system which is our quantitative rating system that can help eliminate the stocks that you should avoid….and point to the ones with the most upside potential.
In fact, we have created a stellar strategy that focuses on the “Top 10 Stocks Under $10” which harnesses the best of the POWR Ratings. We share more info on that topic further below.
Reason #2: Inefficient Markets
Some of the greatest fortunes have been made in illiquid and inefficient markets.
It’s these exact conditions that create opportunities for investors. Compare this to more efficient and liquid markets, where it’s tough for individual investors to have any sort of advantage over institutional investors with more resources or high-frequency, trading algorithms.
It’s normal in a large and liquid stock to see any sort of news or developments immediately reflected in the stock price. With stocks under $10, the fundamentals matter just as much but prices don’t react as instantly or swiftly to these events.
This lag is your edge.
Another factor is that less liquidity means more volatility. This is another potential advantage for smart investors who can take advantage of this volatility to enter or exit positions at favorable prices.
Reason #3: Turnaround Opportunities
The final reason to love stocks under $10 is that this is where we can find “turnaround” opportunities in the market.
These are companies that are executing or experiencing a pivot in their business that will lead to an acceleration in earnings. Sometimes, it comes about due to a change in management, new regulations, or a change in monetary or economic conditions.
This is a powerful factor that can lead to many-fold returns for investors who are early and correct in identifying these opportunities.
Of course, investors have a better chance of identifying such situations with low-priced stocks, because they tend to be under owned and under covered by Wall Street and institutional investors. Once again, the POWR Ratings and our proprietary Stocks Under $10 strategy help pinpoint the best of these turnaround opportunities.
What To Do Next?
The best place to consistently find these winning low-priced stocks is in my POWR Stocks Under $10 newsletter.
This is the portfolio service that harnesses the power of our exclusive “Top 10 Stocks Under $10” strategy which has generated +61.63% annual returns since 1999.
Beyond great picks I will also explain the all important “WHY” behind each move we make. Why to buy now…and when to sell for maximum gains.
You can experience these market shattering returns for yourself, by taking a risk-free 30 day trial for just $1. To get started, simply click the link below:
All the Best!
Chief Growth Strategist, StockNews
Editor, POWR Stocks Under $10 Newsletter
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SPY shares were trading at $444.25 per share on Friday morning, down $2.50 (-0.56%). Year-to-date, SPY has declined -6.47%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Jaimini Desai
Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles. More...
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