Investment in low-priced stocks has often found favor with investors, and with good reason. After all, these “so-called” cheap stocks can potentially provide investors with rewards that are not always bestowed by other investment styles.
Specifically, these stocks allow for a lower initial investment, offer greater potential for price appreciation and provide investors with bigger dividend payments as well.
But is it adequate to gamble one's hard-earned money on cheap stocks? With market-wide volatility yet to be addressed, it would be prudent for investors to seek for value plays that are simultaneously low-priced.
Low-Priced Value Bargains
Who doesn't love to strike a bargain? By investing in low-priced stocks, investors are able to buy a larger number of shares in a company than they would have otherwise been able to, say, in a more higher-priced stock.
Consequently, the strategy enables investors to amplify their returns with even a minuscule monetary gain in the stock price, as the percentage gain on such stocks is a lot higher. For example, a $20 stock can reap huge profits as even a $1 increase in share price, adds 5% to the portfolio.
Meanwhile, value investing offers an opportunity to enter the market and grab stocks that have otherwise been overlooked by a majority of investors, and are hence, trading cheap. Further, these stocks often flaunt low P/Es, have solid outlooks and yield decent dividends, too.
Thus, for people who appreciate the power of a discount and at the same time, want to make the best out of low-priced value stocks, we hereby offer few potential stock picks that are still priced short of perfection.
4 Stocks to Put Your Money
Since most of these low-priced value bargains are not industry behemoths, investors need to be extra cautious when investing in these stocks.
Using our new style score system, we have zeroed in on four cheap stocks that flaunt excellent prospects and might prove to be a boon for value investors. Back-tested results show that stocks with Value Style Scores of ‘A' or ‘B,' when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the greatest investment opportunities.
