Best cheap stocks to buy in July 2024
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 9:00 a.m. UTC July 4, 2024
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Identifying the best cheap stocks is more challenging than searching for low-price stocks. Stocks with low share prices are usually inexpensive for a good reason. As a general rule of thumb, stocks of low-quality companies often stay cheap over the long haul.
The best cheap stocks are high-quality, profitable businesses with long-term growth opportunities, with an attractive fundamental valuation and positive earning projection.
The best cheap stocks to buy in 2024 have share prices of less than $50, forward price-to-earnings ratios under 17, consensus analyst recommendation of “buy” or better, and high marks for earnings stability and earnings expectations.
Why trust our investing experts
Experienced stock analysts select our best stock selections based on screening for several must-have metrics. These metrics often include but are not limited to forward price-to-earnings, risk, earning stability and Wall Street “buy” consensus. Among all of our 70-plus stock selections, the average return beats the S&P 500. But investors should note that before purchasing any stocks, it’s important to do plenty of research and ensure their selections align with their financial goals and risk tolerance. You can read more about our methodology below.
- 130+ companies screened.
- 3 levels of fact checking.
- 3-step editorial review.
- Altimeter stock grade of B or higher.
Best cheap stocks
Comcast (CMCSA)
VICI Properties (VICI)
Market cap
YTD performance
EQT (EQT)
Market cap
YTD performance
Tapestry Inc. (TPR)
Market cap
YTD performance
Fox (FOX, FOXA)
Market cap
YTD performance
Compare the best cheap stocks
Methodology
Until recession risks subside, focusing on cheap stocks that have profitable, stable businesses and attractive valuations can help mitigate investing risks.
The cheap stocks included above all trade on a major U.S. stock exchange and met the following criteria:
- Member of the S&P 500 index. While the index is often used as a broad view of the U.S.’s economic health, the famed benchmark includes many large-cap companies, which tend to be less volatile.
- Stock price is less than $50. Most stocks priced at under $50 tend to be issued by small-cap or midcap. The stocks selected on this list are issued by established companies with a market capitalization of at least $10 billion.
- Consensus analyst recommendation of “buy” or better. A strong number of analyst “buy” ratings indicates an expectation the stock will outperform the overall market.
- Forward earnings multiple less than 17. This metric can be used to find a good stock valuation based on the stock’s projected future earnings. Currently, the median forward P/E among S&P 500 stocks is nearly 18, according to Yardeni Research. We selected stocks where the market may not be pricing in their full potential.
- An Altimeter overall grade of B or higher. The overall grade takes into account profitability, earning stability, valuation and earning expectations. Grades of B or higher are given to stocks that are ranked in the top quarter of nearly 5,000 stocks in Altimeter’s stock database. This indicates that these companies have strong valuations with the ability to improve returns.
Why other stocks didn’t make the cut
The past year has been a bumpy ride for stocks in certain sectors, with real estate and utilities notching year-over-year losses. In contrast, the highest-performing sector year over year is information technology. Year over year, the communication services sector is up 25%.
In the current uncertain economic climate, investors should be defensive yet opportunistic. The stocks selected were from the following four sectors: energy, communication services, consumer discretionary and real estate.
Final verdict
Investing in 2023 may prove challenging, especially if the Federal Reserve cannot navigate a "soft landing" for the U.S. economy. Buying cheap stocks with low share prices can be dangerous in this difficult macroeconomic environment.
Many of these stocks have low share prices because their businesses face unique challenges or are ill-suited to operate in environments of elevated inflation and interest rates.
But because stock selection may be difficult for the time being, it doesn't mean there are no opportunities to buy high-quality, cheap stocks with share prices that won't break the bank.
These five stocks all have attractive valuations, growth opportunities, and solid financial outlooks that could help them outperform in 2023 and beyond.
How to buy cheap stocks
To buy cheap stocks, you first need to open a brokerage account. Hands-on investors who enjoy doing their own research and feel comfortable making their own trades can open a self-directed online trading account with a reputable online brokerage, most of which do not charge commissions for standard stock trades. If you would feel more comfortable having some assistance with your stock purchases, you can consider opening an account with a full-service brokerage that offers investment assistance and other financial services for a fee.
Once you have opened and funded a brokerage account, research cheap stocks to identify companies that have positive underlying business fundamentals and are attractively valued in the market. When you have decided which cheap stocks to buy, place orders to buy your stocks of choice, making sure to use limit orders if you want to ensure your trade is executed at or below a specific price.
Advantages and risks to consider
Cheap stocks can be attractive investments because they don't cost an arm and a leg and they often have more potential upside than higher-priced stocks. In addition, stocks that are cheap simply because they have fallen out of favor and not because of a meaningful downturn in the underlying company's performance can offer investors a chance to make high-quality investments at a discount to fair value. Buying a cheap stock after a sell-off can be like buying a new TV when it goes on sale for Black Friday.
But a high percentage of cheap stocks are cheap for a reason, and companies with cheap stocks are likely to be experiencing problems with their underlying businesses. Cheap stocks are often higher-risk investments than their higher-priced counterparts. When it comes to cheap stocks, investors would be wise to remember the adage "You get what you pay for."
Frequently asked questions (FAQs)
Yes. Most popular online brokerages have $0 account minimums, meaning you can start buying cheap stocks no matter how much money you have in your account.
Even if you don’t have enough money to buy one share of pricier stocks like Microsoft, Nvidia and Berkshire Hathaway, plenty of brokers offer fractional share investing, which allows investors to buy a partial share of stock for less than the cost of a single share.
Investing in cheap stocks can be very lucrative. But that’s only if you choose the best cheap stocks based on your personal investment goals and current market climate.
Just because a stock has a low share price does not mean its shares are attractively valued. Investors should consider the quality of a cheap stock’s business and its valuation based on fundamental metrics such as P/E, price-to-sales (P/S) and price-to-book (P/B) ratios.
Investors can buy a relatively large number of shares of a stock that has a lower share price. In addition, focusing on cheap stocks can make it easier for investors who have a small amount of money to diversify their portfolios.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
