In life they say, “You get what you pay for.” This sentiment is usually uttered when something is considered cheap; but when it comes to best stocks under 10, the differences are not so clear cut. With stocks, a low price doesn’t necessarily translate into cheap and it’s our job in this short piece to show you how to turn that into an advantage.
Best Stocks Under 10 – The Mechanics of Price
In the stock market the typical arbiter of value is price. Expensive stocks are seen as being more valuable and investors will often fork up the money needed to acquire them. The only trouble with looking in one direction where price is concerned is that there is a cost-impediment for most day traders and investors. How many ordinary investors or traders for instance, could fork out the $1000+ for an Amazon.com Inc. (NASDAQ: AMZN) share? Not many; which is why understanding what goes into price and value is so important.
Let’s take a look at two examples to illustrate the point. Advantage Oil & Gas Ltd. (NYSE: AAV) at this writing is trading at $4.95; based on that price, this is a stock that would qualify as a penny stocks based on standard definition and the virtue of it falling below $5. But although AAV is considered a penny stock by price, it carries a market cap of $914.61M at the time of writing. That’s a classic cheap stock that is pushing nearly $1B worth of value.
Advanced Emissions Solutions, Inc. (NASDAQ: ADES), by contrast, is at the time of this writing trading at $11 – just over the price-anchor of this article, and definitely not what most on Wall Street would call a cheap stock. Despite this relatively higher price, however, ADES is trading with a market cap of $222.18M at this writing. That’s nearly $700M worth of market capitalization less than a stock – AAV above – which is trading more than 50% below ADES’ valuation.
You can see from that illustration that when you compare price alone, you can often miss the inherent value that is bound up in an individual stock. It’s a classic investing mistake, one that can lead to spectacular misses when a low-priced best stock under 10 happens to breakout. Such breakouts are not always predictable, nor straightforward.
Best Stocks Under 10 – The Urgency of Action
One reason you can’t accurately predict when a low float low price stock might breakout, is that when they move, the price action can be swift. So, it’s not uncommon for best stocks under 10 to have breakout running 60% – 1,500% occur suddenly, only to peter out in a matter of days or weeks. This unpredictability coupled with poor stamina, is a big reason that investors and day traders need to keep their eye open and not ignore best stocks under 10 on account of them being “cheap.”
The cost of ignoring these stocks can be high in terms of opportunity costs. Investors and traders found this out the hard way with Aquinox Pharmaceuticals (NASDAQ: AQXP), a biotech company based in Vancouver, Canada. On Friday, August 7, 2015, AQXP traded for less than $2 throughout the day, eventually closing above open. For most investors and traders watching things, AQXP was doing nothing out of the ordinary; nothing at least, that would signal the eventual explosion that happened next. But by Tuesday, AQXP had closed at a staggering $21 – a gain of nearly 1,100%. But that wasn’t the rally that gave those investors that missed out headaches. The one that really caused sleepless nights was the rally which occurred the Monday when AQXP reached a high of $55.75, a 30,000% rally since the tepid close on the Friday. One can just imagine how stunned investors and traders would have felt having missed such a payday. This proves our point, of course; best stocks under $10 should never be ignored. Doing so can leave a life-changing gains on the table.
Best Stocks Under 10 – Outsourcing Your Work
We know you shouldn’t ignore best stocks under 10; but how do you get a steady stream of such stocks without spending hours doing research? One way is to join a newsletter that does all the heavy lifting. These newsletters can save you literally weeks, sometimes even months of research time. Best of all, the best ones offer their picks to you for free. All you have to do is sign up! Why not start by taking a look at this one? Check them out.