The Best Cheap Stocks To Buy In 2014 – Find Penny Stocks to Buy Right Now
Fri, Oct 4, 2013
Not All Cheap Stocks Make Great Investments.
Stocks that are cheap tend to stay cheap for a very long time. Investors don’t make any money when a cheap stocks stays cheap. Or worse, gets even cheaper.
However, investing in cheap stocks is the epitome of Contrarian Investing. So cheap stocks offer some of the most lucrative capital appreciation potential. And they are always worth a look.
Here are a few cheap stocks worth buying this year and how we identify a good cheap stock.
What Makes The Best Cheap Stocks To Buy In 2014
Cheap stocks are often found in companies with all kinds of problems.
They might sell poor products, provide services that are no longer in demand, be losing out to their competition, or any other factors which many companies never recover from.
Here’s how to tell the difference between a cheap stock that will stay cheap and cheap stock that’s likely to offer higher returns than expensive stocks.
The best cheap stocks to buy now in are usually the shares in companies which have some very specific attributes and their underlying businesses are only facing temporary problems.
These stock-specifics of cheap stocks include:
Low P/E Ratio – the P/E ratio is one of the simplest valuation measures in all of stock analysis.
It is simply the price of a stock divided by the earnings per share.
A high P/E ratio means you are paying more for earnings than the overall market. A low P/E ratio means you’re paying less.
So a stock with a low P/E ratio is cheap. One with a high P/E ratio is expensive.
Over time, stocks with low P/E ratios tend to do better than stocks with high P/E ratios.
The best cheap stocks to invest in 2013 featured below all have P/E ratios below 13 (less than the current S&P 500 P/E of 15).
Dividend Yield – A stock’s dividend yield often makes up a critical part of the overall return to investors.
The yield on a stock can range from zero to double-digit percentages.
Many high-yield stocks pay more than 10% annual dividends. Since they return most of their earnings to shareholders in dividends, they don’t have much cash left over to reinvest and increase shareholder values.
Most stocks don’t pay any dividends at all. These are normally growth companies. So not having any dividend yield isn’t necessarily a bad thing.
In the case of searching out the Best Cheap Stocks To Buy Right Now 2014 we use yield as an indicator of health.
Since we’re dealing with ultra-cheap stocks in companies that are facing some tough times, a dividend yield of any size indicates the company is in strong enough financial position to make its dividend payments.
All of the top the best cheap stocks to buy right now identified below have at least a small yield.
52-Week Price Change – A stock’s recent price moves are dependent upon a lot of factors.
Since we’re looking for the cheapest stocks, we want to start with the stocks that have declined the most in the last year.
All of best cheap stocks to buy today featured below have decline more than 50% in the past year.
These are the indicators that will pay off over the medium- and long-term for investors looking for cheap stocks to invest in for the rest of 2014.
Three Best Cheap Stocks To Buy In 2014
There are a number of Best Cheap Stocks To Buy 2014 in which meet the criteria above.
Many of them are in hard hit industries that are facing tough times. Some will fade away. Others will return to their past glory. And reward investors handsomely for buying now
Here Are The Three Best Cheap Stocks To Buy Right Now In 2014
Best Cheap Stocks To Buy In 2014 #1
Company: IAMGOLD (IAG)
P/E Ratio: 12.4
52-Week Price Change: -60%
Anything to do with gold or precious metals has certainly had a rough go of it over the past two years. IAMGOLD is no different.
Gold prices may have put in a bottom though. And companies like IAMGOLD, which mines gold in Africa and keeps costs relatively low, will limp along during the lean times.
Its shares will limp along as well. But its share price will surge when gold prices rebound.
Best Cheap Stocks To Buy In 2014 #2
Company: Ebix Inc (EBIX)
P/E Ratio: 5.65
52-Week Price Change: -56%
Officially, Ebix operates as an intermediary that allows businesses to coordinate “life insurance, annuities, employee health benefits, risk management, workers compensation, and property and casualty insurance.”
It is in the software services sector.
The problem has been that Ebix is getting is watching its earnings drop.
Over the last three months the Wall Street analysts that cover the stock have dropped their earnings expectations for Ebix. The earnings forecast for next quarter are now 31 cents per share, down from 36 cents. The expectations for next year’s earnings are $1.58 per share, down from $1.97.
These reduced estimates have led investors to bail out on Ebix. That’s why its shares have been more than halved in the last year. But if Ebix can turn things around, shares will fly. And that’s the kind of potential that makes a good cheap stock to buy today.
Best Cheap Stocks To Buy In 2014 #3
Company: Walter Energy (WLT)
P/E Ratio: N/A
52-Week Price Change: -57%
Walter Energy is the epitome of a cheap stock.
It is a coal miner which puts it in one of the hardest hit sectors in the world. Most coal stocks are at or below their 2009 lows.
The primary type of coal it produces is metallurgical coal. This type of coal is used in steel production. So with steel demand leveling off over the past few years, there has been a glut of production.
That’s why Walter Energy does not have a P/E ratio because it doesn’t have any earnings (it lost money last year).
All of this combined puts Walter Energy in a very tough spot. That is, of course, how cheap stocks are created.
These are some Of the Best Cheap Stocks to Buy In 2014
They are all out of favor, their share prices are significantly lower than they were just a year ago, and they all have the potential to come back very strong when conditions improve.
Investing in the Best Cheap Stocks never seems like a good move at the time. But these top cheap stocks offer the potential for far greater returns than expensive stocks.
Good investing,Best Cheap Stocks To Buy 2013, Best Cheap Stocks To Now 2013