Cheap stocks continue to be the land of opportunity for aggressive investors.
We are seeing an opportunity for massive profits in stocks under $10 a share. As so much investor cash is directed at memes and other story stocks, some fantastic businesses have seen their stock price drift back to single-digit prices. Best of all, many of these solid companies are also trading at single-digit price/earnings ratios.
A solid business combined with sneakily great valuations is the perfect recipe for making money in any market.
It just so happens we're in a red-hot market where low-priced stocks could double or triple in price in a matter of days once investors get ahold of them.
Here are the best cheap stocks to buy right now…
Airlines Make Great Cheap Stocks Now
Mesa Air Group Inc. (NASDAQ: MESA) runs regional airlines service under a master agreement with American Airlines Group Inc. (NYSE: AAL) and United Airlines Holdings Inc. (NYSE: UAL). The airline serves 102 cities in the United States and Mexico under United Express and American Eagle names.
Like all airline stocks, shares of Mesa got hit hard in 2020 but have begun to recover as a significant percentage of the population has gotten vaccinated and we begin to reopen the world.
Mesa has also begun looking for new ways to diversify its business. It has a new freight carrying contract with DHL and is already operating two aircraft under that contract.
It also announced last month that it is partnering with Gramercy Associates to add European flights to its offerings. Gramercy is run by Tony Davis, the former CEO of Tiger Airlines in Singapore.
Mesa has outperformed analyst expectations since the coronavirus hit the United States. It has delivered positive earnings surprises in every quarter since the pandemic began. In the most recent quarter, Mesa reported profits that exceeded analyst expectations by 27%.
Mesa is just one of the two airlines that have made money over the past year.
In spite of the reopening of the economy and Mesa's outstanding financial performance, the stock is trading at just nine times earnings right now. Coupled with a mere $9 share price, and you've got the ideal cheap stock: under $10 a share and a seriously low valuation.
If the stock traded at the multiple that analysts are placing on other airlines' hoped-for 2020 profits, shares of Mesa would be trading at twice the current stock price right now.
And that's a real possibility as investors come back to the sector.
A Low-Priced Stock to Beat Any ETF
Acacia Research Corp. (NASDAQ: ACTG) gives us a chance to buy into what is basically a private equity fund.
Acacia Research acquires undervalued businesses with a preference for mature technology, life sciences, industrial, and certain segments of the financial industry. It also has an intellectual property business that acquires patent portfolios.
It partners with the very successful activist and value investor Starboard Capital, which provides Acacia with funding and assistance in sourcing and closing deals. Jonathan Sagal, managing director of Starboard, is on the board of Acacia Research to help direct the future efforts of the firm.
Last year, Acacia purchased a portfolio of 18 life sciences and biotech companies from a fund that was closing up shop. It has sold some of the companies and kept some of the ones it found more promising.
Working with Starboard should give Acacia Research what it needs to grow its portfolio value at a very high rate for the extended future. You can buy the stock right now for less than seven times earnings, which we think will ultimately turn out to be an incredible bargain.
Shares trade for just $6 right now, making this a low-priced stock with the potential to soar much higher.
The Best Cheap Stock to Buy Now
Tiptree Inc. (NASDAQ: TIPT) isn't just an interesting business. It's one of the best cheap stocks you can buy.
It owns Fortegra Insurance, a property and casualty insurance company that serves niche markets. These include things like those extended car warranties we all get calls about, credit insurance, product warranties on things like mobile devices, consumer electronics, appliances, furniture and bedding, and motor clubs. In other words, short-lived and high-margin lines of insurance.
Tiptree also operates Tiptree Capital, which originates mortgages and runs an investment portfolio. Right now, the investment portfolio is split between senior housing properties and shipping companies it started buying a few years ago.
The mortgage company is Reliance First capital, and it has seen strong growth during the pandemic due to the surging demand for homes.
Tiptree's management owns about a third of the stock outstanding, so they tend to have the type of long-term growth-focused mindset that builds wealth over time.
That's an exciting story for investors, but what makes Tiptree stand out is its cheap price under $10 a share.
The company itself sees the stock price as being way too low for the kind of business it's doing. Tiptree has been buying back a lot of stock trading at very low valuations. Over the last year, management has repurchased more than 23 million shares.
Think about it like this: The people who know the business the best are pouring money into the stock because they think it's such a value at this price. It's hard to argue with them.