Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
In the investment culture, you will often hear the dismissing sentiment that under $10 stocks are laden with risk more than any other stock trading venture. After all, these so-called penny stocks require minimal investment for potential multiple gains.
The return on your investment with penny stocks might quadruple in a year, but often enough, such low-value stocks get even lower. The exception to this observation comes in the form of black swan events, like the coronavirus pandemic, especially if they sank the stock value in the first place.
Stocks to Buy Under $10
In this very specific light, here are some stocks under $10 that show promise to buck the trend of penny stocks. As always, you must take responsibility for weighing all the arguments presented for these promising stocks, and act accordingly with the help of certain trading platforms such as Robinhood, which have succeeded in democratizing commission-free stock trading.
All the stocks listed here have severely plummeted due to coronavirus, but they have a sound foundation to recover as the coronavirus miasma dissipates.
A Chinese equivalent to Tesla’s exclusive electric vehicles, Nio was effectively shut down as China undertook unprecedented measures to stop the spread of COVID-19 in January and February. In a country which has far more leeway to institute lockdowns compared to Western nations, this meant that many people weren’t allowed to leave their home to get groceries, let alone buy new premium EV cars. Consequently, Nio reported a 53.2% decrease in sales in the first quarter of 2020 compared to the last quarter of 2019.
This is what constitutes a black swan event. Prior to coronavirus, Nio was well ahead in becoming a roaring success, with an increase of 70% of sales in the fourth quarter of 2019. As you may have noticed, China has a huge problem with smog in its multi-million people metropolises. Barring all other sources of pollution such as coal plants, an EV vehicle delivers a rapid solution to this problem of not being able to breathe clean air.
Nio took many insights from Tesla and positioned itself as the number one EV seller in China. Combine this with China’s successful dealing with the coronavirus pandemic as it reassesses its fatality to a seasonal flue, Nio stands to get back on the pre-corona track at a rapid pace. In fact, at the time of this article, Nio’s stocks have risen above $5 but are still under $10, with all indicators pointing to a continued rise that mirrors Nio’s 105.8% growth in ES8 and ES6 vehicle deliveries in April.
Among the first industries to be taken out by the government’s response to the seasonal flu was the travel and tourist industry. Although based in Germany, Trivago is well-known outside its borders as a reference online booking platform for hotels, hostels, and other accommodations for weary travelers. Needless to say, its stock lost 92% of value compared to Trivago’s highest peak in 2017.
Currently, Trivago is holding way under $5. Understandably so as it reported a 33% revenue slump for the most recent quarter. However, this slump is coming out of European and Asian markets, the ones that were first hit by the coronavirus, and the latter is on its way to full recovery. Moreover, Europe’s nations had different approaches to dealing with the pandemic, some of which, like Sweden, had no lockdowns at all and managed just fine.
Given the fact that American clients constitute only a third of Trivago’s business, and they are subjected to further travel bans, Trivago will have an opportunity to bounce back as it realigns its marketing efforts toward European and Asian nations. Fortunately, Trivago has full control of its expenditures to accomplish just that.
Planet 13 (PLNHF)
Consider this scenario, if you knew that alcohol’s prohibition days were soon to be over back in the 1930s, which investments would you have made?
We face the same question regarding marijuana. Although marijuana has been legalized in many states, in some form or another, the cultural and political mood permeating society tells us that marijuana will be fully legalized on a national level in the near future.
This will place this valued mind-soothing commodity on the same legal status as alcohol or tobacco. Even better, marijuana enjoys a superior product reputation than both alcohol and tobacco, based on its medicinal properties that are far less harmful than these traditional drugs.
Only one question remains, which company is best equipped to meet the projected marijuana market value of $73.6 billion by 2027? By many indicators, this would appear to be Las Vegas-based Planet 13. As soon as it reopened alongside Las Vegas casinos, its stock rebounded. The company is still non-profitable, but its marketing philosophy is clever and just what is needed when America wakes up to a fully legalized marijuana.
Namely, Planet 13 associates marijuana with a lifestyle, exemplifying all the little ways it can improve one’s disposition. A testimony to this branding success is Planet 13’s enviable position as Nevada’s leading marijuana superstore retailer, holding 10% of all marijuana sales in the state. They plan to replicate this model in other states as soon as legal barriers are brought down.
Rubicon Project (RUBI)
It would be safe to say that many consumers of the media don’t like ads that interrupt their enjoyment of the program. However, what if those ads are highly relevant to your interests? Moreover, what if they are able to bring higher conversion for the platform that deploys them?
This is the gist of the Rubicon Project, a small technology company, recently merged with Telaria, that created a VMP – video management platform. Like we previously discussed with the emergence of TechFin, purveyors of technology hold great power and benefits for all platforms that wish to maximize their profits. By using big data analytics and machine learning, these companies make ads relevant. Thus, less annoying and more likely to convert to sales, which further increases ad revenue.
More importantly, the Rubicon Project offers the ad maximization tools for a newly emerging market – streaming. Over the next decade, we will see a shift from linear TV ads to streaming TV ads. This constitutes a wide-open opportunity that the Rubicon Project fully grasps and aims to exploit by providing just the right tools every streaming platform will need.
Plug Power (PLUG)
Like the Nio stock, this one is on the rise, closing toward $10 at the time of this writing.
Older environmentalists may remember the exceedingly attractive promise of hydrogen fuel cells to power our vehicles. With its much greater energy density than batteries, and without emissions except for water vapor, HFCs appeared to be a perfect alternative for smog-belching fossil fuels.
Alas, if you recall the historical Hindenburg disaster, hydrogen is highly flammable. On top of that, an entire infrastructure of HFC delivery must be built up from scratch, just like Tesla is doing with its superchargers. Nonetheless, technological innovation is speeding ahead, making HFCs far safer. Compared to electric batteries, they leave a lesser carbon footprint, allow for much greater travel distances, and are set to become cheaper.
This is indeed an appealing alternative to both fossil fuels and batteries. However, does Plug Power have what it takes to bring their vision to the market as Tesla managed to accomplish? Will there be an insurmountable psychological barrier concerning hydrogen’s flammability? The answer comes in the form of first-adopters. Amazon and Walmart have already assessed Plug Power’s HFCs and they are deploying it in their warehouses for forklift machinery.
Would they’ve done so if they hadn’t deemed HFCs safe enough to deploy in hundreds of vehicles administering to their core business? Would they’ve done so if they hadn’t concluded that HFCs significantly cut energy costs? Given that Plug Power already participates in the transport of 25% of retail food and groceries in the US, it certainly seems that Plug Power is on a course to carve a profitable niche for itself.