Generally speaking, you get what you pay for, which is why the concept of affordable sleeper stocks to buy might not immediately seem so attractive. However, the market arguably doesn’t perfectly value all tradable assets by incorporating all publicly known information. With thousands of companies traded on the New York Stock Exchange and Nasdaq, it’s impossible for anyone to know everything.
Of course, you should be skeptical whenever someone pitches you the best stocks under $10. Even with this list, you should always conduct your own due diligence before proceeding. However, the idea of finding diamonds in the rough isn’t as dubious as the Nigerian prince who needs your help in cashing a $500 million check. You can find them if you know where to look.
Fortunately, the screener tool of investment resource Gurufocus enables investors to find compelling ideas for undervalued stocks under $10. And these aren’t just cheap names for the sake of cheapness. Rather, they enjoy stout financial metrics and relevant businesses. If you’re ready to take a shot, below are high potential stocks below $10.
| ELA | Envela | $7.19 |
| HDSN | Hudson Technologies | $8.74 |
| SRTS | Sensus Healthcare | $2.69 |
Envela (ELA)
Founded in 1965, Envela (NYSEAMERICAN:ELA) and its subsidiaries engage in diverse business activities within the recommerce sector. These activities include recommercializing luxury hard assets, consumer electronics and IT equipment. As well, the company provides end-of-life recycling solutions. Because Envela helps extend the life of products, it’s one of the more creative environmental, social and governance plays available. Since the start of this year, ELA stock gained almost 33%.
Even with this tremendous performance, ELA ranks among the affordable sleeper stocks to buy. For one thing, investors can take note of the valuation. Trading at a trailing multiple of 12.23, Envela ranks better than 61.26% of enterprises listed in the cyclical retail segment. Also, its price-earnings-growth ratio clocks in at 0.19 times, far lower than the sector median of 1.16 times.
Operationally, Envela’s three-year revenue growth rate lands at 30.6%, beating out nearly 90% of its peers. Also, its EBITDA during the same period impresses at 62.6%. Finally, Lake Street’s Mark Argento pegged ELA a buy. His price target stands at $11, implying nearly 58% upside potential. Thus, it’s one of the best stocks under $10 to consider.
Hudson Technologies (HDSN)
Headquartered in Pearl River, New York, Hudson Technologies (NASDAQ:HDSN) is an engineering and chemical materials specialist. Among its solutions are capturing and recycling refrigerants and other ozone depleting and global warming gases; optimizing energy systems to reduce energy consumption and development and support of best practices to enable equipment operators to lower their footprint on the environment. Priced at $8.90 a pop, HDSN dipped almost 9% since the Jan. opener.
Still, those seeking affordable sleeper stocks to buy should take a long look at Hudson. While it’s not the sexiest idea available, the market prices HDSN at a forward multiple of only 6.72. As a discount to projected earnings, the company ranks better than 89.61% of its chemicals sector peers.
On the operational side, Hudson’s three-year revenue growth rate pings at 22%, beating out nearly 81% of its rivals. Also, its free cash flow (FCF) growth rate during the same period comes in at an impressive 17.7%. Adding to the narrative of high potential stocks below $10, analysts peg HDSN a moderate buy. Their average price target lands at $14, implying over 57% upside potential.
Sensus Healthcare (SRTS)
Based in Boca Raton, Florida, Sensus Healthcare (NASDAQ:SRTS) is a medical device company specializing in highly effective, non-invasive, minimally-invasive and cost-effective treatments for both oncological and non-oncological conditions. It gains insider attention for its directional anisotropic radiation therapy (ART), which treats patients undergoing cancer treatment during surgery (or at the tumor site) fast and efficiently. Priced at $2.77 a pop, SRTS lost nearly 61% since the Jan. opener.
Understandably, that makes SRTS one of the riskiest names among affordable sleeper stocks to buy. As well, the underlying company runs the risk of being a value trap. At the same time, the multiples are attractive, particularly being priced at only 0.98-times tangible book.
Operationally, Sensus commands a three-year revenue growth rate of 16.9%, beating out 72.9% of its medical device peers. Moreover, its FCF growth rate during the same period comes in at 15.1%, above 65.64% of the competition. Notably, Sensus features a strong balance sheet, with a cash-to-debt ratio of 19.86 times. In conclusion, analysts within the past month have pegged SRTS as a unanimous strong buy. Their average price target lands at $8.33, implying nearly 201% upside potential. Thus, it could be one of the more enticing undervalued stocks under $10.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.