In the opening week of October 2023, the major American stock exchanges featured a total of 1,968 stocks trading at $5 or less per share. Sorting through this extensive pool of low-priced stocks can be a formidable task. Many of these so-called penny stocks find themselves in this category due to a variety of issues, including operational difficulties, management missteps, or declining financial health. With the recent downturn in the stock market and the looming specter of a bear market, exercising caution is paramount.
However, even in these uncertain times, opportunities for prudent investment exist among low-priced stocks. Here are nine cost-effective stocks that show potential for strong performance in 2024:
Banco Santander SA (Ticker: SAN)
Banco Santander is a prominent Spanish banking franchise with a substantial footprint in Latin America, offering exposure to the dynamic economies of the region. Despite significant structural challenges facing the European economy, some of Santander's divisions, particularly Santander Mexico, have demonstrated resilience. SAN stock has enjoyed a 25.8% rally this year, presenting an appealing value proposition at just 5.3 times forward earnings.
Ambev SA (Ticker: ABEV)
Ambev, the South American arm of the global brewing giant Anheuser-Busch InBev SA/NV (BUD), is experiencing a promising year. In contrast to its parent company, Ambev maintains a net cash position and has made prudent competitive decisions. With a pro-business candidate likely to lead Argentina, a pivotal market for Ambev, improved valuation and business prospects are on the horizon. The stock is attractively priced at 12.6 times forward earnings and offers a generous 5.8% dividend yield.
Enel Chile SA (Ticker: ENIC)
Enel Chile, a significant Chilean electricity producer and distributor, has overcome numerous challenges, including drought, economic recession, and unfavorable political conditions in Chile. The stock has rebounded, closing at $2.84 on October 5, thanks to improved weather conditions and political stability. ENIC shares are valued at just 7.7 times forward earnings, leaving room for further growth.
B2gold Corp. (Ticker: BTG)
B2gold Corp. is a mining company that provides diversified exposure to gold through operations in Mali, Namibia, and the Philippines. The recent drop in gold prices, attributed to rising interest rates, has exerted pressure on BTG shares. However, in the face of global economic uncertainty, gold's appeal may experience a resurgence, rendering BTG an attractive prospect. The stock is trading at 9.9 times forward earnings and offers a 5.5% dividend yield.
Rocket Lab USA Inc. (Ticker: RKLB)
Rocket Lab operates in the rapidly expanding field of launch services and space systems solutions, with a strong track record in delivering Electron launch vehicles and Photon satellite platforms. The company is poised to generate over $250 million in revenue in 2023, with projected profitability by 2025. Analysts foresee revenue surpassing $600 million in 2025.
JetBlue Airways Corp. (Ticker: JBLU)
The airline industry has faced challenges due to surging oil prices, labor disputes, inflation, and weakened consumer spending. However, JetBlue's stock price already reflects these challenges. With a 32% decline in the past six months and substantial short interest in its shares, JBLU may be positioned for a substantial rebound.
Olaplex Holdings Inc. (Ticker: OLPX)
Olaplex is a consumer wellness company focused on hair care and beauty products. Despite facing obstacles with the reopening of the global economy, the company remains profitable and is trading at just 10.3 times forward earnings. An endorsement from Barclays analyst Lauren Lieberman in early October suggests a positive outlook for the company.
Grupo Aval Acciones y Valores SA (Ticker: AVAL)
Grupo Aval is one of Colombia's largest financial groups, enjoying limited competition and high profitability. Recent political and economic changes in Colombia, including a rebound in oil prices and anticipated rate cuts, offer growth prospects for AVAL shares. The stock is presently trading below its March 2020 lows, presenting an opportunity for potential gains.
Perimeter Solutions SA (Ticker: PRM)
Perimeter Solutions specializes in the provision of firefighting products and lubricant additives. The company went public through a SPAC merger and has encountered challenges due to reduced fire activity during a wet spring season. Investors should consider Perimeter Solutions from a multi-year perspective, as weather conditions are likely to balance between benign and more destructive fire seasons. The company holds a significant market share within its core products, indicating the potential for a recovery from its current position.