Whether you're a stock market veteran or jumping in for the first time, cheap stocks can be a great idea. They can help you earn an extra bit of capital or introduce you into the world itself. But finding the best cheap stocks to buy today can be difficult because the market is always changing.
However, there are a few stocks that are currently looking very positive and are relatively inexpensive to buy right now. And some are looking like they may even get more expensive rather quickly, so buying now is the best choice.
But first, you need to know how to pick the best stock.
How to Choose a Stock
If you're new to the stock trade, you're probably trying to figure out how to even choose a stock before looking at the best cheap stocks to buy today. There are a lot of mistakes you can make along the way, but if you go slow and pay attention to the market, it can be a lot easier.
Start by looking at the brands you buy and think about why you buy them. Understanding why you like them and why other people like them will help put their earnings reports in context.
However, don't just dive right into your favorite company's stocks. Do the proper research.
Another good tip is to avoid the hype because it can die -- hard and fast. If you end up sinking hundreds into a brand new idea that everyone is excited about and it doesn't pan out, there goes your money.
But if there's a severe need behind the product or company, maybe it's worth it.
There's a lot to look at, like revenue growth, how new the company is, and how much debt a company has. All of these and more are hints to how well a particular stock will react down the line.
When to buy or sell
So you've found a good stock. Excellent! But knowing when to buy or sell is important, and research is everything. Since each share is different, there's no definite rule to follow; however, there are some things to pay attention to that can help.
While sales may sound like something to avoid, historically these are the best times to invest. Even during times of distress in the stock market when prices are drastically low, most investors may tell you to stay away.
But these times may be the best times for you to snag super-low stock prices right when they're about to blow up.
Waiting to buy is a great strategy, as long as you know your price is plausible. It is crucial to estimate what a stock is worth, though. That way, if it goes on sale, you or your investor knows it's likely to rise back up. But establishing a buying range may be a better idea in the long run.
Holding your stock can be a brilliant choice in this market. If you've bought cheap, it can take a few years for that price to appreciate closer to a price target range. Sometimes you have to be patient and wait on your stock.
Deciding when to sell can be tricky. Of course, you want to buy low and sell high, but how do you know that the stock won't climb higher and you're selling too soon?
The truth is, you don't. The best strategy is to pick a price that you would like to sell at and hold it until it reaches that point. Then assess the market and the company to determine if you should sell or hold on a bit longer.
How to Find Cheap Stocks
Finding cheap stocks is relatively easy, but differentiating the bad investments from the best cheap stocks to buy today is the trouble. That's particularly true in today's oversaturated market.
If you are having issues with understanding the stock market, sometimes books help. The Stock Market Almanac is a great place to start. If you need something easy to absorb, Stock Investing For Dummies isn't a bad idea.
But in general, finding a good cheap stock involves you paying attention to breaking news, figuring out market patterns, and understanding the industry.
Looking at breaking news is an excellent way to see where a particular company is going. If you see the price is low and that they just replaced their CEO with a perspectively good business person, it might be a good sign to buy. If the prices are low because they had a scandal or legal issues, it's best to stay away.
Watching and understanding market patterns may be difficult, but it pays. Comparing the industry with the overall market ratings can tell you which stocks are more likely to recover after a drop.
Also, understanding price dips can lead to very lucrative investments, as dips are more likely to reverse.
The industry you're buying into, and the demand for it is essential to look at as well. Purchasing stock from a dying company will get you nowhere.
Instead, look at the radical companies looking to make vast and rapid advancements, but are still trying to find their place.
Best Cheap Stocks to Buy Today
Looking over market trends and how companies are performing is one thing, but sometimes it's good to find your baseline. These five companies, some of which may surprise you, are relatively cheap to buy into right now and have the potential to be lucrative.
CBS Corporation (CBS)
While cable has taken a hit in recent years, many TV channels have been making strides to evolve and keep up with the times. CBS is one of those companies who has significantly improved where it needed to most.
Streaming is the latest rage, and it doesn't look like it's going to die any time soon.
This advancement is a great step in keeping this corporation very viable. Along with the acquisition of Viacom, CBS would be a smart investment, especially since their stock was priced at only 7.5 times this year's expected earnings.
General Motors (GM)
Say what you will about GM, but the auto industry is a steady stream. There's no denying that General Motors had some issues in the past, but they've managed to pull themselves back up and keep on going.
They were even able to tough out the barrage of tariffs in 2018 and come back stronger than ever.
While no signs are pointing to when the next automobile growth cycle will be, GM has been continuously staying steady. Yielding 4.25 percent while sporting a cheap price to earnings ratio (P/E) of 5.7 makes it a smart move to make it one of the best cheap stocks to buy today.
Lumentum Holdings (LITE)
If you are unfamiliar with this name, you're not the only one. These guys make communications equipment and industrial lasers but are also a significant presence in the fiber optics industry.
Now, fiber optics may have lost a bit of its hype recently. However, there has never been a better time when the world needed such high-speed connectivity. And someone is going to have to make all the stuff that's required to build those connections.
The market doesn't see it yet, pricing LITE stock at a forward P/E of 9.7, but the expected growth of this company will see that rise soon. Best grab it while you can.
AgroFresh Solutions (AGFS)
The future belongs to hipsters, and what do hipsters love more than avocado toast and healthy eating? That's exactly what this company is all about.
AgroFresh specializes in technology to keep produce like apples and avocados fresh. And seeing how people are buying all kinds of fruits and veggies year-round, now is the best time for this kind of tech.
Now is also the best time to buy this stock as prices are dirt cheap. If you're looking for one of the best cheap stocks to buy today and lock down, this is it.
Delta Airlines (DAL)
Who doesn't like to travel? There are only a handful of airlines people trust anymore, after that American Airlines fiasco, and Delta is one of them. Possibly one of the smartest moves you could make right now is buying in Delta.
They are projected to more than double in value, to seven billion by 2023 because of their partnership with American Express.
Their cashflow gives Delta substantial financial strength and growth potential to offset any short-term risks for investors willing to buy and hold.
Wolf of Wall Street...Sort Of
Cheap stocks are an excellent idea for those who are just getting into the game. But knowing which are the best cheap stocks to buy today and which to avoid can be hard. Make the wrong choice, and you'll end up paying for it.
However, keeping an eye on the market and industries is a good way to get a step ahead of any trouble. Always be sure you're constantly researching and watching the news, so you know when and what to buy.
Have you had any luck in the stock market? Do you have your list of best cheap stocks to buy today? We want to hear from you!