The 3 Best Stocks Under $10 to Buy Now

Oversold and undervalued stocks offer some of the best profit opportunities on the market. That’s why we’ve picked the three best stocks under $10 to buy today.

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Whether these stocks are part of an untapped market, have been beaten down after a slight earnings miss, or are being unjustly lumped in with an underperforming industry, they’re trading at discount. And they all offer double-digit profit opportunities.

Monster Beverage Corp. (Nasdaq: MNST) is a perfect example.

MNST stock traded under $10 for the first five months of 2004. But as the premiere name in the energy drink market, MNST stock soared. One year later, it had gained 250% and traded over $35.

By July 2006 it traded over $101 per share. That’s a gain of more than 900% in just over two years. MNST shares are worth more than $136 each.

On the hunt for the next MNST, we found three of today’s best stocks under $10…

Best Stocks Under $10 No. 1: Kratos Defense and Security Systems

Kratos Defense and Security Systems (Nasdaq: KTOS) is a $294 million defense company focused on communications, combat systems, and surveillance. Among its specialties are drone warfare and cybersecurity.

Kratos Defense & Security Solutions Inc. (Nasdaq: KTOS)

Recent Price: $5.69

Market Cap: $343.15 million

Institutional Ownership: 50.8%

2015 EPS Estimate: $0.48

Operating Margin: 1.97%

Beta: 0.45

KTOS stock hit a rough patch in Q3 2014 when it posted earnings per share of $0.02 compared to estimates of $0.13. That news sent KTOS stock down 36% in the following month.

But Money Morning’s Chief Investment Strategist Keith Fitz-Gerald said the drop was undeserved.

"Many investors seem to have it out for the stock based on a Q3 earnings miss; I have a different opinion," Fitz-Gerald said at the time. "The miss was due to problems in the contracting process and competitors protesting the fact that Kratos was winning so many contracts. Not problems stemming from Kratos itself."

As a small defense company, Kratos focuses on the areas it performs best in. Those include drones, targeting systems, avionics, and satellite communications.

"I like that. It means management has a clear vision of what they do and where they want to take the company," Fitz-Gerald said. "I'm also particularly keen on the fact that management goes to great lengths to diversify its business mix and wants to compete only where they have a distinct advantage."

The company also sticks to smaller contracts, unlike huge defense contractors like Lockheed Martin Corp. (NYSE: LMT) or Raytheon Co. (NYSE: RTN). That keeps Kratos’ contracts safe from the government budget fights that can kill a company’s revenue stream.

KTOS stock has climbed nearly 15% in 2015. It trades at $5.76 now, but Fitz-Gerald sees it climbing to $10 per share by the end of the year.

That’s just the first of our three best stocks to buy under $10. Continue reading for the next two profit opportunities. Not a Money Morning member? You can get this best stocks list right now – just sign up…

Best Stocks Under $10 No. 2: Dice Holdings Inc.

Dice Holdings Inc. (NYSE: DHX) operates career websites that focus on the tech, finance, energy, healthcare, and hospitality industries. Dice generates revenue by charging companies to list job openings on its sites.

Dice Holdings Inc. (NYSE: DHX)

Recent Price: $8.79

Market Cap: $480.2 million

Institutional Ownership: 86.8%

2015 EPS Estimate: $0.52

Operating Margin: 17.8%

Beta: 0.36

DHX stock took a major hit since November, but Money Morning’s Chief Investment Strategist Keith Fitz-Gerald says it’s oversold. After hitting a high of $11.49 in mid-November, DHX has fallen 23%. On March 6, it opened at $8.79.

There were two reasons for DHX stock’s decline.

As strange as it sounds, the first problem was falling oil prices. Two of the company’s sites, Rigzone and OilCareers, focus on the energy sector. When energy companies started scaling back spending, the stock suffered. DHX dipped 12% from Nov. 17 through Dec. 31.

The next issue was the company’s Jan. 27 earnings report. The company met earnings estimates and posted a 16% year-over-year increase in revenue, but guidance figures dipped.

DHX forecasted earnings per share (EPS) between $0.50 and $0.53 for the full-year 2015. Analysts had projected $0.59. Revenue guidance was set at $268 million to $276 million. That was below estimates of $281.2 million.

But Dice Holdings is transitioning from a growth-by-acquisition company to an organic growth company. Where it once just bought up rival companies, it is now investing in its own sites.

Fitz-Gerald also points to the European Central Bank’s (ECB) increased spending as a buy signal for DHX stock. The ECB says it will dedicate spending on healthcare, energy, and tech companies – all segments Dice focuses on.

"Those are all 'must-have' companies that Europe literally cannot live without," Fitz-Gerald said. "[ECB President Mario] Draghi's monetary madness will boost them significantly."

DHX stock also has a high level of institutional ownership at 86.8%.

"That's a huge vote of confidence from seasoned analysts who have the power to move markets," Fitz-Gerald said.

DHX stock has a consensus price target of $9.99. That’s a gain of 13.6% from today’s opening price.

Best Stocks Under $10 No. 3: CNH Industrial

CNH Industrial (NYSE: CNHI) is another undervalued stock to buy. The company builds trucks, buses, commercial vehicles and marine powertrains for industrial and agricultural companies. It’s a $10.9 billion company with 62 facilities around the world.

CNH Industrial N.V. (Nasdaq: CNHI)

Recent Price: $7.30

Market Cap: $10.1 billion

Institutional Ownership: N/A

2015 EPS Estimate: $0.49

Operating Margin: 7.28%

Beta: 1.7

CNH is the second-largest agricultural equipment company on the market behind Deere & Co. (NYSE: DE). The segment accounts for 84% of the company’s profits.

Unfortunately for CNHI stock, the price of food commodities has been falling. The FAO Food Price Index, which tracks international prices of a basket of food commodities, hit its lowest value since 2010 in February.

Global food prices started declining in April 2014. That caused CNHI stock to drop 30% from April through October.

Investors have started buying back into the stock in 2015. It’s up 10.2% in 2015. It opened today $7.30.

Fitz-Gerald sees it climbing much higher in 2015. And he found something in the company’s last earnings report that other Wall Street “experts” missed.

"The company has been sharply reducing its merger-related debt. In Q4/2014 alone, the company whittled down its net debt by $1.2 billion – and it did this while devoting $1 billion to capital expenditures and paying out $400 million in dividends to shareholders over the year," Fitz-Gerald said. "In a year that was challenging for construction companies, those are very impressive feats – and a sign of very shrewd management."

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"I expect CHNI to have a good 2015 and an even better long-term performance," he continued. "After all, people have to eat, and they have to have a place to live."

CNHI also pays a modest dividend, with a yield of 2.7%.

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