Many investors know how to take their first profitable step in the search for ideal stocks to buy: Look for extraordinary growth potential selling at a significantly low valuation.
Even with markets up double-digits this year, there are still stocks to buy that are trading at a discount to what they're worth.
Now's a good time to look for these cheap stocks to buy, as earnings reports can sometimes ding a share price on missed revenue, even when the long-term outlook is strong.
Analysts often become too bullish too soon, and set up investors for short-term disappointment. They fail to explain that a positive long-term potential might not materialize in today's earnings reports.
Another thing to consider when hunting for the best cheap growth stocks to buy is if the stock has hit Wall Street's radar. Once Wall Street spreads the word to investors to pile in to a stock, the share price will start climbing and you'll miss some of the most explosive gains.
That's why it's most profitable to look for stocks to buy that aren't making major headline news. For example, the 15 companies profiled by Barron's this weekend as single-digit P/Es with good prospects are some of the biggest names on the market. Every investor has considered investing in these stocks to beef up portfolios.
But the best gains are found in stocks that Wall Street hasn't yet pumped money into…
So we found two stocks to buy now that are cheap and boast healthy outlooks.
Our energy pick took a hit this year but is on the rebound. The other is a penny stock with a one-year price target that's nearly twice where it's trading now.
As economic conditions slowly continue to improve, Wall Street and the big institutions will likely recognize the innate value in these growth stocks to buy now, and companies like the following will reap the rewards of increased buying activity.