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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.
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of "Max Wealth" and Heatseekers.
Their numbers on their own look good, but Why did HDSN go down so much last year, and also did very poorly when compared to the S&P 500, and its industry peers?
As I was just thinking of buying, these comparisons just sort of scared me off, keeping in mind worse-case scenario (there's got to be a smarter buy, right, if the rest of the industry is doing better than them?)