Three Cheap Stocks to Buy Now

cheap stocks to buy nowFinding the best cheap stocks to buy now makes the difference between just seeing a gain and doubling or tripling your return.

That's why it's always good to look for strong companies that have seen their share prices dip. Then investors can buy undervalued stocks and collect profits as the stocks rebound.

And now's a great time to look. The Dow and S&P 500 have been volatile in 2015. Some share prices have been hit too hard.

So we found three cheap stocks that have seen their share prices fall too far and are ready for a rebound.

Cheap Stocks to Buy Now No. 1: Ford Motor Co. (NYSE: F)

The first stock on this list is Ford Motor Co. (NYSE: F). Since March 3, F stock has dipped 7.7%, giving us a great entry point now.

Sales have been strong for Ford in 2015. Between January and April, Ford sold 5.41 million light vehicles. In 2014, it sold just 5.13 million during that span. Auto information company TrueCar expects Ford to sell 17 million cars this year.

But vehicle sales aren't the only thing driving Ford stock. Low oil prices will also push the Ford share price higher.
Oil trades below $60 per barrel now, after crashing in 2014. That means consumers are paying less at the pump. Ford officials attributed a strong first quarter in part to low gas prices, with CEO Mark Fields saying "improving consumer sentiment" and "lower fuel prices" will continue to help the company grow.

According to Money Morning's Executive Editor Bill Patalon, the booming U.S. economy will also be a catalyst for Ford stock. The U.S. economy is expected to grow at a 3% pace or better in 2015. And that's after the Dow Jones Industrial Average gained 8.3% in 2014.

"Wages are rising, giving U.S. families more buying power," Patalon explained. "And falling food and energy prices - coupled with the lowest household debt-to-income ratio since 2002 - give households more to spend."

Money Morning Defense & Tech Specialist Michael A. Robinson points to the recent tech advances as a major buying point for consumers too.

"With cars more than a year or two old, we're talking no backup cameras, no collision-avoidance sensors, Bluetooth, or integrated GPS," Robinson said. "That becomes an additional incentive to buy a new car or truck."

Ford stock opened today at $15.23 - making it still in "cheap stock" territory. Over the next five years, earnings are expected to grow by 17.3%. Analysts' one-year price target for F is $17.13 - 12% higher than where it trades now.

Continue reading for two more cheap stocks to buy now...

Cheap Stocks to Buy Now No. 2: Orexigen Therapeutics (Nasdaq: OREX)

Orexigen Therapeutics Inc. (Nasdaq: OREX) is on our cheap stocks to buy now list because it's trading near $5 per share. OREX is down 18.7% in 2015. It's a speculative play, with a market cap of just $629 million.

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OREX is a play on the United States' $20 billion-a-year weight-loss industry. More than two-thirds of adults and one-third of children in the United States are overweight. And despite those high numbers, there are still very few weight reduction medications.

While many diet medications have negative side effects, OREX's new weight-loss drug Contrave has showed long-term health improvements independent of weight loss.

Contrave was shown to reduce heart attacks by 30%, strokes by 37%, and heart-related deaths by 74% in its interim trials.

"If these numbers hold up, there is no doctor who would balk at effecting substantial cardiovascular health improvement in his patients, while helping them keep their weight under control," Money Morning Biotech Investing Specialist Ernie Tremblay said. "And it's unlikely that any insurance company wouldn't put the drug on its formulary [the list of drugs it covers]."

Tremblay cautions investors from getting too caught up in interim results. The drug still hasn't received full FDA approval. But the potential for the drug is huge. And FDA approval would be a major catalyst for the stock.

Cheap Stock to Buy Now No. 3: Altria Group Inc. (NYSE: MO)

Another stock trading at "cheap" levels is Altria Group Inc. (NYSE: MO). Since March 2, MO stock has fallen 8.9%, while the S&P 500 is flat.

stocks to buyAltria may seem like a surprising pick as the smoking market declines in the United States. In fact, analysts at Wells Fargo & Co. (NYSE: WFC) predict Altria's revenue from cigarettes will decline from $14.8 billion in 2015 to $7.4 billion by 2023.

But MO stock is a great way to play the booming electronic cigarette market.

Research from UBS and Wells Fargo indicates that e-cig sales were just $82 million in 2010. In 2014, they were $2.76 billion. They're expected to hit $10 billion by 2017.

BIS Research has forecast the market will hit $39.6 billion by 2024. That's a compound annual sales growth rate (CAGR) of 27.3%.

"Part of our focus is meeting and exceeding adult tobacco users' expectations with our products," Altria spokesman Bill Phelps told The Street. "Our research shows that about half of those who smoke are interested in alternatives to cigarettes. We offer a variety of products that will evolve as those preferences evolve."

MO stock opened today at $51.40, and there is a consensus price target of $57.33 from analysts polled by Thomson Reuters. That's a gain of nearly 12% from today's price. One analyst sees the stock climbing 21%.

In the upcoming quarters, earnings are expected to grow 9.2% and revenue should grow 3.4%. Altria also has nearly $3.7 billion in total cash, so it can invest heavily in e-cig growth.

Follow me on Twitter: @KyleAndersonMM

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