Cheap stocks to invest in 2021 is more than just an arbitrary guide on stock tips. It’s about getting the right investing strategy, so you can start making more money in the stock market.
Cheap stocks to invest in 2021? Investing in stocks is a smart decision as it increases your financial flexibility and helps you plan for the future. One of the biggest reasons why people don’t invest in stocks is because they think that they need a lot of money to do so.
MamaMancini’s Holdings Inc. (MMMB)
MamaMancini’s is a small packaged foods company primarily focused on Italian cuisine. It offers frozen and refrigerated meatballs, meatloaf and pasta among its line of products. The company is enjoying a healthy growth trajectory: Revenues are up from $18 million to $41 million since 2017. The company also uplisted from the Over-the-Counter Bulletin Board to the Nasdaq as part of its corporate development. Shares hit $4 at one point but have sold off about 40%, giving later investors a chance to get into this story near the ground floor. As it stands today, the company is already significantly profitable on an earnings-per-share basis. And in 2023, according to analysts, the company could make 18 cents per share in earnings, which would make the stock at its current price sell for just 13 times expected earnings. That’s quite a delicious offer.
Enel Chile SA (ENIC)
Enel Chile is a Chilean power utility. Shares have been volatile and trending downward lately. That’s understandable, as the company had issues with COVID-19 along with price swings on foreign exchange and commodities. Upcoming elections in Chile have further added to the uncertainty. Regardless, shares are trading at an estimated 8 times this year’s earnings and 6 times next year’s earnings. That’s astonishingly cheap in the current marketplace. Enel Chile also offers a 9.4% dividend yield. Chile is well-positioned to benefit from the current commodity and green energy boom. It’s a leading producer of key raw materials such as copper and lithium that go into batteries and renewable energy components. Sooner or later, Chilean stocks should move back up, with Enel Chile being a big beneficiary.
Lightinthebox Holding Co. Ltd. (LITB)
Lightinthebox is a Chinese online retailer focusing on budget-priced fashion, electronics and home goods. Chinese stocks have gotten obliterated over the past six months. A combination of regulatory crackdowns, trade tensions and supply chain issues has been the perfect storm for these firms. Lightinthebox stock has tanked along with the bunch. If you’re looking for a low-priced stock that could mount a comeback, however, this could be the one. The company generated $467 million of revenue last year, yet its market capitalization is less than $200 million. It’s not due to anemic margins, either. Lightinthebox earns strong profit margins on its sales, and is overall firmly in positive territory on an earnings per share basis. With shares down almost 40% year to date, LITB stock could be poised for a quick comeback when sentiment toward Chinese companies improves.
Digital Ally Inc. (DGLY)
Digital Ally makes video camera systems, primarily for law enforcement. In the wake of high-profile police shootings and facing pressure to reform law enforcement, municipalities have been looking for ways to keep their officers more accountable. Digital Ally’s body cameras and in-car units can record a definitive history of incidents to help prosecutors and defense attorneys get to the truth in a contested situation. Given the national discourse around reforming the police over the past year, companies like Digital Ally should be well-positioned to receive more contracts in coming years. The company has increasingly rolled out subscription-based offerings to police units, and it has added other product lines such as no-contact temperature screening and disinfectant instruments. Digital Ally has struggled to maintain profitability in recent years, and there’s a history of stock dilution as well. On the other hand, short interest is extremely high, so shares could be set for a sharp rally.
Banco Santander SA (ticker: SAN)
Banco Santander is the largest Spanish bank by market cap. Analyst Johann Scholtz says Banco Santander’s capital ratios still need some improvement following the latest European Central Bank stress tests, but the bank proved to be less sensitive to stress than peers. Scholtz says Santander could improve its profitability, capitalization and valuation if it would trim its presence in underperforming geographical regions. He says the bank’s Latin American business is particularly impressive, and it is a market leader in Brazil, Mexico and Chile. Morningstar has a “buy” rating and a $4.50 fair value estimate for SAN stock.
Telefonica SA (TEF)
Telefonica is the major telecom operator in Spain. Analyst Javier Correonero says the company is doing an impressive job of divesting underperforming divisions, but it may still be difficult for Telefonica to generate excess return on invested capital over the next decade. Still, Correonero says the company’s decision to sell its tower assets will help it reduce debt, a top capital allocation priority. Correonero says Telefonica will likely continue to sell assets and streamline its business, efforts that could potentially unlock hidden value in the company. Morningstar has a “buy” rating and a $5.80 fair value estimate for TEF stock.
Entravision Communications Corporation (EVC)
Since I included Entravision Communications Corporation (EVC) in the June 2021 edition of my “Penny Stocks to Watch” column, it’s had a fantastic run from around $4.73/share to a peak of $8.11 at the beginning of September. (That’s an approximately 70% theoretical profit for readers.) Even at its current price of $7.11, shareholders are looking pretty smart right now.
In my opinion, Entravision’s penny stock days are likely behind it, barring some catastrophic event. Its moving averages are pointing to a “Strong Buy” signal, and its relative strenth index (RSI) has returned to normal (i.e., not overbought) levels.
One potential issue is that EVC is doing SO well—as with, for example, its consolidated adjusted EBITDA ascending 932% over the prior-year period, as of the second quarter of 2021—that it will be difficult for the stock to continue hitting this momentum.
The kind of triple-digit revenue and EPS that Entravision is seeing could turn into what Wall Street analysts call “tough comps,” meaning the stock may struggle to return to its previous highs and skittish investors could consequently abandon it if/when its results grow less exciting.
While I believe it’s highly possible that EVC will continue to climb by at least 20% more over the next few months or so on the back of its global expansion plans, it looks for now as if it may be taking a breather. Lower entry points may be ahead, so watch this one closely.
Alto Ingredients, Inc. (ALTO)
Alto Ingredients, Inc. (ALTO) is a penny stock right now, but I don’t expect it to stay that way for very long. Not with projected EPS growth next year at 71.54% and a forward price-to-earnings (P/E) ratio of 5.32, both of which suggest that 2022 will be an excellent year for ALTO shareholders. And not with—in my opinion—a recession-proof suite of products involving “specialty alcohols,” which are used in such diverse (and in some cases essential) goods as cosmetics, cleaning products, pharmaceuticals, animal feed, pet food, and biodiesel feedstock.
Like many of its low-priced peers, ALTO is a turnaround story. Despite its large roster of blue-chip clients—with household names like Chevron, Cargill, and Procter & Gamble among them—its five-year revenue history is dispiriting.
More recently, however, the company has been pivoting from an ethanol manufacturer to a specialty alcohols producer. Its sales have subsequently shot up over the past two quarters, climbing approximately 30% and 35%, respectively.
Unfortunately, Alto Ingredients’ cost of goods sold (COGS) has also increased over those periods by roughly the same percentages. I believe that this is a necessary stage in ALTO’s journey toward sustainable growth, however, as the group undertakes to transition its facilities toward producing specialty alcohols.
The full fruit of its turnaround may take a few more months to appear. But once potential shareholders get a load of all of ALTO’s abundant potential, I think its prices may skyrocket—and relatively soon, at that.
Charles Schwab
Schwab’s research pages point out the exchange on which a stock trades, which will keep you informed of the inherent risk. There are a variety of platforms available; the StreetSmart platforms have customizable charting and streaming real-time quotes. Schwab does not charge trading commissions on all stocks (including penny stocks) and ETFs.Pros
- Excellent screeners available on StreetSmart Edge
- Free access to a wide array of news feeds
- Strong customization and personalization options on StreetSmart Edge
Cons
- The sheer number of features and reports available sometimes overwhelming
- Transaction history for just 24 months online
- Uninvested cash not swept into a money market fund
Conclusion
The stock market is one of the most exciting and lucrative ways to invest. It’s also one of the most competitive and difficult to make a profit from. Without a doubt, it’s a very risky resource to invest in. There are lots of places you can find cheap stocks to invest in, but they all have varying degrees of credibility. So how can you tell which sources are going to be accurate? Luckily for us, we know that Facebook groups are populated with some of the best minds in the business when it comes to investing.