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2 Stocks Under $10 That Are Buys Right Now

2 Stocks Under $10 That Are Buys Right Now

These 2 companies may be cheap, but odds are good there’s upside on the horizon.

Cheap stocks can be risky, sure. But if you know where to look, you can find companies with potential for big upside.

The two companies we’re talking about today have both been beaten down in the last few years as their old business models became obsolete. But both are transforming into businesses with staying power and an eye on the future.

Here’s what you need to know about these two stocks.

Groupon (NASDAQ: GRPN)

You might be thinking Groupon (NASDAQ: GRPN) is a name that used to be loved but has long since been forgotten. 

But the reality is that Groupon is still growing. In fact, last quarter, the global customer base grew by 2% year-over-year. What’s more, while revenue has slumped for 11 consecutive quarters, the company’s cash flow is well into positive territory, and its debt is manageable.

Further still, the company is beginning to show signs of improvement with its newer initiatives, under a transformation in its business helmed by CEO Rich Williams, with its Groupon+ voucher-less platform recording 1.3 million redemptions in Q3 – up 500% year-over-year. Another positive figure is that gross profit per user is growing and climbed 4% year-over-year in Q3, from $26.43 to $27.51.

In its transformation, the company is turning its focus toward higher-margin businesses, and is focusing more on advertising to higher-value customers that will be more likely to spend more on Groupon, rather than to one-and-done customers who deliver little long-term value. 

They also launched a new advertising campaign last year with hyper-relevant comedienne Tiffany Haddish that has already had nearly 100 million online views. I think that campaign has legs and will likely have a long-term positive impact on usage, which in turn should push the stock higher.

The average target price for GRPN is $4.96, suggesting possible upside of 31.45% over the next twelve months. Late last year, B. Riley rated the stock a Buy and set a price target of $5.60 – 48.5% higher than Thursday’s closing price.

Blackberry (NYSE: BB)

Blackberry (NYSE: BB) always had great software going for it, and the company’s transformation from a hardware maker to a provider of software and services is complete, which means its legacy smartphone business that has been pulling it down won’t be a problem moving forward.

Back in 2013, CEO John Chen took up the helm of the struggling Blackberry and immediately stopped production of its smartphones, licensed out its brand to a Chinese OEM, and refocused entirely on the growth of its software and services business. And while the turnaround has been painful, we’re starting to see light at the end of the tunnel.

Blackberry is now betting its future on the automotive industry, and the autonomous car market more specifically, with its QNX service. Its QNX technology is already embedded in more than 120 million vehicles on the road today, and the company just debuted the world’s first digital cockpit solution, a secure Android implementation for automakers to offer applications like Google Maps and Google Play Music in new vehicles.

“As the ECUs in a car consolidate, automakers are seeking safe, secure, and reliable solutions that are flexible enough to deliver a unique driving experience,” said John Wall, Blackberry’s Senior Vice President and Co-Head of Blackberry Technology Solutions. “After two years of constant improvement and testing, we have built the world’s first safety-certified digital cockpit that enables secure Android apps in the car. We believe being able to provide this level of security will be a key differentiator for automakers as consumers begin to weigh security and data privacy when purchasing a vehicle.”

Last quarter, higher-margin software and services revenue grew 10% annually on a non-GAAP basis, and accounted for 96% of its top line, up from 85% the year prior. And while total revenue still fell 3% annually, that figure broke a multiyear streak of double-digit declines. 

For the full year ending February 28, analysts expect revenues to fall 7%, with non-GAAP earnings climbing 21%, and revenue and earnings rising 4% and 6%, respectively, an indication that the business is finally on the verge of moving forward.

Analysts’ average price target for BB is $10.50, indicating possible upside of 30% over the next twelve months. 

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