Cheap stocks can be a double-edged sword. These stocks often come with a lot of promise, and with that a lot of volatility, as positive catalysts can send these stocks soaring, while any negative news can send these stocks crashing in an instant.
It can also be difficult to know what you’re buying with cheap stocks, as they don’t generate the headlines that bigger stocks do and fewer analysts cover them.
But there are two stocks under $10 that I have my eye on now. Both are on the cutting-edge of their respective technologies, and both offer significant growth potential and could see some positive catalysts this year that could send shares rocketing higher.
Here’s what you need to know about these two stocks under $10.
Limelight Networks (NASDAQ: LLNW)
Much like other tech stocks, Limelight Networks (NASDAQ: LLNW) had a rough go of it in the last half of 2018, but 2019 could prove to be a pivotal year for the stock.
The premier content delivery network (CDN) service provider is focusing on the development and implementation of its high-quality media delivery services and has refocused its attention to more demanding video streaming accounts, counting Amazon (NASDAQ: AMZN) Prime Video among its big-name clients.
Limelight also just inked a deal with Ericsson (NASDAQ: ERIC) that will double the company’s network capacity, which should also drive revenues higher in the second half of this year.
Oppenheimer analyst Timothy Horan calls the deal a “game-change” for Limelight. Horan recently met with the company’s management, which he says believe that the company is “moving past churn/pricing pressures that negatively impacted (the second half of 2018),” and he believes the company’s unique infrastructure can “provision (over-the-top) video gaming better than its peers.”
Analysts rate the stock a Buy and their average price target for LLNW is $6.38, suggesting possible upside of 117.6% over the next twelve months.
Everspin Technologies (NASDAQ: MRAM)
Everspin Technologies (NASDAQ: MRAM) is a small but innovative semiconductor stock. The stock took a beating in the last quarter of last year alongside other chip stocks, but is now up nearly 50% year-to-date.
Everspin develops MRAM technology, a technology that offers higher write and read speeds than RAM, virtually limitless endurance, and has the capability to store data for years at higher temperatures. While the technology isn’t new, MRAM process nodes have been shrinking, making the technology more practical, and it is considered a “holy grail” in the industry as the technology can act as both computer memory and storage.
Shares of Everspin jumped last month on rumors that Intel (NASDAQ: INTC) was endorsing the company’s MRAM technology after Intel reported that it would be integrating an embedded MRAM into its 22nm FinET CMOS technology.
“We don’t know if Intel is using the Everspin’s technology but Intel’s decision certainly validates the MRAM technology, which has been the crux of the investment theme,” Needham & Company analyst Rajvindra Gill wrote in a note to clients.
Gill went on to note that “Everspin has a licensing agreement with Global Foundries to MRAM on its 22nm FD-SOI technology. We believe the major MCU suppliers will eventually replace eFlash with MRAM targeting IoT and automotive applications as it has higher endurance and faster write cycles.”
“We believe over the next several years, nearly 50% of the 32-bit MCU market could transition to MRAM as they transition to smaller process nodes,” Gill wrote. “All the major MCU suppliers are actively reviewing their current flash technology.”
Given this promising outlook, it’s no wonder why analysts’ average price target for Everspin is $13.50, indicating possible upside of 61.68% over the next twelve months. Late last month, Needham’s Gill reiterated their Buy rating on the stock and set their price target at $14 – 67.7% higher than the price as of this writing.