Investment in low-priced stocks has often found favor with investors, and with good reason. After all, these “so-called” cheap stocks can potentially provide investors with rewards that are not always bestowed by other investment styles.

Specifically, these stocks allow for a lower initial investment, offer greater potential for price appreciation and provide investors with bigger dividend payments as well.  

But is it adequate to gamble one’s hard-earned money on cheap stocks? With market-wide volatility yet to be addressed, it would be prudent for investors to seek for value plays that are simultaneously low-priced.

Low-Priced Value Bargains

Who doesn’t love to strike a bargain? By investing in low-priced stocks, investors are able to buy a larger number of shares in a company than they would have otherwise been able to, say, in a more higher-priced stock.

Consequently, the strategy enables investors to amplify their returns with even a minuscule monetary gain in the stock price, as the percentage gain on such stocks is a lot higher. For example, a $20 stock can reap huge profits as even a $1 increase in share price, adds 5% to the portfolio.

Meanwhile, value investing offers an opportunity to enter the market and grab stocks that have otherwise been overlooked by a majority of investors, and are hence, trading cheap. Further, these stocks often flaunt low P/Es, have solid outlooks and yield decent dividends, too.

Thus, for people who appreciate the power of a discount and at the same time, want to make the best out of low-priced value stocks, we hereby offer few potential stock picks that are still priced short of perfection.

4 Stocks to Put Your Money

Since most of these low-priced value bargains are not industry behemoths, investors need to be extra cautious when investing in these stocks.
Using our new style score system, we have zeroed in on four cheap stocks that flaunt excellent prospects and might prove to be a boon for value investors. Back-tested results show that stocks with Value Style Scores of ‘A’ or ‘B,’ when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the greatest investment opportunities.

All these value bets sport a P/E below 20, have a solid Zacks Rank and an attractive Value Style Score. Moreover, these stocks are currently trading below $20, which makes them all the more lucrative.

Dallas, TX-based Ashford Hospitality Trust, Inc. (AHT - Snapshot Report) is a self advised Maryland corporation and real estate investment trust organized to pursue opportunities in the lodging industry.

Zacks Rank: #1
Value Score: A
Stock trading at: $8.69
P/E: 7.33 (versus 13.76 for the industry)
Dividend Yield: 5.5%
This year’s expected EPS growth rate: 19.6%

Gas Natural Inc. (EGAS - Snapshot Report) distributes and sells natural gas to end-use residential, commercial, and industrial customers across Montana, Wyoming, Ohio, Pennsylvania, Maine and North Carolina. The company is headquartered in Great Falls, MT.

Zacks Rank: #2
Value Score: A
Stock trading at: $10.13
P/E: 17.53 (versus 17.72 for the industry)
Dividend Yield: 5.3%
This year’s expected EPS growth rate: 3.6%

Diamondrock Hospitality Co. (DRH - Snapshot Report) is a self-advised real estate company that owns, acquires and invests in upper upscale and upscale hotel properties located primarily in North America.

Zacks Rank: #2
Value Score: B
Stock trading at: $13.80
P/E: 13.40 (versus 13.76 for the industry)
Dividend Yield: 3.6%
This year’s expected EPS growth rate: 17.7%

Ford Motor Co. (F - Analyst Report) manufactures and distributes automobiles worldwide. This Dearborn, MI-based company and its subsidiaries also engage in other businesses, including manufacturing automotive components and systems, and financing and renting vehicles and equipment.

Zacks Rank: #2
Value Score: AF
Stock trading at: $14.57
P/E: 9.39 (versus 14.01 for the industry)
Dividend Yield: 4.1%
This year’s expected EPS growth rate: 36.6%

All You Need to Know About Value Bargains

Nevertheless, for investors looking at good value investments, price should not be the only criterion. This is because a stock’s price is not practically as indicative of its value as its earnings growth, P/E ratio or dividend metrics. The abovementioned low-priced value bargains possess compelling fundamentals and promise huge return potential.

We thus advise investors to look beyond stocks in the limelight, and invest instead in these hidden gems, that too at throwaway prices, banking on the Zacks' new style score system, as it will surely help them earn more bang for the buck.