Photo by Damir Spanic on Unsplash

The market plummeted on Monday, sending the S&P 500 deeper into correction territory down roughly 13% from its highs. The Nasdaq’s 3.6% drop to start the week had it on the cusp of bear market levels, having tumbled nearly 20% from its November records.

The Russian invasion of Ukraine is showing no signs of letting up, as cease-fire talks fail. The U.S., other nations, and even private companies are ramping up sanctions on Russia in the hopes it forces Putin to pull back and make a deal. And Biden said on Tuesday that the U.S. is set to ban imports of Russian oil and natural gas.

Predicting what happens next on the geopolitical front is extremely difficult. That said, Wall Street doesn’t appear to have gone into full panic mode yet, with the S&P 500 down just around 3% from its late-January lows, which was weeks before the initial Russian attacks.

Plus, interest rates should remain historically low for years to come even when the Fed starts to raise rates, which should keep Wall Street chasing returns in stocks. Let’s also remember that valuations have been recalibrated close to pre-covid levels.

Investors who can handle further downside risk might want to consider buying stocks in the early days of March. Today, we used a Zacks screen to help show investors how to find strong, highly-ranked stocks that are trading for under $10 per share…

Penny Stocks

One dollar or less used to be the common threshold for what we call “penny stocks.” Today, the SEC has expanded penny stocks to securities that trade for less than $5 a share. Many investors avoid these stocks because they are speculative in nature.

Meanwhile, penny stocks often trade infrequently and hold wide bid/ask spreads. These stocks also carry many other traits that, in many cases, cause excessive volatility. With that said, some penny stocks perform incredibly well, which helps them remain attractive.

Stocks Under $10

Moving on, let’s briefly discuss the next class of cheap stocks. Stocks that trade in the $5 to $10 range are generally less risky than their penny stock counterparts. Investors might be more likely to have heard of these companies or seen the tickers. They are, however, still inherently more speculative than many other higher-priced stocks.

Investors can obviously find winning stocks for under $10 if they are extremely selective. So today, we narrowed the list of thousands of these more speculative stocks down to a more manageable group of $10 and under stocks that might help boost your portfolio.

Screen Parameters

• Price less than or equal to $10
• Volume greater than or equal to 1,000,000
• Zacks Rank less than or equal to 2

(No Holds, Sells or Strong Sells.)

• Average Broker Rating less than or equal to 3.5

(Average Broker Rating of a Hold or Better.)

• # of Analysts in Rating greater than or equal to 2

(Minimum of at least two analysts covering the stock.)

• % Change F1 Earnings Estimate Revisions -- 12 Weeks greater than or equal to 0

(Preferably upward earnings estimate revisions, but definitely no downward revisions.)

Here are two stocks of the roughly 35 highly-ranked names trading under $10 a share that made it through the screen today…

Matterport (MTTR)

Matterport is a spatial data company focused on turning spaces and buildings into “digital twins,” or virtual models designed to reflect physical objects to help improve insights, provide real-time feedback, and much more. Matterport boasts that its offerings help unlock “unparalleled spatial data insights for companies and individuals to better design, build, promote, and manage their most valuable asset.”

Matterport went public via a SPAC in 2021 and its revenue climbed 29% to $111 million. Meanwhile, its total subscribers soared 98% to 503K, with its spaces under management up 54% to 6.7 million. The company is focused on smartphones and other efforts to help “democratize space capture and drive adoption.” Zacks estimates call for its revenue to climb 17% in 2022 and surge another 54% in FY23.

Centennial Resource Development, Inc. (CDEV)

Centennial Resource Development is an independent oil producer focused in the Delaware Basin, which is a sub-basin of the Permian Basin in West Texas. CDEV has easily topped our quarterly earnings estimates in three out of the last four periods, including a 30% beat in Q4. The company also announced a $350 million stock buyback program on February 23 when it reported its fourth quarter results.

Centennial Resource Development’s management team said the repurchase plan is “supported by robust two-year outlook and resilient through commodity price cycles.” CDEV stock has soared from under $0.50 a share during the initial covid selloff to roughly $8.50 on Tuesday. Zacks estimates call for more top and bottom-line growth in 2022, and the stock could benefit from surging oil and energy prices.

Both stocks offer solid growth potential. Yet, it isn’t wise to pack your portfolio full of cheap, $10 or less stocks. Still, these stocks are certainly worth further investigation because grabbing a few of the top names from this list might bolster your returns. And let’s not forget that picking a few cheap stocks can also be quite fun.