In theory, investors shouldn’t care about the price of a company’s stock. What matters more than anything is the market cap. It’s an error to think a stock is cheap simply because its share price is in the low single digits. And investors should use extra caution when searching through low-priced stocks. Oftentimes, stocks that have fallen to trading for just a couple bucks end up going all the way to zero.
That said, some of the market’s biggest winners also come out of the sub-$5 stock category. Whether the company has a low share price due to falling from glory or just not being discovered yet, these low-priced players can sometimes rocket to crazy heights.
So, with the disclaimer that these sorts of companies tend to be of the high-risk, high-reward variety, let’s take a look at three cheap stocks under $3 that could fly in coming quarters.
Best Insurance Stocks To Own Right Now: Trina Solar Limited(TSL)
Energo (CURRENCY:TSL) traded up 5.3% against the U.S. dollar during the 24-hour period ending at 18:00 PM ET on June 29th. One Energo token can currently be bought for approximately $0.0146 or 0.00000235 BTC on popular cryptocurrency exchanges including Gate.io, Coinrail, Coinnest and CoinEgg. Energo has a market capitalization of $9.93 million and $823,323.00 worth of Energo was traded on exchanges in the last 24 hours. Over the last week, Energo has traded 11.7% lower against the U.S. dollar.
Best Insurance Stocks To Own Right Now: ENERGY TRANSFER PARTNERS(ETP)
If high yields are indicators of high risk, then Energy Transfer Partners’ 12.4% yield ought to be an indicator of astronomical risk! But for this energy infrastructure MLP, the risk appears substantially lower than it did a few months ago, which may make this the time to buy in before the market catches on.
Energy Transfer Partners, which operates more than 71,000 miles of pipelines across the U.S. — including the controversial Dakota Access Pipeline — has a well-established yield and a history of increasing it regularly. In fact, the company has never cut its quarterly distribution, increasing it instead almost every quarter since the company went public in 2002. That’s one heck of a record of commitment to increasing value for unitholders.
IMAGE SOURCE: GETTY IMAGES.
The market, though, has been concerned about the partnership’s balance sheet, which is is awash in debt, and its distribution coverage, which was very thin for much of last year. However, in its most recent Q4 2017 earnings report, the company posted a distribution coverage ratio of 1.3 times, which is a very comfortable margin.
The company also has taken some concrete steps to pay down more expensive debt through asset sales and take on less expensive debt in return, which has cleaned up its balance sheet somewhat — so the risks seem much more remote. Even if the worst happened and the company’s yield were, say, halved, Energy Transfer Partners would still yield more than many of its peers.
Investors should be aware that there are some additional tax reporting requirements for MLP unitholders, which can make them a poor choice for some portfolios. But if that doesn’t bother you, you’d be hard-pressed to find this high a yield for this moderate a risk.
Best Insurance Stocks To Own Right Now: DAQO New Energy Corp.(DQ)
People’s Republic of China-based Daqo New Energy Corp (NYSE:DQ) manufactures and sells polysilicon and wafers in the People’s Republic of China. This Zacks Rank #1 company has a 3-5 years EPS growth rate of 7% and a Value Score of A.