The 5 Best Cheap Stocks To Buy Now

PUBLISHED Sep 10, 2022, 12:07:59 PM        SHARE

imgDividend Power Blog

Everyone loves to buy something on sale. For investors, that means finding undervalued stocks.

Although available during bull markets, investors usually find more cheap stocks during bear markets. Prices drop, sometimes falling too far, making some stocks a deal, like in 2022. Hence, now is a good time for investors to scour lists and find the best cheap stocks to buy.

Below is a list of the five great cheap stocks to buy now. But first, let’s explore this concept.


If you are interested in investing in stocks that pay dividends I recommend signing up for the Sure Dividend Newsletter* . It is a good value and one of the best dividend stock newsletters available. There is a 7-day free trial and grace period so it is risk free. The service provides top 10 stock picks each month with discussion of advantages, valuation, and risks. I highly recommend them and use their insights for my own stock research.

What Are Cheap Stocks?

Cheap stocks are undervalued equities. That doesn’t mean stocks whose price is below a dollar amount. You should not buy a stock solely because it is priced below $10 per share, $5 per share, or some other price point. Some stocks are at a low price due to the company’s declining revenue.

Even worse, some companies’ businesses may be in decline, and they cannot recover. Buying stocks like these because they are priced low will probably cause a loss of principal. They are often cheap or undervalued for a reason and can usually go lower.

“A low-priced stock doesn’t mean it’s good value,” said Danielle Miura, Certified Financial Planner of Spark Financials in Ripon, California.

“A stock may be cheap in terms of the price per share. However, it may be worth very little if the company has little potential or serious issues.”

“Some of the lowest-priced stocks are penny stocks,” says Muira. “Penny stocks are not well regulated, provide less company information to investors, have a lower trading volume, and are vulnerable to scams.”

How To Find Cheap Stocks?

By their very nature, cheap stocks are harder to find than overvalued ones. The financial news is full of reports of stocks with double-digit or triple-digit gains. But often, they are overvalued. Eventually, stock valuations drop, and overvalued stocks suffer the most. In addition, some people and sites provide lists of low-priced stocks but don’t dig deeper.

“Most of these people don’t ever look at the nuts and bolts like the statement of cash flow, their financial ratios, their 10-Q, and 10-K, etc.,” said Certified Financial Planner Blaine Thiederman of Progress Wealth Management in Arvada, Colorado. “So understand the company and how it creates a profit.”

A way to find cheap stocks is to start with a stock screener and do some research on your own. One method is to examine price-to-earnings ratios (P/E ratios) for regular stocks or price-to-funds from operations (P/FFO) for real estate investment trusts (REITs). Both metrics are a measure of valuation.

For example, the stock price of Alphabet (GOOG, GOOGL) has declined almost 19% year-to-date (but it is still $118.12!) That certainly doesn’t sound cheap, but is it? How do we know? The P/E ratio tells us the stock is undervalued and cheap. The stock’s ratio is 22.6X, which is below its 5-year range of 23.3X and 27.4X, so not super cheap, but still a deal. We will include Alphabet as one of the best cheap stocks to buy now.

What Else To Look For in the Best Cheap Stocks To Buy Now

A low P/E or P/FFO ratio is the minimum criteria, but you should dig deeper. What other characteristics should a cheap stock have? An essential one is growth.

A business must be healthy and have some growth over time to generate increased revenue and earnings. If a company cannot grow at all, it will probably get surpassed by its competitors. Even worse, if a business declines, the stock price may go lower.

Next, ask yourself if the company is returning cash to shareholders. The two primary ways are dividends and share buybacks. Dividends return money directly to you, generating a passive income stream. A large enough stream will permit you to live from dividends in retirement. Share buybacks are good too, but you don’t receive cash.

Best Cheap Stocks To Buy Now

Below we provide a diversified list of the best cheap stocks to buy now.

1. Alphabet

Alphabet was formerly known as Google, and many still call it by that name. The company owns the world’s dominant search engine with more than 90% market share. Alphabet also owns YouTube, FitBit, Android, Chrome, Gmail, Google Cloud, Google Drive, Google Maps, Google Play, Nest, etc. The company is pervasive on the internet, and most people use its products or services daily.

The stock price has been under pressure because of recession fears. During recessions, advertising revenue falls, which Alphabet depends on (most of its revenue comes from search engine or YouTube advertising).

Google does not yet pay a dividend; however, it is one of the top companies for stock buybacks. The stock is cheap based on its P/E ratio trading below its 5-year and 10-year ranges. With Alphabet, investors can buy an innovative company and market leader.

  • Ticker: GOOG, GOOGL
  • Stock Price: $118.12
  • Market Cap: $1.53 trillion
  • Dividend Yield: None
  • 1-Year Trailing Total Return: -13.72%

2. Verizon

Verizon Communications (VZ) is one of three leading cellphone providers in the US that together hold over 90% of the market. Besides mobile phone service, Verizon owns the FiOS fiber broadband network. The company offers services to consumers and businesses.

Verizon is struggling with slow growth in its core business because the cellphone service market is mature and has already consolidated. Hence, there are few acquisition targets. The next growth area is FiOS, but it is expensive to expand. Therefore, the stock price has dropped.

Verizon is undervalued based on a P/E ratio of about 8.6X, making it one of the best cheap stocks to buy now. For perspective – the S&P 500 Index’s average P/E ratio is approximately 21.4X. Moreover, Verizon’s ratio is far below the 5-year and 10-year ranges. Simultaneously, the dividend yield is roughly 5.8%, which is excellent for retirees desiring income.

  • Ticker: VZ
  • Stock Price: $44.42
  • Market Cap: $186.55 billion
  • Dividend Yield: 5.76%
  • 1-Year Trailing Total Return: -19.78%

Related Articles About Verizon

3. Ally Financial

Ally Financial (ALLY) is a digital financial-services company. It mainly operates online, providing insurance, mortgages, car loans, fleet financing, commercial banking, etc. The firm was formerly known as GMAC and became Ally in 2010. Today, the stock is in the news because Warren Buffett is acquiring shares.

The firm is in a cyclical business, and recession fears hammered the stock price because the company’s products and services will likely experience lower demand during an economic slowdown. For instance, fewer people buying cars cuts demand for auto loans and insurance. People may also default on their loan repayments, which will increase losses. In another example, businesses may not need as many commercial banking products.

Ally is absurdly inexpensive and one of the best cheap stocks to buy now based on a P/E ratio of about 4.8X. Again, this value is well below the 5-year and 10-year ranges. The company pays a dividend, but the yield is only about 3.3%. If Warren Buffett is buying shares, it is worth researching the company.

  • Ticker: ALLY
  • Stock Price: $35.16
  • Market Cap: $10.85 billion
  • Dividend Yield: 3.27%
  • 1-Year Trailing Total Return: -31.34%

4. Gilead

Gilead Sciences (GILD) is a large biopharmaceutical company that is probably not as well-known as the other companies on this list of the best cheap stocks to buy now. However, it is a leader in treating Human Immunodeficiency Virus (HIV), liver diseases, cancers, and Hepatitis C Virus (HCV).

The company’s stock price is down for the year because of recession fears. But Gilead is also a victim of its success in treating HCV. The drugs are a cure; thus, the number of patients with hepatitis C is shrinking after peaking in 2015. Profits peaked in 2015 and have trended down since then. Consequently, the stock price is well off its all-time peak in 2015, despite a robust research and development pipeline.

Gilead’s P/E ratio is a low 9.8X, a value at the lower end of its 10-year range. Additionally, the dividend yield is excellent at 4.4%.

  • Ticker: GILD
  • Stock Price: $65.34
  • Market Cap: $81.9 billion
  • Dividend Yield: 4.41%
  • 1-Year Trailing Total Return: -8.83%

5. Whirlpool

Whirlpool Corporation (WHR) is now the fifth best cheap stock to buy. Almost everyone knows about Whirlpool. The company makes most household appliances – washing machines, dryers, refrigerators, stoves, icemakers, etc. Their well-known brands are Whirlpool, Maytag, KitchenAid, JennAir, Amana, Roper, etc.

Whirlpool’s stock price is down approximately 30% year-to-date. The company also faces recession fears and a slowing real estate market. Home builders and new homeowners buy appliances, and home sales volumes are decreasing because of higher interest rates.

However, Whirlpool is ridiculously cheap at a P/E ratio of around 7.4X, much lower than the 5-year and 10-year averages. Interestingly, the company is still growing earnings and cash flow per share on a lower share count and higher margins. Investors get a 4%+ dividend yield too.

  • Ticker: WHR
  • Stock Price: $164.29
  • Market Cap: $9.17 billion
  • Dividend Yield: 4.17%
  • 1-Year Trailing Total Return: -25.40%

Final Thoughts on Best Cheap Stocks To Buy Now

The above list of cheap stocks to buy now is a good place to start. Potential investors should do their research to build on the information provided above. Focusing on undervalued stocks can lead to outsized total returns because the market typically overreacts to poor economic news. Recession expectations are high, and shareholders have sold stocks to move to cash for safety. As a result, it may be a good time to invest in cheap stocks.

Disclosure: The author owns VZ

Disclaimer: The author is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.

This article by Prakash Kolli of Dividend Power originally appeared on Wealth of Geeks, and was republished with permission.

You can also read How Do Credit Cards Work? Are They Worth It?

*This post contains affiliate links meaning that I earn a commission for any purchases that you make at the Affiliates website through these links. This will not incur additional costs for you. Please read my disclosure for more information.

Originally Posted on


Ally Financial Inc
Return: 16.66%


Return: 16.66%

Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
Do great stocks go on sale during a down market?

Do great stocks go on sale during a down market? The short answer is: yes!

How to Double Your Returns by Actually Using Simple Strategies

They say the internet changed everything. Well, finally, that change has come to basic investing. It is now easy to double your returns from just a decade ago.

Dividend Stock Watch List: Lanny’s September 2022 Edition

Welcome back to another dividend stock watch list article! The stock market took a nose dive on August 26th, shedding over 3% in some instances on the overall valuation of the stock market.

3 Beaten-Down Dividend Growers for Income Investors

The bear market in 2022 has provided opportunities to buy solid companies at a discount. Fears about a recession and rising interest rates have punished equities.

Kilroy Realty (KRC): Undervalued REIT and 4.2% Yield

The markets had a wild ride down on Friday (8/26/2022). The SPDR S&P 500 ETF (SPY) saw a 14-point drop, about a 3.4% decline in a single trading day.

NextEra Energy Stock Dividend and Forecast

NextEra Energy Stock remained stable during the June lows and the growth in dividend is expected to grow annually by 10% through 2024.

The 3 Highest Yielding Dividend Aristocrats

Investors that want reliable income and ongoing dividend increases to offset inflation may be very interested in the Dividend Aristocrats.

Recent Stock Purchase II August 2022

With August ending and the markets giving us better buying opportunities, I decided to add to some of my existing positions.

2022 Tobacco Stocks List | The 6 Best Now, Ranked In Order

As a business owner, selling products that have high profit margins along with strong brand awareness and an exceptionally loyal customer base is strongly desirable.

Meta Stock: An Attractive Valuation

According to the long-term forecasts, the worth of Meta's stock will be $272 at the end of 2022 and $360 in 2023.

Growth Investing in American Express Stock

American Express Company is a payment card services provider with world-class products and services. The company has thrived over the years by providing excellent access to products, insights and experiences for their customers.

What Will Microsoft Stock Be Worth in 10 Years?

Microsoft stock has rewarded its shareholders with more than 700% return over the past ten years. It will continue to grow over the next decade as well.

The Best Oil Refiner: Analyzing The Big 4 U.S. Oil Refiner Stocks

Oil refiners have enjoyed an impressive rally since the start of 2021, thanks to the recovery of global consumption of oil products from the pandemic.

Recent Stock Purchase August 2022

How has your summer been going? For me, it is more of the same which simply means making a monthly stock purchase and staying invested no matter how ugly the world economy is looking.

Top 5 Foundation Dividend Stocks for ANY Portfolio [October 2020 Update]

Hey everyone! I was sitting at my kitchen table doing an intense round of push-ups, reading articles and had a thought. I would love to share my point of view on the top 5 foundation dividend stocks that every beginning investor should own.

eBay (EBAY) Stock – A Possible Discounted Stock to Bid On?! | Investing for Passive Income

Let’s dive into a selling and re-selling platform that I use almost every single day. We are talking about eBay, not Amazon nor Facebook. I have used eBay as a reselling platform for more than 10 years.

Chevron (CVX) – Oil and Gas Demise Is Overblown

This Chevron Corporation (CVX) post is my third in a series of posts in which I cover an integrated oil and gas producer as well as summarize the overblown expectations of the demise of the oil and gas industry.

SCHD vs. VYM: Which Dividend ETF Is The Best?

SCHD and VYM are the two best dividend ETFs on the market. They provide a yield of around 3% and have a low cost of ownership. There is plenty of diversification in each fund, but each is designed differently.

Blue Chip Stocks In Focus: Atmos Energy

Atmos Energy can trace its beginnings back to 1906, when it was formed in Texas. Since then, it has grown organically and through mergers to a $16.5 billion market capitalization.

Blue Chip Stocks In Focus: Bristol-Myers Squibb

Bristol-Myers Squibb was created as the result of a merger between Bristol-Myers and Squibb on October 4th, 1989. Bristol-Myers can trace its corporate beginnings back to 1887.

Resources for Publishers
Resources for New Investors
Boosted with BossCoin
Financial Literacy Leaders
Tom Hamilton
Wise Intelligent
Mark Robertson
Kevin Matthews II
Akeiva Ellis
Brendan Dale
Kenneth Chavis IV
Sharita Humphrey