Finding low-priced stocks with potential for growth means different things to different investors. For some, it means finding penny stocks (those that trade for less than $5 and sometimes under $1). These stocks carry significant risk, but the reward can produce life-changing returns.
When other investors hear low-priced growth stocks, they may think about a specific price target that allows them to accumulate a significant number of shares for a modest capital investment. Still, others might define a low price as a stock trading near its 52-week low.
There is no right answer. So, in this article, I’m looking at seven low-priced stocks with potential for growth that touch each of the categories above. Three stocks are trading near their 52-week low, two stocks are trading between $10 and $20, and two are penny stocks. The common denominator, however, is growth, so each of these stocks (except one) is forecast to deliver at least 15% earnings growth in the next 12 months.
United Parcel Service (UPS)
United Parcel Service (NYSE:UPS) is down 22.2% in the last 12 months and is near its 52-week low. That’s not surprising because the package delivery company is reporting weak volume in all of its core areas. The company’s debt is also at 10-year highs.
However, UPS is expecting volume and orders to grow in the coming months. Some of that may be due to expectations for a rate cut. That would stir consumer demand and it would also make it easier to service that debt.
The immediate risk is that a rate cut may get pushed to next year. And with clear evidence that low- and middle-income consumers are pulling back on spending, UPS stock could come under pressure.
However, analysts project 16% earnings growth over the next 12 months and a $161.60 price target that would be a gain of 18.9%. And that’s in addition to the company’s high-yield, 4.80% dividend.
ManpowerGroup (MAN)
Manpower Group (NYSE:MAN) provides workforce solutions and services including recruitment services for permanent, temporary, and contract positions. The company is a recognized leader in the space and has launched its PowerSuite tool that brings AI into its operations.
However, the numbers don’t lie, and the company is reporting lower revenue and earnings, which may or may not surprise you depending on how you feel about the job numbers being reported.
MAN stock is down 12.7% in the last 12 months with all of that loss coming since the first of the year. The opportunity is obvious. A rate cut, and possibly a change in the White House, would stimulate hiring. Analysts who want to be in front of that news are projecting earnings growth of 35.6% over the next 12 months.
However, analysts also give the stock a neutral rating with an upside of around 12%. And investors are getting a high-yield dividend that has a yield of 4.43% and has been growing for 14 consecutive years.
Dynatrace (DT)
Dynatrace (NYSE:DT) is another of the low-priced stocks with the potential for solid growth. The company provides security and compliance software for cloud-native environments.
DT stock is trading near its 52-week low, but it’s not immediately clear why. Year-over-year earnings were lower in the company’s last earnings report. However, the topline continues to grow, and the company authorized a $500 million share buyback program.
Like many software-as-a-service (SaaS) companies, investors and analysts pay close attention to revenue numbers. The company reported strong 20% year-over-year growth in annual recurring revenue (ARR). In its previous quarter, it also reported 24% year-over-year growth in quarterly subscriptions.
What’s more likely is that DT stock, which only started trading publicly in 2019 soared too high, too fast. The stock price was over $60 in February 2024. This feels like a pullback, although a healthy one. But with short interest dropping by 41% in the next month, retail investors may be getting a buyable opportunity.
Mayville Engineering (MEC)
I found Mayville Engineering (NYSE:MEC) using a stock screener to find stocks trading between $10 and $20 that were projected to deliver over 15% earnings growth. That alone doesn’t make it one of the low-priced stocks with potential.
For that, we look at Mayville’s 14-year streak of being named the country’s largest fabricator by Fabricator Magazine. Mayville produces, designs, extrudes, fabricates and assembles aftermarket products in the United States. What’s particularly compelling is that two of the company’s key markets are commercial vehicles and some defense contractors.
MEC stock is another relatively new stock that went public in 2019. After some ups and downs, the stock is right back where it started. It is, however, up 15.7% in 2024. Analysts are forecasting 83.8% earnings growth in the next 12 months. With four out of five strong buy ratings among analysts, Mayville is an attractive choice for growth and value.
Constellium (CSTM)
Constellium (NYSE:CSTM) is a French company with a market capitalization of just over $2 billion. The company designs and manufactures aluminum products for key markets such as packaging, aerospace, automotive, and defense.
The company is also working in tandem with French recycling companies in its “Close the Loop” initiative. The goal of the project is to enhance the company’s role in the circular economy by developing technologies for recycling aluminum “from end-of-life vehicles for use in future automotive production.”
After two strong years in 2022 and 2023, demand appears to be normalizing, which is reflected in Contellium’s quarterly earnings. The one shining star came from the company’s aerospace business.
That caused CSTM stock to drop over 8%, but analysts believe it could present investors with a buying opportunity. Only six analysts offer ratings, but all six give the stock a strong buy rating with a price target of $25.23 which is a 30% upside.
EVE Holding (EVEX)
If you haven’t heard about electric vertical take-off and landing (eVTOL) vehicles (i.e. flying cars) by now, it’s time to pay attention. Several of these companies, including EVE Holding (NYSE:EVEX) are likely to receive FAA certification. This will set the stage for commercial operation sometime in 2025.
Eve is a little behind leaders such as Joby Aviation (NYSE:JOBY) in that it’s not expecting to receive FAA certification in the United States until 2026. However, is also planning to get certified with the Brazilian Air Authority at that same time. The company’s order book includes non-binding letters of intent (LOIs) for 2,850 aircraft. And Eve reports having $300 million in cash that it believes will be enough to fund operations through 2025.
This is the one stock on this list that is not expected to grow earnings. It’s supposed to continue being unprofitable. And certification is not a given. However, analysts have an $8.20 price target on EVEX stock which would be a gain of 97.5%.
Holley (HLLY)
Holley (NYSE:HLLY) is another penny stock that is one of the low-priced stocks with growth potential. The company manufactures and markets automotive aftermarket products for car and truck enthusiasts in the U.S., Canada, Europe, and China.
I’ve included HLLY stock on this list because analysts are forecasting earnings growth of 51.8% in the next 12 months. And although the stock is down 26% in the first half of 2024, analysts are expecting robust growth of 99% in the next 12 months. In fact, seven out of nine analysts give the stock a Strong Buy rating. One reason could be that the company’s free cash flow increased by 14.8 million year-over-year in the first quarter of 2024.
What could make the stock drop? Since the company is primarily geared toward car and truck enthusiasts, they are likely dealing with a demographic with more disposable income. However, if the economy weakens further, this could cause further slow, or reverse, the current growth trends in revenue and earnings.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
