Identifying both promising and cheap stocks to buy is a perpetual challenge for investors. This is especially true in an uncertain market where companies are trading at nearly all-time highs.
The appeal of cheap stocks lies in their potential for high returns, but finding the right ones requires careful analysis. Investors need to know that ‘’cheap’’ doesn’t necessarily equate to a small market cap or low share price. Financial metrics such as forward price to earnings (P/E), price to sales (P/S), earnings per share growth, and free cash flow are all important metrics to value a company.
However, those are certainly not the be-all and end-all, making this journey that much more difficult. By examining companies’ financial health, market positioning, and future growth prospects, investors can make more informed decisions to outperform the market.
Now, let’s unpack the three best cheap stocks to buy to make early investors exceedingly wealthy in 2024 and beyond!
Goldman Sachs (GS)
Goldman Sachs (NYSE:GS), a global investment banking powerhouse, might not typically be considered a ‘’cheap’’ stock due to its high share price. However, when evaluating its financial metrics, it becomes apparent that the company may currently be undervalued.
Goldman Sachs has navigated a particularly challenging interest rate environment over the last 24 months. This inevitably placed a dent in its revenue and earnings growth, with its stock price suffering from the windfall. However, its business is gradually turning around as the global economy recovers, making it well-positioned to benefit from increased deal flow and market activity.
The stock is currently up 18% YTD, driven by strong first-quarter results and growing optimism on interest rate cuts. In Q1 FY24, revenue increased 16% year over year to $14.21 billion. Earnings per share swelled 32% year over year to $11.58 per share, with strong growth across its investment banking and wealth management divisions. Moreover, with a forward price to earnings of 13 the stock looks attractive at current levels. This makes GS stock one of the top cheap stocks to buy in 2024.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) is a leading provider of silicon carbide modules and semiconductors for the electric vehicles (EVs) and energy storage markets. Despite facing a slowdown in its business, it remains one of the best cheap stocks to buy to get filthy rich.
ON Semiconductor lost its appeal as the renewable energy sector was crushed by inflation and higher interest rates in 2023. However, in 2021 and 2022 it thrived on the back of strong demand for power management and sensor solutions. This led the company to deliver record revenue and earnings, which have slowed down significantly in the last year. While this may seem like a drag, ON Semiconductor’s business weathered the storm and delivered notable bottom-line growth in the 2023 fiscal year.
The company remains bullish on its mixed signals platform, as well as making strategic investments in expanding its manufacturing capacity. This includes its recent multi-year $2 billion investment in the Czech Republic for end-to-end silicon carbide production to power the future of electrification. Furthermore, secular tailwinds in the EV and energy storage markets provide fertile ground for long-term growth.
CACI International (CACI)
CACI International (NYSE:CACI) is a lesser-known gem in the defense and intelligence sector. It primarily provides cybersecurity and enterprise IT solutions to U.S. government agencies, and its outlook for FY24 remains strong.
Caci International’s expertise in cybersecurity, signal intelligence, and digital solutions positions it uniquely in the defense industry. The company’s ability to secure high-value government contracts remains steadfast. This helps ensure a steady revenue stream and healthy backlog to continue driving revenue growth and profitability. With growing geopolitical uncertainties across the globe, CACI remains well-positioned to capitalize on this wave.
In its latest quarterly financial results, revenue increased 11% year over year to $1.94 billion. Earnings per share rose 18% year over year to $5.13 per share, with adjusted EBITDA margin up 200 basis points. Moreover, its price-to-earnings ratio of 24 is attractive when considering its earnings outlook and long-term growth prospects. For investors looking for cheap stocks to buy, CACI International presents an extremely compelling case.
On the date of publication, Terel Miles 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.
