Closing out the second complete week of July 2021, the benchmark S&P 500 found itself up nearly 17% year-to-date whereas the technology-centric Nasdaq index was close to being up 14% for the year. With the events of the novel coronavirus leading to unprecedented support for retail investors, the equities sector naturally benefited. Therefore, you may be deterred from considering cheap stocks to buy.
After all, with a robust combination of stimulus checks and stay-at-home orders allowing worker bees to both earn and save money, plenty of those funds went to the equities market. Given this circumstance, just the idea of cheap stocks to buy might seem a ridiculous notion. But even with the incredible enthusiasm for investing, many opportunities still abound.
For one thing, there are thousands of equity units lying around for the picking — and some of them are surely cheap stocks. Yes, the market may have peaked in the late 1990s in terms of publicly available offerings at 7,562. But in 2015, the number of tradable securities was still lofty at slightly over 3,800. More recently, we’re looking at approximately 6,000 companies in both the NYSE and Nasdaq.
It just comes down to the math of basic economics and the financial markets. Simply, everyone can’t be at all places at the same time. You actually see this dynamic play out with the popular meme trades. As one equity unit or asset (such as cryptocurrencies) gains outsized popularity, the formerly popular memes end up becoming cheap stocks.
Ironically, the enormous interest in certain high-profile opportunities opens the door for cheap stocks. Since these prospects attract big crowds, that leaves other securities flying under the radar. Here are some names to consider adding to your portfolio for the second half of 2021.
Franks International (NYSE:FI)
Clean Energy Fuels (NASDAQ:CLNE)
LiveXLive Media (NASDAQ:LIVX)
A quick caveat before we dive in: many of these cheap stocks (which are priced around $10 or lower) are still mired in downward trend channels. Therefore, exercise careful risk management as you assess these low-cost opportunities.
Cheap Stocks to Buy: Zynga (ZNGA)
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Between early June 2019 to just before the pandemic, mobile and social media-based video game manufacturer Zynga was in a sideways funk. ZNGA stock, which had previously surged higher from late 2018, was stuck in a rut. Then, the coronavirus made its rude entry, which initially boded poorly for ZNGA and equities in general. However, the public health crisis turned out to be a catalyst.
With people stuck at home and with government authorities putting a lockdown on non-essential activities last year, millions turned to video games across all platforms to while away the hours. Naturally, this was a positive for ZNGA stock.
But recently, Zynga again finds itself in a sideways consolidation pattern. As society reopens from the pandemic, the organic impetus for gaming has lessened, causing some to leave ZNGA. However, this makes shares one of the best cheap stocks.
For one thing, we just don’t know how this pandemic will play out. Rising cases of the SARS-CoV-2 virus’ delta variant may spark another round of restrictions. Also, Zynga has demonstrated tremendous growth, most recently in the first quarter of 2021 with top-line sales up 68% year-over-year.
Franks International (FI)
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An energy infrastructure play, Franks International “provides a broad and comprehensive range of highly engineered tubular running services, tubular fabrication, drilling technologies, and specialty well construction and well intervention solutions.”
As I warned earlier, FI is one of the cheap stocks that’s stuck in a downward trend channel. In this particular case, FI stock is worrying because of its severe magnitude of volatility. In the week ended July 16, shares dropped a little over 10%. Over the trailing month, Franks International tanked 20.5%.
So, why bother with this hemorrhaging equity unit? Granted, it’s a risky play but for those with ironclad stomachs, it’s possible that some of the negativity is an overreaction to the shift toward renewable energy infrastructures. Yes, going green is a priority but honestly speaking, the oil and gas sector isn’t just going to disappear overnight.
As I’ve mentioned in prior InvestorPlace articles, the key right now given our geopolitical status is energy diversity. Eventually, we may get to a fully renewable future. In the meantime, we can’t turn our back on fossil fuels just yet, not when they offer so much energy density.
Cheap Stocks to Buy: Petrobras (PBR)
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While we’re on the subject of risky energy-related cheap stocks to buy, discount divers may want to take a long look at Petrobras. Officially known as Petroleo Brasileiro, Petrobras is, as the name suggests, a state-owned Brazilian multinational corporation in the petroleum industry.
Thanks to the Covid-19 vaccine rollout and the gradual return to normal activities, oil firms have represented the best cheap stocks to buy during the first half of this year. But the problem is that the majors have already experienced a big boost and, therefore, the optimism has been priced in, leaving most of them out as convincing second-half opportunities.
However, there might be an exemption for PBR stock. Generally speaking, investors have found safety in established names. While Petrobras is a significant global entity, its ties to Brazil — and therefore, exposure to the troubled Latin American economy — makes it a risky proposition.
Still, as I mentioned with Franks International, oil remains a very relevant component of our economy. Further, evidence indicates that Petrobras has benefitted handsomely with its exports to offset a slump in domestic demand.
Clean Energy Fuels (CLNE)
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Having discussed fossil fuel-based investments, it’s only right to explore the more sustainable side of the energy spectrum with Clean Energy Fuels. Specializing in renewable natural gas (or transportation fuel derived from natural waste), Clean Energy Fuels offers huge implications for the transportation paradigm, making CLNE one of the more intriguing cheap stocks to consider for your portfolio.
Mainly, RNG has a lower environmental impact than fossil fuels. True, there will be some impact involved, potentially due to high demand/usage and methane leakage. In contrast, renewable energy sources such as wind and solar offer zero emissions. While a true statement, RNG has the potential to convert emissions from solid-waste landfills to practical energy. Taken as a holistic endeavor, RNG can positively impact multiple tiers of the sustainability equation.
Secondly, RNG represents a transitionary solution. Yes, the best approach is to go fully electric and zero emissions for our transportation networks. But that’s probably not going to happen for a while. Instead, we can leverage existing infrastructure to promote a workable solution while we strategize for a permanent one.
Still, for all this talk, CLNE stock is wildly risky, as evidenced by its chart. Also, the underlying company’s lackluster financial performances have left some investors skeptical. Therefore, caution is advised.
Cheap Stocks to Buy: Trivago (TRVG)
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Heading into the high-risk, high-reward portion of cheap stocks for the second half of the year, we start with Trivago. An internet tech firm focusing on the services and products in the hotel, lodging and metasearch fields, Trivago has been successful in getting its brand evangelized to the public. However, shares have been lackluster since peaking in the summer of 2017.
With the Trump administration appearing to normalize relations with China in late 2019, TRVG stock started to show some signs of life. Of course, the coronavirus pandemic soon followed, which initially devastated demand. Obviously, with both domestic and international government bodies clamping down on social activities and movement, TRVG stock shed much of its market value.
Theoretically, then, the reopening of society should be a boon for Trivago. At least in the first quarter of this year, this has proven true. Since then, TRVG has been one of the worst-performing cheap stocks — you might say it’s cheap for a reason.
Still, if the Covid variants don’t turn out to be as terrible as some folks are thinking, then Trivago could benefit from pent-up demand. Certainly, TRVG is worth watching as we traverse the second half of the year.
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A Brazilian brewing company under the Anheuser Busch Inbev (NYSE:BUD) umbrella, Ambev should theoretically be one of the cheap stocks to benefit from the coronavirus pandemic. Over the trailing year, ABEV stock is indeed enjoying the fruits of the pandemic, for lack of a better phrase, up over 27%.
Therefore, bullish speculators hope that this will be the overriding theme for Ambev, not the 8% loss shares suffered during the trailing one-month period. It probably boils down to how you anticipate the global Covid-19 crisis will play out.
Should authorities in the 14 countries in the Americas which Ambev operates manage to control the pandemic, then ABEV could be an amazing bet. That’s because you would anticipate a surge in tourism in Central and South America, where Ambev has a strong presence. In turn, this dynamic should translate to higher sales of alcoholic beverages.
But the sticking point for prospective buyers is that several countries which Ambev targets are coronavirus hotspots. Therefore, you want to be careful how you approach ABEV stock.
Cheap Stocks to Buy: LiveXLive Media (LIVX)
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One of the make-or-break cheap stocks in my opinion, LiveXLive Media (pronounced Live by Live) nevertheless makes for an intriguing case at this juncture. As a music streaming platform, which combines both audio and video (often live events, hence the name), LiveXLive presented an extremely relevant entertainment stopgap during the initial Covid-19 onslaught.
Following the first round of selloffs in the market as many investors anticipated an apocalyptic event, LIVX stock became one of the quickest equity units to recover from the malaise. With live events out of the picture for the foreseeable future (at the time), the underlying platform was one of the digital options for fans to stay connected with their favorite artists.
Further, the extreme close contact involved in popular concerts still raises questions about viability. Even for this year, some artists have postponed live events, which cynically bodes well for LIVX stock. Therefore, if you believe that the Covid-19 crisis will worsen, LIVX may be something to consider.
Of course, if the new Covid variants ultimately turn out to be false alarms, then pent-up demand may cause LiveXLive to lose some of its newfound relevance. Either way, this is one to keep an eye on as we watch how this crisis develops.
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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