What Cheap Stocks to Buy in 2023
If you are looking for some cheap stocks to buy in 2023, you might be overwhelmed by the number of options available. However, not all low-priced stocks are worth your money. Some of them might be cheap for a good reason, such as poor fundamentals, weak growth prospects, or regulatory risks.
So how can you find cheap stocks that have the potential to deliver high returns? Here are some tips and examples to help you out.
How to Find Cheap Stocks
One of the ways to identify cheap stocks is by analyzing the price-to-earnings (P/E) ratio of stocks to discover whether they are undervalued. The P/E ratio measures how much investors are willing to pay for each dollar of earnings. A low P/E ratio could indicate that a stock is undervalued relative to its earnings potential.
However, the P/E ratio alone is not enough to determine whether a stock is cheap or not. You also need to consider other factors, such as the growth rate, profitability, dividend yield, and competitive advantage of the company. A low P/E ratio could also mean that the company is facing some challenges or risks that could affect its future earnings.
Another way to find cheap stocks is by looking out for market overreactions that caused sharp plummets in stock prices. Sometimes, investors tend to overreact to negative news or events that affect a company or an industry, creating an opportunity for bargain hunters to buy quality stocks at a discount. However, you need to be careful and do your research before buying these stocks, as some of them might not recover anytime soon.
Examples of Cheap Stocks to Buy
Here are some examples of cheap stocks that you might want to consider buying in 2023, based on their P/E ratios, growth prospects, and recent performance. These stocks are not recommendations, but rather suggestions for further research.
- Nokia Corp. (NOK): Nokia is a telecom equipment and digital map data vendor that also licenses intellectual property to third parties. The stock has a forward P/E ratio of 14.1 and a trailing 5-year annualized EPS growth rate of 22.5%. Analysts expect the company to grow its EPS by 23.9% annually over the next five years. Nokia has been gaining momentum in the 5G market, especially in North America and China. The stock is trading at $4.20 as of April 24, 2023, which is 8% below its 52-week high.
- Tencent Music Entertainment Group (TME): Tencent Music Entertainment is a leading online music platform in China and is the parent company of QQ Music, KuGou Music and WeSing. The stock has a forward P/E ratio of 12.8 and a trailing 5-year annualized EPS growth rate of 20.5%. Analysts expect the company to grow its EPS by 21.5% annually over the next five years. Tencent Music has a large and loyal user base of over 600 million monthly active users. The stock is trading at $16.50 as of April 24, 2023, which is 18% below its 52-week high. However, the stock faces some regulatory risks from both China and the U.S., which could affect its performance.
- Rackspace Technology Inc. (RXT): Rackspace Technology is a leading provider of cloud computing services and solutions for businesses. The stock has a forward P/E ratio of 9.9 and a trailing 5-year annualized EPS growth rate of 17%. Analysts expect the company to grow its EPS by 19% annually over the next five years. Rackspace Technology has been benefiting from the increased demand for cloud services amid the pandemic and has been expanding its partnerships with major cloud providers such as Amazon Web Services (AMZN), Microsoft Azure (MSFT), and Google Cloud (GOOG). The stock is trading at $18.50 as of April 24, 2023, which is 19% below its 52-week