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As we navigate through 2024, the stock market continues to present various opportunities for savvy investors, particularly in the realm of small and mid-cap stocks. These stocks, which represent companies with relatively lower market capitalizations, can offer significant growth potential and are often more affordable than large-cap stocks. Investing in these cheap stocks can be a strategic move for those looking to diversify their portfolios and capitalize on emerging companies that have the potential to grow into major industry players.
Conducting thorough research and due diligence is crucial, as these stocks can be more volatile and less predictable. By identifying promising companies with strong fundamentals, innovative products or services, and sound management, investors can make informed decisions for stock trading that may yield substantial returns in the long term.
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Overview of the cheap stocks to buy
Company Stock | Best For |
Delta Air Lines | Best airline stock to own |
Amazon | Solid cash flow |
Palantir Technologies | Emerging AI leader |
Johnson & Johnson | Dividend aristocrat |
Coca-Cola | Long-term growth potential |
Nvidia | Top tech stock of 2024 |
Airbnb | Strong momentum stock |
Coinbase | Solid growth runway |
Tesla | High upside potential |
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Delta Air Lines
One of the biggest airlines in the world, Delta Air Lines stock is trading below $50 and is one of the best cheap stocks to buy. Headquartered in Georgia, it is the oldest operating airline in the U.S. and the seventh-oldest operating airline in the world. Regarding travel stocks, Delta remains a top stock pick due to its expansive network and the growing premium segment.
The company has an extensive domestic and international route and caters to many travelers each year. With the pent-up travel demand, Delta Air Lines is set to benefit this year. Americans will travel extensively in 2024, and this will have a strong impact on the airline company. It is one of the top airline companies right now, and the stock has a solid chance of doubling in the coming years.
Amazon
A household name today, Amazon gained massive popularity during the pandemic when we all had to stay home and order essentials from the e-commerce giant. The company is three decades old and has seen it all: a war, a pandemic, and several market ups and downs. Amazon started as a bookseller, and from these humble beginnings, it has become the largest e-commerce giant today. Amazon’s earnings growth is impressive, and it reported solid free cash flow in the past two quarters. It has a market cap of $2.04 trillion and is one of the most valuable companies in the world.
The company has a strong global presence, a highly diversified business, and impressive fundamentals. It has a wide umbrella of products and services and holds a strong market share in the cloud computing segment. The company generates the majority of its revenue from cloud computing and advertising. With billions of people visiting the website, advertisers are happy to put their money on Amazon. The stock has enjoyed a solid run since the beginning of the year, and its current price is $195. Its upward rally is set to continue throughout the year.
Related: How to buy Amazon stock in 2024.
Palantir Technologies
Tech company Palantir has been on a roll due to the growing demand for artificial intelligence applications. Known for its big data analytics, the company provides data analysis tools and has worked with the government for many years. From deciphering complex numbers to offering tools for counterterrorism, Palantir can do it all. Tech stocks are driving the market this year, and Palantir is one of the best stocks to own.
The company has been around for two decades and has built an envious clientele. With the ongoing AI boom, Palantir has reported record growth in clients and revenue. The company saw a 21% year-over-year revenue jump in the first quarter. It is steadily expanding across multiple industries and is still run by the same leadership that established it. Palantir’s financials are solid, and buying the stock below $30 is a steal. It could double in the near term.
Related: How to Buy Palantir Stock in 2024.
Johnson & Johnson
A household name today, Johnson & Johnson is an American company established in 1886. The company has seen it all: wars, recession, high interest rate environment, and even a pandemic. It is known for developing medical devices and pharmaceuticals. It trades under the ticker JNJ on NYSE. With a solid portfolio of blockbuster drugs, Johnson & Johnson has all it takes to thrive in the healthcare industry. Its products are sold in more than 175 countries, and it has 250 subsidiary companies. This speaks about the strength it adds to your portfolio.
Johnson & Johnson is also a dividend aristocrat with a history of increasing dividends for 52 consecutive years. The stock has a solid runway and a dividend yield of 3.38%. JNJ’s future looks bright with several drugs in the pipeline, and it runs a business that will never go out of demand. The highs and lows are common due to market volatility but Johnson & Johnson has the ability to survive through it all.
Coca-Cola
Beverage giant Coca-Cola could be a solid addition to your stock portfolio. The company has a global presence, a history of over 100 years, and a loyal customer base. Founded in 1892, Coca-Cola has seen several market ups and downs and thrived through them all. Its products are available in more than 200 countries, and the company has diversified into healthy drinks, keeping consumer preferences in mind. PepsiCo’s top competitor, Coca-Cola, has nailed a business model that keeps costs low while ensuring steady organic revenue growth.
You must not expect a rally with Coca-Cola because the stock moves steadily and slowly. It is a low-risk and very safe stock to bet your money on. However, considering its growth story and impact on the global beverage market, it is one of the top dividend stocks to own. The company is a dividend aristocrat with a yield of 3.05% and a history of increasing dividends for 52 years. It has a very strong balance sheet, which makes dividends sustainable. If you are a long-term investor, Coca-Cola is worth considering.
Nvidia
Tech industry darling Nvidia has been a hot property since the start of 2023. Having hit unprecedented highs, the stock has made several investors rich, and the management announced a stock split in the first quarter to ensure it remains appealing to all. After a 10-for-1 stock split, Nvidia has become accessible to all investors and is still on a rally. With a valuation of $3.18 trillion, Nvidia’s stock price went over $1,000 after the first-quarter results. Several mutual funds and ETFs hold Nvidia shares.
Looking at the company’s history and past performance, Nvidia looks highly promising, and it could continue to hit new highs. The company is a leader in the AI industry and is making the most of the imbalance between the demand and supply of AI chips. As more organizations and governments look at adopting AI for business growth, AI stocks are set to benefit. The company has enough orders to last until 2025 and will launch new chips yearly. Holding a solid market share, Nvidia is only going upwards from here. It currently has a price target of $140.
Related: How To Buy NVIDIA Stock in 2024.
Airbnb
Founded in 2008, Airbnb is an online marketplace for short-term and long-term homestays. The company has become a household name and is steadily expanding its presence. It has made it easier for property owners to list their property on the portal and start generating passive income while making it equally easier for guests to rent a place for their stay. The pandemic introduced remote work into our lives, leading to people booking longer stays and choosing Airbnb over hotels. It currently has more than 5 million hosts across the world.
Airbnb simply acts as a broker and takes a commission from the booking, thus ensuring steady revenue while keeping the operating costs at a minimum. Millions of listings are on the platform, and the company is trying to improve user experience. Despite seeing many ups and downs over the years, Airbnb has performed exceptionally well.
Coinbase
Coinbase Global’s claim to fame is the soaring interest in cryptocurrency. As Bitcoin gained popularity and started hitting new highs, it attracted investor interest, and people started looking for a platform that could make crypto investing easier. This is where Coinbase gained the highest interest and users. The platform makes investing and storing cryptocurrencies easier. It is the largest crypto exchange in terms of trading volume in the U.S.
The company has seen an explosion in trading volume, which has helped the stock rally. However, a large part of the population isn’t engaged in crypto investing, which means the platform has a lot of potential to grow. Coinbase remains at the heart of the digital currency economy and offers a range of products for high-risk investors. One of the top growth stocks, its share price is up 52% year-to-date. Coinbase is in a strong position in the industry with much room to run.
Tesla
Pioneer electric vehicle maker Tesla has seen high volatility since the beginning of the year. It trades under the Nasdaq ticker of TSLA. Having reported a drop in EV sales and a dip in profit, the stock is trading at a discount, making it one of the cheapest stocks to buy this year. The company is known for leading the EV industry, but it is going through trouble due to a dip in China sales and a drop in U.S. demand due to the high inflation.
However, Tesla is not limited to the EV industry and has investments across the renewables sector. Founder Elon Must is not someone who sits back and watches the world innovate. He takes a hands-on approach and is known for innovation and technological advances. The current pullback in the stock is temporary, and Tesla could bounce back in no time.
Related: How to Buy Tesla Stock.
Best cheap stocks summary
Company Stock | Price (as of close July 15, 2024) | Dividend Yield (as of July 15, 2024) | 52-week high | 52-week low |
Delta Airlines | $43.30 | 1.39% | $53.86 | $30.60 |
Amazon | $192.74 | Nil | $201.20 | $118.35 |
Palantir Technologies | $28.96 | Nil | $29.30 | $13.68 |
Johnson & Johnson | $149.42 | 3.32% | $175.97 | $143.13 |
Coca-Cola | $63.63 | 3.05% | $64.36 | $51.55 |
Nvidia | $128.48 | 0.031% | $140.76 | $39.23 |
Airbnb | $147.07 | 1.79% | $170.10 | $113.24 |
Coinbase | $241.62 | 2.78% | $283.48 | $69.63 |
Tesla | $258.32 | Nil | $299.29 | $138.80 |
FAQs
What are small and mid-cap stocks?
Small-cap stocks refer to companies with a market capitalization generally between $300 million and $2 billion. Mid-cap stocks are those with a market capitalization between $2 billion and $10 billion. These companies are often in growth phases, offering significant potential for appreciation.
Why should I consider investing in cheap stocks?
Investing in cheap stocks can offer substantial growth opportunities as these companies often have more room to expand compared to large-cap stocks. They can provide diversification benefits and the potential for higher returns.
What are the risks associated with cheap stocks?
Cheap stocks can be more volatile and less liquid than large-cap stocks. They may be more sensitive to economic changes and market fluctuations, and they might face greater challenges in terms of access to capital and market share.
How do I identify promising small and mid-cap stocks?
Look for companies with strong fundamentals, including robust revenue growth, solid profit margins, manageable debt levels, and competitive advantages. It's also important to consider the management team's track record and the company's position within its industry.
Where can I find information on small and mid-cap stocks?
Information can be found through financial news websites, stock market research platforms, company annual reports, and financial statements. Additionally, investment forums and professional analysts' reports can provide valuable insights.
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The bottom line
Investing in cheap stocks in 2024 offers a unique opportunity for investors to tap into potentially high-growth companies that have yet to reach their full market potential. While these stocks can provide substantial returns and help diversify a portfolio, they also come with higher volatility and risks.
Conducting thorough research, focusing on companies with strong fundamentals, and staying informed about market trends are crucial steps for mitigating risks and maximizing gains. By strategically selecting small and mid-cap stocks, investors can position themselves to benefit from the dynamic and evolving landscape of the stock market.
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Writer
Vandita Jadeja is a financial writer and editorial assistant at Joywallet. She loves to read and write about money and brings 7 years of experience from the financial industry. She loves coffee, mountains and sunsets.
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