If you entered income in 2020, did not know if you had the guts to be an investor in the stock market, your question is almost certainly answered. That’s because this year we’re witnessing record-breaking stock volatility, including the fastest decline in the bear market in history, as well as the strongest four-year rally in decades.
The thing about volatility is that it opens the door for long-term investors to buy into large companies on the cheap. While I am not saying that the road to wealth will not be filled with speed bumps, investors who look far ahead in the near future will be rewarded for their patience.
Plus, what’s remarkable about investing in the stock market is that you do not have to be rich to get rich. Starting with even $ 500 can be more than enough to get you on the path to financial freedom.
The question is, where should you put $ 500 to work? While tech stocks with triple-digit stock prices have been stagnant for months, perhaps the most intriguing stocks can be found in stocks with stock prices below $ 10. Below are three great stocks you can buy right now that all sports share a single-digit price .
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Sirius XM
One of the smartest stocks that investors can buy at the moment is satellite radio operator Sirius XM (NASDAQ: SIRI), which may have been for just $ 6 per share.
As some of you may know, Sirius XM is the on my own satellite radio company. This does not mean that it is completely without competition, because terrestrial and online radio operators are always fighting for listeners, just the same. But having a satellite system in space means that Sirius XM has relatively fixed transmission and operating expenses, regardless of how many new non-paying subscribers the company enrolls. Over time, this is a formula for slow but steady margin expansion.
What’s even more exciting for Sirius XM shareholders is how the company generates its revenue. Despite the acquisition of Pandora, an ad-based streaming content provider, in February 2019, the vast majority of Sirius XM’s revenue is generated from subscriptions.
During the coronavirus disease 2019 (COVID-19) -infected second quarter, 31% decreased from the period of previous year, but subscription sales actually increased 3%. Since subscribers are less likely to cancel their plans if economic hiccups arise, the fact that they will have 83% of Sirius XM sales by 2020 (year to date) suggests that Sirius XM is uniquely placed among radio operators to to survive a recession and rise stronger than before.
Sirius XM has exceptional power for plan price, so its shareholders should expect consistent mid-digit growth.
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Annaly Capital Management
Although real estate mortgages for real estate investments (REITs) have not been exactly on the shopping list in recent years Annaly Capital Management (NYSE: NLY) would be.
Mortgage REITs such as Annaly borrow at lower short-term interest rates, then get assets or borrow at a higher yield in the long run. The difference between this long-term yield and short-term lending rate is the net interest margin, and the wider the gap, the more profitable mortgage REITs are typically.
In Annalys’ case, the turnaround on the yield curve from last August was the absolute worst thing that could have happened, because it meant that short-term borrowing costs were long-term yield opportunities, at least for a short period of time. However, history has shown that as the US economy recovers from a recession, this gap between long-term and short-term yields widens over time. This means that Annaly’s net interest rate will have to expand quite extensively over the next few years.
Furthermore, REITs’ mortgages typically buy two types of assets: agency and non-agency. Agency assets are supported by a government agency in case of default, but typically have lower returns, while non-agency assets have no federal support but offer superior returns. Annaly invests almost exclusively in safer mortgage-only agency security. This means that it is protected in case of default, which is why the company has used tax to its advantage.
After averaging close to a 10% dividend yield over the past two decades, Annaly is a dream income earner for sure.
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CalAmp
Another great stock under $ 10 that investors can buy with confidence is mobile technology solutions provider CalAmp (NASDAQ: CAMP).
As with most business cycles, CalAmp faces a number of major challenges due to the coronavirus pandemic and the threat of persistent instability in the US-China trade war. The good news is that many of these issues are in the process of being resolved, which will pave the way for stable growth and profitability for Internet of Things up-and-comer CalAmp.
On the production side of the equation, CalAmp has aggressively reduced its confidence in China for its telematic equipment. At one time, Chinese imports accounted for between 70% and 80% of the company’s telematic solutions. This is now down to closer to 50%. With CalAmp able to outsource outside of China, the potential for geopolitical risk to disrupt its bottom line is greatly diminished.
In addition, we have (finally) witnessed CalAmp’s management team in car financing and in significantly higher marginal, consistent cash flow ventures. More specifically, the subscriptions software-as-a-service (SaaS) companies help companies better manage and manage their fleets, and improve the supply chain visibility.
Even with the company’s sales up 10% to $ 80 million in the quarter ended May, SaaS revenue was up 10% from last year’s period to $ 28 million. As SaaS grows into a larger piece of the pie, CalAmp’s margins will climb.
In short, connected devices are a huge opportunity this decade, and CalAmp is equal in its thickness.
