Best Cheap Stocks – Forbes Advisor – Technologist

Our curated list of cheap stocks to buy now is built using strict criteria. The stocks outlined above are traded on U.S. exchanges and meet the following requirements:

• Sustained average annual EPS growth. Each stock on the list has averaged at least 10% yearly EPS growth over the last five years.
• Sustained average annual revenue growth. Chosen stocks have averaged at least 10% sales growth per year over the last five years.
• Sustained year-over-year EPS gains. EPS must be higher than the prior year in each of the last four years.
• No negative earnings in the last four years. While sustained earnings growth is key, profitability is even more important, so no stocks should have seen negative EPS in the past four years.
• Sustained growth seen in forward EPS estimates. Average analyst estimates for annual EPS growth over the next five years is 10% or greater per year. The current year must also have positive growth above 0%.
• A recent price drop. The stock must be trading at least 10% below its 52-week high.
• Fair valuation. Price/Earnings ratio must be below 50 and the Forward P/E ratio must be below 25. While what an acceptable P/E ratio is varies based on industry and growth prospects of a company, this metric helps eliminate stocks at extreme valuations.
• Financial strength. All the companies have at least a C financial rating or higher from Morningstar.

These criteria aim to uncover stocks that have been growing their earnings and revenue and are expected to continue growing these key metrics. While analyst estimates aren’t always accurate, they provide a handy measure of consensus expectations—and stocks often move based on their expectations.

When buying the dip, consider when you will purchase and when you will exit, whether the stock drops or rises. It is unknown how far a stock will drop before it recovers or whether it will continue to trend higher in the future.

To learn more about our rating and review methodology and editorial process, check out our guide on how Forbes Advisor rates investing products.

Please note that the stocks above were selected by an experienced financial analyst, but they may not be right for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance.