Just because a stock has a low share price, that doesn’t mean it’s a great deal. There are many stocks under $10 per share with bad fundamentals, no earnings, or bad management that aren’t going anywhere. For every start-up that’s on its way up, there are several companies that have plummeted under $10 because of beaten-down industries or mismanagement.
But you will also find strong companies in this price range that have seen their stock drop temporarily due to outside forces like the pandemic and are poised to bounce back. Here are two stocks priced under $10 per share that are worthy of consideration.
Investors Bancorp is priced and poised to move
Investors Bancorp (NASDAQ:ISBC) is the holding company for Investors Bank, a regional bank based in Short Hills, New Jersey. At 155 branches, it’s the largest bank based in the Garden State, and its local brand and presence have given it an advantage over its large competitors. It has gradually branched out in both the New York and Philadelphia suburbs, primarily through acquisitions. In the third quarter, it acquired Gold Coast Bancorp, which has branches on Long Island.
The bank benefits from being a leader in one of the wealthiest areas of the country and the nation’s leading money center. The proof is in the consistent earnings it has posted, averaging double-digit annual earnings growth over the past five years. In the third quarter, net income rose 16% year over year to $64 million. Its provision of credit losses was only $8.3 million, down from $33 million the previous quarter. This is due to the bank’s high-quality loan portfolio, with a low overall loan-to-value ratio of 53%. That means the average loan customer puts more down and borrows less, making it less of a risk.
The bank is undervalued, with its $9.94 closing price on Friday comfortably below its book value of $11 per share. So look for that stock price to start moving up as the economy improves into 2021 and beyond.
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