Whether you’re just beginning your journey as an investor with limited capital or you simply enjoy hunting for affordable stocks that can turn into lucrative investments, seeking out strong businesses that don’t have a hefty price tag can be a solid strategy. The truth is that you can build a portfolio on any budget if you know where to look. With the valuations of many of the most popular companies in the stock market looking a bit frothy these days, seeking out lower-priced stocks that have long-term potential is a nice alternative.
Below, we are going to take a look at 3 stocks at under $50 a share that investors should consider buying now. Each one of these companies has something unique to offer investors and could end up paying off in a big way over the long term.
Rocket Companies
The first stock on our list, Rocket Companies (NYSE:RKT), is disrupting the entire mortgage industry with its Rocket Mortgage application. The application helps clients apply for mortgages, deal with documents, complete monthly payments, and even get real-time mortgage quotes. Rocket Companies also owns real estate and financial services businesses that could see strong growth. With mortgage rates at record lows and the Federal Reserve planning to keep them there for the foreseeable future, this company is benefitting from increased demand for refinancing and new home purchases.
Rocket Companies went public in August and shares reached as high as $34.42 back in September. The stock has cooled off and formed a support level around $20, which could provide a nice entry for investors. Rocket Companies recently announced a partnership with Realtor.com that will allow users to connect directly to the Rocket Mortgage application, which could be a rewarding partnership going forward. Q2 earnings were strong for the company, as it reported a year-over-year increase in total net revenue of 268%. It also generated a record figure in closed loan origination volume of $72.3 billion, which was a year-over-year increase of 126% and helps to confirm that the low-interest-rate environment is a huge plus for its business.
Altria Group
While I’m not the biggest advocate of Tobacco products, this stock is worth a look thanks to its great dividend yield and resilience during recessions. Altria Group (NYSE:MO) is a holding company that has business segments including smokeable products, smokeless products, and wine. One of its wholly-owned subsidiaries, Phillip Morris USA, is one of the largest manufacturers of cigarettes in the USA. Altria also has exposure to e-vapor products and made a $1.8 billion investment in Canadian cannabis company Cronos (NASDAQ:CRON) back in 2018, which means investors will get a piece of the burgeoning cannabis market with this stock.
Although there has been a secular decline in cigarette smoking, there’s certainly value in owning a defensive name that will still provide investors with reliable income during an uncertain economic period. During the first half of 2020, Altria held its own as the pandemic swept the nation and was able to grow adjusted diluted earnings per share by 8.5% year-over-year and revenues by 3.9% year-over-year. The company also announced a dividend increase of 2.4% in Q2 marking the fifty-fifth dividend increase for the company over the last 51 years. With a dividend yield of 8.39% and a diversified portfolio of products, this stock could be a bargain for dividend investors.
Cloudflare
If you’re interested in a company that is involved in cloud computing with a stock price under $50, look no further than Cloudflare (NYSE:NET). It operates a cloud platform that delivers a range of network services to businesses all over the world including 16% of the Fortune 1,000. Cloudflare’s edge-computing services are cutting-edge and are being used to improve websites and network security for companies of all sizes. With so many businesses moving their operations into the cloud, it’s easy to recognize the potential for a company like Cloudflare over the next several years.
As with many of the high growth software stocks this year, Cloudflare stock has been on fire and is up over 160% year-to-date. That makes it a higher-risk investment based on its valuation, but you can’t deny that it’s a stock with serious momentum working in its favor. Cloudflare will report it’s Q3 earnings on Nov. 6 and investors that are interested in the company should monitor the stock in the coming weeks as it might rally up into the release.