Top 5 Stocks Under $10 For The 2nd Half Of The Year

As we move into the second half of the year, keeping the Brexit tremors behind us, the U.S. macro data raises optimism. As per a recent Reuters report, factory activity in the U.S. has scaled the highest levels in over one and a half years.

Moreover, strong gains in orders and production signal at the renewed strength in the manufacturing sector. Additionally, the job market is likely to gain further stability. Further, many street analysts expect the Fed’s policy to be accommodative.

Outlook for the Second Half of 2016

Even though the fears of an ‘Earnings Recession’ continues to haunt investors and the Q2 earnings season is widely anticipated to remain sub-par, the magnitude of a decline in earnings estimates is lower for both the current and subsequent quarters. Also, as per Thomson Reuters data, the ratio of this year’s earnings forecast that were raised to that being lowered is the highest since 2011. These factors can only mean one thing – the Earnings Recession could bottom out over the rest of the year, which is great news for investors.

Investors are thus expected to look for stocks that have a good earnings outlook for the second half of the year. This is where our popular Zacks Rank system and Zacks Style Score system come into play, as they help investors select stocks that match their requirements.

The Metrics

We usually look for stocks that have a Zacks Rank of #2 or better, along with a Value Growth Momentum (VGM) score of ‘B’ or better. The Zacks Rank system is a timeliness indicator, meaning that investors can use it to identify precisely when a company's prospects are beginning to improve. Also, the VGM Score rates each stock on their combined weighted styles, helping to identify those with the most attractive value, best growth and most promising momentum across the board.

Stocks with a VGM Score of ‘A’ or ‘B’ and a Zacks Rank of #1 or #2 usually generate better returns on an average than the individual components, as it considers three times as many items that are correlated to future stocks returns. Additionally, we focus on those stocks whose earnings estimate for the full year has gone up considerably.

Our Picks

Here are some of the stocks we have narrowed down on, using the metrics described above, which you may consider adding to your portfolio.

AK Steel Holding Corp. (NYSE:AKS) is a producer of steel and tubular products in the U.S. This Zacks Rank #2 (Buy) stock has a VGM score of ‘A.’ Over the past two months, 5 earnings estimates have gone up, while none moved lower for the full year. These revisions have helped boost the consensus estimate significantly for the current year. The stock closed the last trading session ataround $4.85.

Casella Waste Systems Inc. (NASDAQ:CWST) is a vertically integrated solid waste services company. It currently carries a Zacks Rank #2 and has a VGM score of ‘A.’ For the full year, 5 estimates moved higher over the past two months, while none went down. These revisions boosted the consensus estimate by 19%. The stock closed the last trading session at around $7.89.

Vale S.A. (NYSE:VALE) engages in the research, production and sale of minerals. The stock sports a Zacks Rank #1 (Strong Buy) and has a VGM score of ‘B.’ Over the past two months, 2 earnings estimates have gone up, while none moved down for the full year. These upward revisions helped boost the consensus estimate by 3.8% for the current year. The stock closed the last trading session at around $5.16.

MiX Telematics Ltd. (NYSE:MIXT) is a provider of fleet and mobile asset management solutions. This Zacks Rank #2 stock has a VGM score of ‘A.’ Over the past two months, 4 estimates moved higher, while none moved lower for the full year. These revisions helped boost the consensus estimate by 6% for the current year. The stock closed the last trading session at around $4.84.

B2Gold Corp. (NYSE:BTG) is engaged in the exploration and development of gold. The company sports a Zacks Rank #1 and has a VGM score of ‘B.’ Additionally, for the full year, 2 earnings estimates moved higher over the past two months, while none were down. This helped to boost the consensus estimate by 4.2%. The stock closed the last trading session at around $2.8.