Many cheap stocks under $10 are cheap for a good reason. Cash-burning biotechs, sketchy shell companies and overhyped fads with more sizzle than substance. But amidst the minefield of duds, there are always a few diamonds in the rough with legitimate 10-bagger potential.
I’ve sifted through the bargain bin to bring you seven of the most promising cheap stocks under $10 that I think could multiply. That said, the upside prospect also means there is a significant downside potential too. But I have found picks that have low dilution and could realistically deliver multibagger returns if the stars align for them. These stocks could definitely hit a home run if the best-case scenario unfolds for their underlying businesses. If not, prepare to stomach the losses. Let’s take a look!
Aemetis (AMTX)
Aemetis (NASDAQ:AMTX) develops and commercializes technologies that replace petroleum-based products with renewable fuels. The company’s stock has been on a wild ride, with shares plummeting over 50% in the past year amid continued losses.
However, I believe Aemetis may be nearing an inflection point. The stock has started to stabilize and trade sideways recently. Analysts expect Aemetis to turn profitable within two years on the back of explosive revenue growth. Further, they expect sales to surge 90% this year to $354 million. Looking further out, the company’s updated five year plan ambitiously targets revenues reaching $1.95 billion by 2028. That’s a robust 38% compound annual growth rate. This revenue spike could lead to a breakout.
H.C. Wainwright analyst Amit Dayal recently reiterated a “Buy” rating and a $28 price target, highlighting Aemetis’ “notable year-on-year revenue growth.” While this price target may prove overly optimistic, it’s not hard to envision Aemetis stock multiplying several times over if the company meets expectations.
Of course, execution risk abounds for this speculative renewable energy play. Aemetis will need to rapidly scale its dairy renewable natural gas operations and successfully bring its sustainable aviation fuel plant online. Perhaps the cheap stock is worth the risk.
Nerdy (NRDY)
Nerdy (NYSE:NRDY) is an innovative online learning platform that uses AI to connect students with expert tutors for personalized live instruction. The company recently reported first-quarter 2024 results, with revenue of $53.7 million beating expectations and marking a 9% year-over-year increase.
I believe Nerdy is well-positioned to capitalize on the growing trend of AI-enhanced learning. AI can be a game-changer when it comes to understanding complex topics like math. The patience and adaptability of AI-powered tutoring is unmatched. If this type of learning becomes more mainstream, I see huge potential for Nerdy to deliver multibagger returns for investors.
Analysts seem to agree, with a consensus “Moderate Buy” rating and an average 12-month price target of $4.46, implying 155% upside from the current stock price. While the financials aren’t perfect, with the company still reporting losses, the top-line growth remains solid, and the losses appear manageable. Plus, Nerdy reaffirmed its full-year 2024 revenue guidance of $232-246 million and expects to generate positive operating cash flow.
Blacksky Technology (BKSY)
BlackSky Technology (NYSE:BKSY) provides real-time geospatial intelligence and satellite imagery analytics. Though it missed analyst estimates, the company saw 32% year-over-year revenue growth to $24.2 million in Q1 2024.
Despite the revenue surge, BlackSky is still unprofitable, posting a net loss of $15.8 million in Q1. Year-to-date, BKSY has fallen 20% as the increasingly competitive space sector proves challenging for many companies to turn profits due to high operating costs. It is now up by 9.6% in the past month, though.
I see reasons for optimism. BlackSky has been winning significant contracts, including a $30 million contract in Q1 from new deals and renewals. If this momentum continues, I believe the stock could be poised for a breakout. Notably, some analysts project BlackSky reaching profitability by 2026.
The current consensus among analysts is a “Strong Buy” rating, with an average price target of $3.17, representing a sizable upside from current cheap levels of around $1.10. While I’m encouraged by the bullish sentiment, I also recognize the execution risks in the cutthroat space industry. If BlackSky can defy the odds and emerge as a profitable, growing space player, there could be meaningful gains ahead for investors willing to stomach the volatility of cheap stocks under $10. But that’s a big “if” at this stage.
Serko (SERKF)
Serko (OTCMKTS:SERKF) is a travel management and expense company. The company recently reported its full-year 2023 earnings, with “total income” up 154% to 48 million NZD, beating previous guidance. I’m bullish here because it targets corporate travel, a niche that could become very big.
Analysts forecast Serko’s revenue to grow at around 19% per year over the next three years, outpacing the growth projected for the overall software industry in Oceania.
If management executes well, Serko could become a major player in the years ahead. However, the company’s lack of profitability and limited operating history make it a high-risk investment. As with any young company, multibagger returns are possible but far from guaranteed. The same applies to this cheap stock.
Mynaric (MYNA)
Mynaric (NASDAQ:MYNA) develops laser communication technologies for high-bandwidth, long-distance data transmission between moving objects. The Germany-based company has been making notable strides lately, securing major contracts and achieving key product milestones.
I’m particularly bullish on Mynaric’s laser communication products for wireless data transfer between aircraft, UAVs, high-altitude platforms and satellites. With the growing importance of these technologies in defense and aerospace, Mynaric looks well-positioned to land contracts in the coming years.
Mynaric also posted 21.89% revenue growth in 2023 to €5.39 million, though losses widened 26.8% to €93.53 million. Analysts forecast a whopping 941% revenue surge to $61 million this year and nearly $394 million by 2027. However, profitability is not on the table in the near term.
Again, this is a very high-risk stock due to the losses here. It needs to continuously land contracts to keep up the momentum. Also, more dilution may be needed until it presumably breaks even in 2027 if cash runs out. The underlying tech is good, but you should reconsider a buy if you don’t like the risk.
SSC Security Services (SECUF)
SSC Security Services (OTCMKTS:SECUF) is a publicly traded holding company that provides physical, cyber and electronic security services across Canada. The company has been on an impressive growth trajectory lately, with record revenue and adjusted EBITDA in their latest quarterly results.
In Q2 2024, SSC posted revenue of $30.4 million, a strong 20.6% increase over the same quarter last year. Adjusted EBITDA also grew 33% to $1.1 million. Personally, I see a lot of potential in SSC Security Services. The need for top-notch physical and cybersecurity is only going to keep increasing in our technology-driven world. With high-profile clients across corporate and government sectors, SSC is well-positioned to capitalize on this demand.
Of course, as with any small and relatively young company, there are risks to consider. Profitability is still inconsistent, competition is fierce and the stock remains thinly traded. However, if SSC can maintain its current growth trajectory and achieve sustained profits, I believe this one of the cheap stocks under $10 that could deliver strong returns in the coming years.
EzFill Holdings (EZFL)
EzFill Holdings (NASDAQ:EZFL) is a pioneer in the mobile fuel delivery industry. The company recently announced preliminary unaudited revenues of approximately $2.6 million for April 2024, a 32% year-over-year increase.
In many circumstances, bringing the gas station directly to consumers and businesses could prove convenient and efficient. Most logistics companies are doing all they can to maximize efficiency, and if constant trips to the pump eat into their bottom line, EzFill’s service may be an attractive option.
However, I’m hesitant to jump on the EzFill bandwagon just yet. The company’s decision to implement a 1-for-2.5 reverse stock split in July 2024 to maintain Nasdaq listing compliance gives me pause. The stock has bounced between $3-6 for most of 2024, and analysts seem to be taking a cautious stance.
It’s low on my watchlist of cheap stocks under $10 due to the reverse split and dilution, but this is a business model I won’t be surprised to see take off.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.