12 Top Stocks Under $10 For 2012 Picked By Analysts

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 |  Includes: AA, BAC, GGB, ING, LYG, MFG, MTU, PCRFY, SAN, SMFG, VEDL, XRX
by: Insider Monkey

There are some limitations for individual investors to invest in stocks with high prices. For example, if your budget is $10,000, you can only buy around 50 shares of IBM. Therefore, for individual investors with low budgets, stocks with low prices are preferable. Additionally, some stocks that trade below $10 got there after a huge decline in their prices and they may be oversold. At the beginning of October Seagate (NASDAQ:STX) was in this situation. The stock closed at $9.39 on October 3, and then doubled within a month. Currently it trades at $16.40, up 75% in two months.

Below we compiled a list of stocks with similar characteristics. All companies in our list have at least $10 billion market cap and are currently trading below $10 per share. Their average analyst recommendation score is below 2.5, which indicates that analysts recommend a “Buy” for these stocks (3=Hold 2=Buy).

Ticker

Company

Price

YTD Return

Analyst Recom.

AA

Alcoa, Inc.

9.86

-34.99%

2.4

BAC

Bank of America

5.8

-56.48%

2.4

GGB

Gerdau S.A.

8.09

-42.10%

2.3

ING

ING Groep NV

8.06

-13.69%

1

LYG

Lloyds Banking Group

1.67

-59.12%

1.5

MFG

Mizuho Financial Group

2.67

-30.13%

1.5

MTU

Mitsubishi UFJ Financial

4.45

-18.30%

2

PC

Panasonic Corporation

9.38

-34.89%

1

SLT

Sterlite Industries (India)

8.34

-48.34%

1

SMFG

Sumitomo Mitsui Financial

5.71

-19.69%

1

STD

Banco Santander, S.A.

7.91

-18.94%

1.5

XRX

Xerox Corp.

8.28

-26.67%

2.2

Click to enlarge

Alcoa, Inc.: Alcoa is an aluminum production company. AA is currently trading at $9.86. It has a market cap of $10.6B, a PE ratio of 10.55, and lost 34.99% since the beginning of this year. The average analyst recommendation for AA is 2.4. The Street Ratings recommended a “Hold” for AA. According to their report, Alcoa’s valuation ratios are relatively low compared with its peers, but its sales growth is lower compared with the industry average. Standard & Poor’s is bullish about AA. It forecasted a 12-month target price of $13.00 per share. John Paulson's Paulson & Co had nearly $300 million invested in AA.

Bank of America Corporation: Bank of America’s stock is currently trading at $5.8. It has a market cap of $58.6B and lost 56.48% since the beginning of this year. The average analyst recommendation for BAC is 2.4. According to Credit Suisse’s analysis, the target price for BAC is $13.00. Standard & Poor’s is also bullish about BAC. It thinks the 12-month target price for BAC is $8.00. Bruce Berkowitz’s Fairholme invested over $600 million in BAC shares.

Mitsubishi UFJ Financial Group, Inc.: Mitsubishi UFJ Financial Group is a Japan-based company engaged in banking businesses. MTU is currently trading at $4.45. It has a market cap of $62.6B, a PE ratio of 11.05, and lost 18.30% since the beginning of this year. The average analyst recommendation for MTU is 2. Ford Equity Research projected that MTU will outperform the market in the next 6 to 12 months. According to its analysis, MTU’s operating earnings yield of 19.9% is better than 98% of other companies in their stock universe. Ken Fisher also invested $182 million in MTU shares.

Panasonic Corporation: Panasonic is also a Japan-based company. It manufactures and sells electronics products. PC is currently trading at $9.38. It has a market cap of $22.5B and lost 34.89% since the beginning of this year. The average analyst recommendation for PC is 1. Standard & Poor’s believes the 12-month target price for PC is $12.00. Jim Simons’ Renaissance Technologies had $13 million invested in PC at the end of the third quarter.

Sterlite Industries (India) Ltd.: Sterlite is a mining company. SLT is currently trading at $8.34. It has a market cap of $28.3B, a PE ratio of 26.31, and lost 48.34% since the beginning of this year. The average analyst recommendation for SLT is 1. According to Standard & Poor’s, the 12-month target price for SLT is $14.00. Ken Fisher had $4.1 million invested in SLT shares.

Banco Santander, S.A.: Banco Santander is a financial group mainly operates in European and Latin American countries as well as the United States. STD is currently trading at $7.91. It has a market cap of $67.2B, a PE ratio of 5.98, and lost 18.94% since the beginning of this year. The average analyst recommendation for STD is 1.5. Ford Equity Research reported a strong buy for STD. It believes the stock will strongly outperform the market in the next 6 to 12 months. Ken Fisher also invested more than $200 million in STD shares as of September 30.

Xerox Corp.: XRX is currently trading at $8.28. It has a market cap of $11.6B, a PE ratio of 11.26, and lost 26.67% since the beginning of this year. The average analyst recommendation score for XRX is 2.2. Credit Suisse’s opinion on XRX is neutral. In its report, the target price for XRX is $10.00. Standard & Poor’s has a strong buy rating for XRX. Its 12-month target price is also $10.00. Larry Robbins’ Glenview Capital had $165 million invested in XRX shares.

Other stocks currently trading below $10 and recommended by analysts include Gerdau S.A. (NYSE:GGB), ING Groep NV (NYSE:ING), Lloyds Banking Group plc (NYSE:LYG), Sumitomo Mitsui Financial Group Inc. (NYSE:SMFG), and Mizuho Financial Group, Inc. (NYSE:MFG). These are foreign financial stocks that are unloved by investors. We think financial stocks are globally undervalued and provide opportunities for outsized gains.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.