But it is also a double-edged sword. When you get it wrong, losses can magnify. That is why it is important to screen for companies now, not only on price but also for significant improvements in the business, like revenue and earnings growth, to help qualify the ones that offer better growth potential in the long run.
So, in this article, I looked at stocks under $10 that have the potential to skyrocket into high double- or even triple-digits. To get the list, I used the following criteria.
- Stock trades between $5 to $10
- Has at least a Buy rating from analysts
- Latest full-year earnings growth or improvement of at least 10%
- Consistent positive revenue growth in the last three years
This set of criteria gave me some of the best stocks under $10.
Here are the results, sorted by earnings growth (highest to lowest).
Materialise NV (MTLS)
3D printing demands are rising, and companies like Materialise NV (NASDAQ:MTLS) are capitalizing on this growth.
Materalise provides software and 3D printing services for various applications. The company aims to transform businesses through repeatability, reliability and quality. It recently launched Mimics Enlight CMF, a pre-operative planning solution, to enhance the in-house planning experience of its healthcare customers, who aim to use 3D software for surgical application planning.
In addition, the company has also launched a personalized TMJ implant, which treats patients requiring total temporomandibular joint (TMJ) arthroplasty at a 100% success rate after one year of treatment. Patients with the implant report an improved quality of life, among other good news.
Materialise reported an impressive 10.4% YOY increase in revenue for 2023, with its medical segment blasting through the 100 million euro revenue benchmark. EBITDA increased by 65%, and the bottom line went from a 0.04 euro cent loss to a 0.11 euro profit.
The company’s revenue is growing steadily, and analysts are happy to give it a Strong Buy rating with 134% upside potential based on the high target price. With its growth and prospects in the green, MTLS might be one of the best stocks trading under $10.
Ardelyx (ARDX)
Ardelyx (NASDAQ:ARDX) is a biotech company specializing in developing and commercializing advanced medicine, specifically diseases with unmet needs.
The company currently has two main commercial products in the market: XPHOZAH, for CKD patients in dialysis, and IBSRELA, for patients with constipation due to irritable bowel syndrome.
Ardelyx currently has two pipeline programs: RDX013, which aims to treat hyperkalemia, and RDX020, which is for metabolic acidosis treatment. The company aggressively promotes its commercial products and presents new data supporting their efficacy.
As for financials, Ardelyx ended 2023 with a massive revenue boost, mostly driven by IBSRELA, which hit $80 million in sales, up from last year’s $15.6 million. Including product supplies and licensing, total revenue reached $124.5 million. Revenue has also increased for the last three years, lending more weight to management’s optimism.
The company is still operating at a loss, but things are expected to improve as it launches more products. Meanwhile, Ardelyx reported a net loss of 30 cents per share in 2023, a sizable improvement from last year’s 42 cents a share loss.
With a current price of around $6 to $7 and a Strong Buy rating with an impressive $15 high target price, investors looking for great growth stocks under $10 might strike gold with ARDX.
Sera Prognostics (SERA)
Known for its proprietary proteomics and bioinformatics platform, Sera Prognostics (NASDAQ:SERA) is a health diagnostic company for women. Using its platform, the company can discover and validate key biomarkers of its patients to use accurate predictors of the dynamic changes that occur during pregnancy. The company’s commercial PreTRM test is a non-invasive blood biomarker test that helps health professionals predict the potential of a preterm birth.
Last year, Sera reported its Prematurity Risk Assessment Combined with Clinical Interventions for Improved Neonatal OutcoMEs, or PRIME study, moved from enrollment to data analysis and reporting. The Data Safety Monitoring Board (DSMB) recommended this move after the study met primary endpoints, which is good news for the company and its investors.
In 2023, Sera Prognostics’ revenue increased from $268,000 to $306,000, continuing a multi-year streak of sales improvement. Meanwhile, the bottom line improved from a $1.43 loss in 2022 to a $1.16 loss in 2023.
According to its recent filings, the company expects increased product demand. “Our new ambient whole blood collection method,” stated CEO and President Zhenya Lindgardt, “allows us to access more patients and, as revenue ramps, we expect should significantly improve gross margin and enable Sera to process more tests efficiently to meet future demand.”
No wonder analysts continue to rate the stock as a Strong Buy. Investors looking for healthcare stocks trading under $10 should look at SERA.
On the date of publication, Rick Orford 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.
Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.