Written by Norman Isaac Mwambazi

Three stocks under $10 with “Strong Buy” ratings.

There is only one reason why investors buy stock: To have a high return on their investment. Every investor comes …

There is only one reason why investors buy stock: To have a high return on their investment. Every investor comes into the stock market looking for one or a few stocks that they can buy low and either sell high or get considerable dividends, but this process can be quite challenging for investors. This is where industry analysts and financial advisers come in to offer insight into the stock market and guide investors in decision making.

Investors live by a simple rule: Buy low, sell high. This means that they will most definitely be looking for those companies whose stocks are relatively cheap but are expected to offer high returns. These companies mostly fall in the small-cap category.

That said, we have borrowed statistics, figures, and reviews from our friends at TipRanks in pursuit of three stocks that fit the bill: a market capitalization of under $700 million, a share price below $10 with upside potential of more, at least an 80% score which makes the analyst community give them Strong Buy consensus ratings. Here they are:

Enthusiast Gaming Holdings (EGLX)

Enthusiast Gaming Holdings (EGLX)

Although Enthusiast Gaming Holdings is relatively new to the Nasdaq Composite Index, it is not new in the ears of gamers. This Toronto-based company that specializes in the digital media section of online video gaming owns and manages numerous gaming brands, but that is not all it does. It also ventures into actual gameplay, social media, journalism and community chats.

The stats

EGLX’s numbers are a pleasure to look at for investors. The company’s e-sports brands have reported having over 100 million franchise fans, and last year the company hosted an experimental edition of its annual live expo, which saw more than 200 exhibitors, 30,000 attendees, and 5.6 million online viewers.

These enormous numbers were used by the company to move from Over-The-Counter (OTC) exchange and get listed on to the tech-heavy Nasdaq Composite Index in April this year, officially trading under the EGLX ticker starting April 21, 2021.

Finances

EGLX has been growing rapidly recently, coinciding with the growing popularity of online esports and video gaming. In Q1 FY2021, the company reported a 321% year-ago-quarter increase in revenue totalling C$30 million (US$24.4 million). Gross profit also saw an 80% year-on-year increase, raking in C$5.9 million (US$4.8 million).

This may come off as ironic, but EGLX is one of the companies that benefited from the COVID-19 pandemic as it saw the number of paid subscribers increase by 49% (137,000) in the 12 months that led up to its Q1 FY2021. This is partly attributed to the stay-at-home directives issued by governments across the globe.

It is no brainer that as the companies paid subscribers grew, its direct advertising sales also increased from C$60,000 (US$48,683) one year ago to C$2.2 million (US$1.79 million) in the current report. In the same period, the company reported over 9.9 billion total views of its written and video online content.

With Enthusiast Gaming’s finances looking healthy, the company decided to add another company to its portfolio by acquiring online gaming data tracking company, Tabwire, in an $11 million cash and stock deal that was finalized on June 24, 2021. Tabwire, which owns TabStats, brings two main assets to Enthusiast: its proprietary technology and its gamer database which boasts 13 million profiles.

Scott Buck, a 5-star Wall Street analyst at H.C. Wainwright & Co., highlighted the strength of Enthusiast Gaming’s online presence that puts the company in a great position for growth which will attract investors.

Buck says that the company’s ownership of and operation of a digital media platform that includes more than 100 gaming-related websites and more than 1,000 YouTube channels with gaming and live event content can be a big source of income when monetized. This can in turn fuel revenue growth and gross margin expansion which will attract new investors for the company because investors love going where they see growth and potential for higher returns. Buck believes “there is a foundation of secular growth which is likely to continue for several years” in the gaming industry and EGLX is no different.

With that analysis, Buck gives EGLX a Buy rating, setting the company’s share price target at $10, which is an 80% one-year upside.

Wall Street is even more bullish when it comes to Enthusiast Gaming, as there are three recent Buy reviews on file for the company which makes its Strong Buy consensus rating unanimous.

Currently, Enthusiast Gaming has a market capitalization of $933.20 million, with its stock going for $6.07 per share. The average price target of $10.45 from analysts indicates a potential upside of approximately 88% for the next 12 months.

Mogo Finance Technology (MOGO)

Mogo Finance Technology (MOGO)

Another company that we found in the TipRanks database with a strong buy rating and a high growth potential is a Vancouver-based financial company called Mogo. Some of the financial services offered by Mogo to its customers include prepaid Visa cards, credit score viewing, personal loans, identity fraud protection, and mortgage services.

Founded in 2003, Mogo is highly dependent on the internet as its services are based online and focus on direct contact with its registered customers, which, according to the company’s reports, are over 1.6 million.

Unlike Enthusiast Gaming that benefited from the COVID-19 pandemic, Mogo was punched in the face, and it is only recovering. Its Q1 FY2021 revenues which stood at C$11.4 million (US$9.28 million), were down 17% year-on-year. However, the company’s revenues say a sequential rise of its revenue by 14% year-on-year.

Putting the drop in total revenue aside, Mogo registered the second straight quarter of sequential growth in subscription and services revenue. These brought in C$6 million (US$4.88 million), which represented a 32% rise from Q4 FY2020.

In the last two months, Mogo reported two important news items that should entice investors and make the company more attractive despite its loss of revenue in the last 12 months. First, in May 2021, Mogo reported that its payments platform Carta Worldwide received the highly essential Visa Ready certification, which allows Carta to spread its wings operation to Europe and North America. Carta Worldwide is wholly owned by Mogo.

The second bit of good news reported by Mogo was on June 1, 2021, when it acquired more shares (2% to be exact) in Canada’s largest cryptocurrency platform Coinsquare. This move saw the growing financial company bring its total stake in Coinsquare to 37%, and it still has the licence to acquire up to 48% of the crypto trading platform.

The stats

Currently, Mogo has a market capitalization of C$619.90 million ($502.78 million), and its stock is trading at $7.90 a share. However, BTIG analyst Mark Palmer believes the company’s stock could rise as high as $13 a share in 12 months, which is approximately an appreciation of 84%.

Palmer says that with Mogo, investors get the opportunity to play both the digital disruption of the Canadian financial services industry and the increasing adoption of bitcoin and other cryptocurrencies.

Mogo scores favourably on Wall Street, with the stock having an average price target of $12.80, which forms the basis of a Strong Buy consensus rating supported by a unanimous 5 reviews.

Avrobio Inc. (AVRO)

Avrobio Inc. (AVRO)

We have seen online gaming, financial services, and now let us see a biotechnology company that rounds up this list. Enters Avrobio.

Avrobio is a clinical-stage biopharmaceutical company headquartered in Massachusetts. This company aims at creating one-dose gene therapy treatments for painful, debilitating, chronic disease conditions. The company is highly invested in treatments that will limit or stop the disease progression in lysosomal disorders, and this is planned to be achieved by inserting a therapeutic gene directly into the patient’s stem cells – letting normal metabolic processes spread the gene through the body.

The stats

Currently, Avrobio has a market capitalization of $418.08 million and $10.01 a share. Needham analyst Gil Blum has set the company’s price target to $28 price target, which is approximately a gain of 183% over the next 12 months.

Blum’s price target is not far off from Wall Street average target of $22.20. The biotechnology company has seven recent reviews, and six of them put in a Strong Buy rating, with one going for a Hold rating. If Avrobio hits this target in the next 12 months, it will have appreciated by 124%.

PS: Stock prices quoted in this article can change anytime.