2025 Gold Rush for Low-Priced Potential Stocks: Screening Methods and Investment Layout Guide

Many investors are keen to find low-priced stocks, mainly because these stocks have relatively low entry costs and their potential investment returns are not inferior to high-priced stocks. But the key question is: How to accurately identify truly growth-potential targets among numerous low-priced stocks? This article will provide a detailed analysis of the investment opportunities in low-priced growth stocks, covering stock selection logic, screening methods, and specific case studies.

Definition and Investment Value of Low-Priced Stocks

Low-priced stocks refer to stocks with relatively low share prices in the securities market. This concept typically centers on the share price as a key indicator, but specific standards vary across countries and markets.

It is important to clarify: low-priced stocks ≠ poor quality stocks. A low price does not directly reflect the company’s fundamentals or long-term growth potential. In fact, if investors can identify companies with genuine growth momentum within low-priced stocks, they have the opportunity to achieve substantial returns at a lower cost.

The so-called low-potential stocks need to meet the following three core conditions:

First, valuation is low. This can be judged using PE (Price-to-Earnings ratio) or PB (Price-to-Book ratio). Generally, potential low-priced stocks should have a PE below 15 and a PB less than 1. More importantly, even with low valuation, the company’s fundamentals must remain stable.

Second, they possess stable profitability. Many low-priced stocks are cheap because they have been loss-making over the long term. Truly worth attention are stocks showing continuous profit records—preferably with EPS (Earnings Per Share) over the past 3 to 5 years above zero, with profits increasing year over year. If the company is not yet profitable, focus on revenue growth; revenue YoY growth should be positive, indicating increasing income each year.

Third, the industry they belong to is attractive. The industry sector is crucial. If the industry has broad prospects or aligns with future development directions (such as artificial intelligence, new energy, etc.), the stock’s upside potential increases accordingly. For traditional industries, attention should be paid to whether dividends and profit distributions are stable, with a preference for stocks with long-term high dividend yields.

Methods for Identifying Low-Potential Stocks

For investors, accurately identifying low-priced growth stocks requires the use of certain tools and strategies.

Use professional screening platforms. Websites like Finviz and Investing.com offer powerful stock screeners. For example, on Finviz, after entering the Screener page, you can set multi-dimensional screening criteria, including fundamental and technical indicators. Simply setting “Stock price below $5” and “PE below 15” can initially narrow down the universe of low-priced stocks. Further refinement can be done based on personal preferences, such as “EPS over the past 3 years > 0” or “revenue growth > 0.”

Investing.com’s stock screener is similarly user-friendly and efficient. Select the country, set the price range, and obtain an initial list of low-priced stocks in that market. Further detailed filtering follows similar principles.

Combine fundamental analysis with macroeconomic judgment. Besides relying on screening tools, investors should also master some empirical methods:

First, look for countries in an upward macroeconomic cycle or industries with good prospects. Searching for low-priced growth stocks within these regions or sectors tends to be more successful. For example, currently, Chile in South America is experiencing an economic recovery expansion cycle. Enel Chile, one of the largest independent power producers in Chile, is expected to benefit from the country’s economic recovery.

Second, focus on high-quality companies in emerging sectors. For instance, Payoneer Global addresses the needs of businesses for employee compensation in the remote work era, representing a growing and expanding new field.

Third, look for companies with potential catalysts for performance. Many biotech and pharmaceutical companies hold multiple pipeline products awaiting clinical approval from FDA or other regulatory agencies. Investing early in such companies could bring substantial returns.

Selected Low-Priced Growth Stocks for 2025

US Market Recommendations

In the US stock market, stocks priced below $5 are called low-priced stocks, but some stocks under $10 are also worth attention. Here are 10 carefully selected representative low-priced growth stocks:

Data as of October 23, 2024

Hong Kong Market Recommendations

In the Hong Kong stock market, we select low-priced potential stocks with share prices below HKD 15 for recommendation:

Data as of October 23, 2024

In-Depth Analysis of Key Low-Potential Stocks

From the above recommended list, we focus on five stocks with the most growth potential in 2025 for detailed analysis:

1. Mizuho Financial Group (MFG)

Mizuho Financial Group is Japan’s third-largest financial institution. The latest financial report shows an 18% quarterly profit increase, with net profit reaching 289 billion yen (about $1.9 billion), mainly due to a significant rise in bank net interest income after Japan ended its negative interest rate policy.

The company maintains a forecast of 7.5 trillion yen in annual profit for FY2025, setting a new record high, reflecting strong management confidence in future performance. As the Bank of Japan officially enters a rate hike cycle, Mizuho Financial is well prepared to benefit from the expanding interest margin.

2. Santander Bank (SAN)

Headquartered in Spain, Santander is a well-known European financial institution. In the first half of 2024, the bank’s net interest income reached €23.5 billion, with parent company profit hitting €6.1 billion, both hitting record highs. The cost-to-income ratio is 41.6%, the best in nearly 15 years, indicating significant improvement in cost management.

International investment firms are optimistic about its prospects, giving a “Buy” rating and expecting long-term growth potential.

3. Ultrapar Participações (UGP)

Ultrapar Participações SA is a Brazilian energy company. The latest financial report shows a net profit of R$491 million in Q2 2024, up 106% YoY. The first half’s net profit was R$947 million, an 85% increase from the same period last year, a very impressive growth rate.

Major international investment banks maintain a “Hold” rating with a target price of $6.40. Based on the current stock price, UGP still has about 80% upside potential.

4. Enel Chile (ENIC)

According to the International Energy Agency’s January 2024 report on renewable energy, global new renewable capacity added for the 22nd consecutive year, with an annual growth rate close to 50%, reaching nearly 510 GW. Installations in Europe, the US, and Brazil have all achieved historic breakthroughs.

Enel Chile, as Chile’s largest independent power producer and one of the fastest-growing renewable energy companies, is expected to become one of the first global power companies to achieve net-zero carbon emissions. Its hydro and solar businesses are expanding rapidly. The Atacama Desert in northern Chile has the highest solar irradiance in the world, providing a natural advantage for its power generation efficiency. Coupled with the surge in precious metal prices and the rapid economic recovery in Chile, this will benefit ENIC’s further expansion.

5. Global Payment Service Provider (PAYO)

Since the COVID-19 pandemic, hybrid and remote work models have become the new normal for enterprises. This work mode allows employees to work in the office or remotely from home flexibly as needed. This change is expected to persist long-term, becoming the mainstream work pattern in the future.

However, this shift in work mode presents new challenges for corporate payroll processes. Payoneer Global was born to address this issue. Its core business is helping companies process payments and invoices for contractors, freelancers, and other remote workers more conveniently. Its services include bookkeeping, backend support, and even operational funding.

The company’s revenue growth trajectory confirms the strong market demand: from $346 million in 2020 to $831 million in 2023, maintaining an annual growth rate of over 20%, demonstrating robust development momentum.

Investment Approaches for Low-Priced Growth Stocks

Once the targets are identified, investors need to choose suitable investment methods:

Method 1: Direct purchase of individual stocks. After opening an account with a broker, simply input the stock code to buy or sell. US stocks have the advantage of a minimum of 1 share, requiring relatively low capital. Confirm the price and quantity, then place the order directly.

Method 2: Indirect holding via funds or ETFs. If concerned about individual stock risks, consider low-priced stock funds or ETF products. For example, iShares Micro-Cap ETF (IWC) and Dow Jones Micro-Cap Index ETF (FDM). These funds typically include hundreds or thousands of stocks priced below $5, effectively diversifying risk and more suitable for long-term investors.

Method 3: Derivative instruments. Compared to direct stock holdings, using CFDs (Contracts for Difference) or other derivatives can achieve higher leverage and returns. These tools usually offer leverage trading, allowing investors to control larger positions with less capital, and have lower transaction costs. But it’s important to note that leverage amplifies both gains and risks. Beginners are advised to start with lower leverage (2-3x).

Investment Strategies for Low-Priced Growth Stocks

To achieve better results in low-priced stock investments, investors can adopt the following two strategies:

Strategy 1: Limit order combined with dollar-cost averaging. Low-priced stocks tend to fluctuate within a certain range over the long term. Using limit orders can help reduce purchase costs. For example, if a stock fluctuates between $5 and $7, placing a buy order at $5.50 or $6 allows automatic execution when the price hits that level.

Additionally, dollar-cost averaging can effectively lower average costs. If an investor plans to invest $100 in a stock, dividing the amount into four parts and buying periodically each week can avoid buying at a high point and optimize the average holding cost.

Strategy 2: Build a diversified portfolio. Investing solely in one or two low-priced stocks is risky. It is recommended to select at least five low-priced growth stocks to form a small portfolio. This approach increases the chance of success and helps diversify individual company risks. Through portfolio allocation, investors can pursue high returns while hedging against over-concentration risks.