How do I go about buying cheap stocks?

Question

I am 25 and I don't have much to start out with.

Answer 1

I would be careful about buying stocks based solely on price or what you can afford.

I would rather won 1 share of AAPL, than 60 shares of ABK.

There is a reason why low prices stocks are cheap, because they are not worth that much.

Unless you are looking to trade which I would advise against if you don't have the money to risk, then I would do this.

1. Open ROTH IRA (Fidelity.com has a no fee Roth IRA)

2. Invest in the S&P500 Index

Answer 2

Let's see, cheap but easy.

I did a stock screen that selected companies that had (1) above industry average profit margins, (2) better than average potential earnings growth (PEG), but (3) lower than industry average price to earnings ratio, and (4) above industry average return on equity.

There was a pool of some 265 companies. A sampling included: GFRE, CEO, FSIN, DSX, and IIVI.

See if some of these melt your butter.

It gets a good deal more complicated, but this was easier for the potential 2 to 10 points than explaining Value Investing (look up Benjamin Graham).

Answer 3

If we knew the answer to that one, we would all be rich.  It all depends on what kind of stocks you are looking for - growth, value, large-cap, small-cap and so on.  I would not use just a PE ratio to judge how cheap a stock is.  You could say financial stocks are cheap, but I know I don't want to buy any of those stocks right now.  

I would read a few books on investing first then start to look at investing.  Here are some books I think will help:

  Ã¢Â€Â¢ How to Make Money in Stocks – William J. O’neil

  Ã¢Â€Â¢ One up on Wall Street – Peter Lynch

  Ã¢Â€Â¢ Real Money – Jim Cramer

  Ã¢Â€Â¢ Reminiscences of a Stock Operator – Edwin Lefevre

  Ã¢Â€Â¢ The Intelligent Investor – Benjamin Graham

Good Luck - Investing is a great way to make some money and the earier you start the better.

Answer 4

There are many cheap stocks, but what you probably want is a stock that is undervalued. I suggest picking up a beginners book in investing such as Investors for Dummies and in accounting such as Accounting for Dummies. Understanding how to read a financial statement is necessary in buying cheap stocks. Study hard and buy cheap. Good luck

Answer 5

Mel,

       I suggest you start with educating yourself to protect the money you are starting with and any money you earn.

      One of the Biggest names you will be coming accross in the investment community is WARREN BUFFET. He just reached an agreement to donate his billions (Yes, with a "B") to the Bill and Melinda Gates Foundation.

      Buffets key advice is that he would rather buy stock at a reasonable price from a wonderful company than buy stock at a wonderful price from a reasonable company.

      Two stocks to look at are:

JOHN DEERE (DEERE & CO.) DE

Mfg heavy machinery. With a falling dollar this top flight mfg of agricultural heavy equipment will take advantage of increasing ag demand and its ability to sell more equipment through the decreasing dollar, than competitors.

       MOSAIC CORP (MOS) Chemical industry. Again a leading U.S. company will be taking advantage of falling dollar.

       Your alternative is to play the penny stocks which is akin to playing slot machines. You might win here and there but basically you play until your money runs out AND I GUARANTEE YOU YOUR MONEY WILL RUN OUT.

      Stick with quality and a long time 20 yrs time frame...you won't appreciate it but your children will.................

Answer 6

open an account with Scottrade