Chicago, IL – April 30, 2025 – The stock in this week’s article is Compass, Inc. COMP.
The stock market has roared back to life off the market’s early-April lows as Wall Street looks ahead to the possibility of trade war deals and solid first-quarter earnings results and guidance.
See the Zacks Earnings Calendar to stay ahead of market-making news.
The last several weeks and the past five years have highlighted why investors should do their best to stay constantly exposed to the stock market.
Investors who want to keep buying stocks in May and beyond might consider adding exposure to cheap stocks that trade for $10 a share or less.
Along with their cheap price tags, the stocks we learn to search for earn strong Zacks Ranks, driven by improving earnings outlooks. Plus, Wall Street is very high on all of these stocks trading for under $10 a share to consider buying in May.
One dollar or less used to be the common threshold for what we call “penny stocks.” Today, the SEC has expanded penny stocks to securities that trade for less than $5 a share. Many investors avoid these stocks because they are speculative in nature.
Meanwhile, penny stocks often trade infrequently and hold wide bid/ask spreads. These stocks also carry many other traits that, in many cases, cause excessive volatility. With that said, some penny stocks perform incredibly well, which helps them remain attractive.
Moving on, let’s briefly discuss the next class of cheap stocks. Stocks that trade in the $5 to $10 range are generally less risky than their penny stock counterparts. Investors might be more likely to have heard of these companies or seen the tickers. They are, however, still inherently more speculative than many other higher-priced stocks.
Investors can obviously find winning stocks for under $10 if they are extremely selective. So today, we narrowed the list of thousands of these more speculative stocks down to a more manageable group of $10 and under stocks that might help boost your portfolio.
Here is one stock out of the over 80 highly-ranked names trading under $10 a share that made it through the screen today…
Compass, Inc. is a leading U.S. real estate technology company. The tech-enabled real estate services firm operates an end-to-end platform for residential real estate agents, integrating tools for customer relationship management, marketing, and transaction services, including title and escrow, and more.
COMP’s platform empowers real estate agents with mobile apps, AI-driven features like “Likely to Sell,” and programs like Compass Concierge, which funds home improvements for sellers.
Compass grew its revenue by 26% in the fourth quarter and 16% in 2024 during “a year in which resale transactions experienced a 29-year low,” according to Compass. Compass expanded its quarterly market share by 65bps YoY to 5.06%.
The real estate tech firm is projected to grow its revenue by 25% in 2025 and 16% in 2026 to reach $8.15 billion, up from $5.63 billion last year. On top of that, it’s expected to swing from an adjusted loss of -$0.31 a share to +$0.09 in 2025 and then skyrocket 194% next year.
The impressive Compass growth outlook comes despite risks such as high mortgage rates, regulatory challenges, and a sluggish housing market. “I believe 2025 will be the year that the gap between Compass and the industry widens. By leveraging our structural advantages and our affiliation with the Christie’s International Real Estate brand, we are positioning ourselves to accelerate our market share gains,” CEO Robert Reffkin said in prepared Q4 remarks.
Compass lands a Zacks Rank #2 (Buy), and it topped our EPS estimates in the trailing three quarters. The company is also in a stronger financial position after generating positive free cash flow of $26.7 million in the fourth quarter and every quarter in 2024, with full-year free cash flow of $105.8 million.
COMP stock has soared 140% over the last year, yet it trades 38% below its average Zacks price target. This is part of a 215% surge in the past 24 months that pushed Compass neck and neck with the S&P 500 during the trailing three years.
Compass trades at 0.5X forward 12-month sales, which marks 90% value compared to its Internet – Software industry’s 4.8X. COMP shares found support near their 200-day moving average recently and could be ready for a breakout if the real estate tech company impresses Wall Street on May 8.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/commentary/2458314/how-to-find-the-best-cheap-stocks-under-10-to-buy-in-may
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