Making big gains on a small budget may sound too good to be true. But the idea is worth pursuing, especially with the help of low-priced stocks. Of course, what may be a low price for one may not be for another. So here we’re considering stocks that are priced low enough for everyone, i.e. stocks under $10.

So how can investors be confident that the low-priced stocks they are considering would yield significant returns over the long term? Basically, there is no magic formula or set theory, but little things that make these stocks more attractive.

They could for instance have good growth prospects or have something of value that makes them potential acquisition targets. Specifically, these stocks may allow for a lower initial investment, offer greater potential for price appreciation and flaunt low P/Es.  

Investor returns are significant with even a minuscule gain in stock price, as the percentage gain on such stocks is a lot higher.  

Thus, for people who appreciate the power of a discount and at the same time want to make the most out of low-priced stocks, we offer a few potential picks that are still priced short of perfection.

The Strategy

Using our new style score system, we have zeroed in on five cheap stocks that flaunt excellent prospects and might prove to be a boon for growth investors. Our research shows that stocks with Growth Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best investment opportunities in the growth investing space.

All these growth bets sport a P/E below 20, have a solid Zacks Rank and an attractive Growth Style Score. Moreover, these stocks are currently trading below $10, which makes them all the more attractive.

The Picks

Arotech Corporation (ARTX – Snapshot Report) provides defense and security products worldwide. The company operates two business divisions: Training and Simulation, and Power Systems. The company was formerly known as Electric Fuel Corporation and changed its name to Arotech Corporation in Sep 2003. Arotech was founded in 1990 and is based in Ann Arbor, MI.