Investing in stocks based on their low dollar value can be risky. Low-priced stocks are often characterized by high volatility, with the potential for abrupt and unpredictable price fluctuations that make them riskier than their more stable, higher-priced counterparts. Additionally, a stock’s low price may signal underlying issues such as financial distress, poor management, or internal challenges within the company.
Nevertheless, this does not imply that all low-dollar stocks are unworthy of investment. Instead, investors should comprehensively assess the company’s overall health and quality, looking beyond the stock price to gain insights into its long-term prospects.
Considering these factors, SoFi Technologies (SOFI), Rivian Automotive (RIVN), and Planet Labs (PL) are three stocks that emerge as notable options for investors to buy now under $30.
Let’s take a closer look at all three stocks.
SoFi Technologies
Financial technology company SoFi is a compelling long-term stock trading under $30. The company’s solid top-line growth, improving margins across all its business segments, growing deposit and funding base, and stringent credit standards position it well to deliver sustainable profitability in the coming years.
The company achieved total net revenue of $1.5 billion in the first nine months of 2023, up 35% year-over-year. SoFi’s lending business continued to thrive, fueled by robust net interest income. Furthermore, its net interest income surpassed expenses by nearly two times. SoFi closed Q3 with high-quality deposits amounting to $15.7 billion, reflecting a sequential increase of $2.9 billion. Notably, 90% of consumer deposits originate from sticky direct deposit members, and 98% of its deposits are insured.
Besides strength in its lending business, SoFi’s non-lending businesses, including the Technology Platform and Financial Services segments, also performed well. SoFi’s Financial Services segment achieved positive contribution profit in Q3, making its three reported segments profitable.
Looking ahead, SoFi is well-positioned for robust growth driven by multiple catalysts. These include the company’s growing members and products, which will likely fuel top-line growth. Moreover, SoFi's risk profile appears favorable, as it has expanded its personal loan business with stringent credit standards. In addition, its diversified funding sources, with a notable boost in loans funded by high-quality deposits, will likely generate cost savings and cushion its earnings.
Overall, SoFi is poised to deliver strong growth in the long term. However, SoFi stock has already experienced significant appreciation, which may be why some Wall Street analysts refrain from endorsing it.
Among the 19 analysts covering SoFi stock, six have a “strong buy” recommendation, 10 analysts recommend a “Hold,” one has a “Moderate Sell,” and two maintain a “Strong Sell.” The average price target for SoFi stock is $9.53, which suggests a potential upside of about 11.2% from current levels.
Rivian Automotive
Electric vehicle maker Rivian Automotive is another attractive stock to consider under $30. While its stock recently pulled back due to a sequential decline in deliveries, this presents an opportunity to buy its shares at a discounted price.
The company’s focus on ramping production, improving cost efficiency, and introducing new technologies bode well for long-term growth. Rivian is simplifying its product portfolio and implementing a company-wide cost transformation program designed to maximize spending efficiency across each of the key cost elements of material costs, manufacturing labor, overhead, quality, logistics, inventory, indirect costs, and capital expenditures.
Thanks to these measures, Rivian achieved sequential improvement in gross profit per unit delivered each quarter in 2023. Further, the company expects continued benefits in the future due to further improvements in material cost per unit, thanks more favorable commodity costs and the introduction of new technologies.
Notably, Rivian amended its exclusivity contract with Amazon (AMZN), enabling it to sell its custom-designed commercial van to other companies - and thereby driving its customer base and revenues.
Overall, Rivian's focus on ramping production, cost efficiency, investments in new technologies, and direct-to-customer operations should support future growth.
Among 23 analysts covering RIVN, 13 recommend “Strong Buy,” three suggest “Moderate Buy,” and seven maintain a “Hold.” The average price target for Rivian stock is $26.09, which suggests a potential upside of about 35% from current levels.
Planet Labs
Shares of earth imaging and space technology company Planet Labs should also be on your radar. The company serves a broad clientele of over 950 customers across large commercial and government verticals, encompassing various sectors such as agriculture, forestry, mapping, and finance and insurance.
Planet Labs is poised to benefit from growth in the large seven- and eight-figure government contracts to its qualified sales pipeline. While these opportunities take longer to close, they offer a stable foundation for a sustained revenue stream, with ample room for expansion in the long term.
To address concerns about extended sales cycles, Planet Labs is refining its go-to-market strategy by streamlining sales processes. This enhanced go-to-market strategy is expected to result in quicker sales cycles and improve customer adoption and expansion.
While near-term challenges in the commercial segment have affected revenue, Planet Labs remains optimistic about the long-term prospects of this area of the business as a significant growth driver. Additionally, the company is well-positioned with a diverse global pipeline, presenting numerous opportunities with government customers worldwide.
Analyst sentiment toward PL is largely positive, with seven out of 10 rating it as a “Strong Buy,” one recommending a “Moderate Buy,” and the remaining two analysts suggesting a “Hold.” The consensus target price of $5.17 reflects a potential 120% increase from its current trading price.
