Cheap Stocks to Buy in India 2024

No matter whether the stock market is at an all-time high or plunging to new lows, investors are always looking for stocks which are trading at a very low price or we could rather say, cheap stocks to buy. You would surely agree to this, we all have that one friend who is a so-called market expert who gives out tips on the best low price shares to buy. But, before you buy these cheap shares, you must find out the answer to this question … are cheap stocks a good investment option for the long term?  Let’s find out.  In this article:

Here is a checklist of things you must analyse before investing in a cheap stock or a low priced stock.

Whenever you buy a stock, be it a cheap stock or any other stock, you must compare its current market price with its fundamentals and analyse if the stock is worth buying or not. 

• Price to Earnings (PE Ratio) 

Price to Earnings ratio is the price investors pay for a share in the company’s earnings. While scrolling through the list of the best cheap stocks to buy now, you might come across many stocks whose PE ratio is relatively less than their competitors. Does this mean that the stock is a lucrative buying opportunity? The answer is no. If a stock has a low PE as compared to a competitor does not indicate that the stock is undervalued. So instead of comparing the PE ratio of one particular stock with another stock, you must compare the PE ratio with the industry PE or the stock’s own historical PE and check if the stock is truly a value buy or not.  Relying too much on a particular ratio will not help you make the decision of whether to buy a cheap stock or not. There is another key ratio to analyse. 

• Price to Book (PB Ratio) 

Price to book ratio is a valuation ratio which calculates the intrinsic value of a stock. So, accordingly, you can understand if the stock is undervalued, overvalued or fairly priced.  Now for most cheap stocks, the PB ratio will also be comparatively low. There could be multiple reasons for a stock to have a low PB ratio. A few of these could be a weak balance sheet with increasing non-performing assets. Another reason could be increasing losses on the balance sheet. So, even if a low PB ratio might look like an attractive buying opportunity, you must analyse the future growth prospects of the company before investing in any low priced or cheap stock.  Apart from this, you must also check the management quality. The management of the company must have a vision and most importantly they must make decisions which would draw profits to the company. Dishonest management which lacks vision can never drive profits and growth to the company.  Moreover, the company must consistently report higher sales and generate good profits. If these factors are fulfilled, then the markets will eventually value the stock to the right price.  This was a small glimpse of how to analyse a cheap stock to buy. If you wish to learn more about how to analyse stocks then here is a video you must watch. In this video, our Chief Markets Editor, Apurva Sheth will take you through an end to end process of how to analyse the fundamentals of a stock and pick the right stock to invest in. 

List of cheap stocks to buy

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*Data as on 13th April 2022. To explore the key financial ratios of any of these cheap stocks then simply visit Samco’s Share Price Page. Click here to explore now.  If you wish to add these cheap stocks to your portfolio, open a free Demat account with Samco and get access to our robust trading platform Samco App. 

Happy Investing