3 Cheap Shares to Buy With $300

Figuring out which shares to buy is one question, but the price to buy at differentiates profits from losses. Here are three cheap shares to buy now.

| More on:
Various Canadian dollars in gray pants pocket

Image source: Getty Images

Recently, a friend talked about how he lost $5,000 in the stock market in fewer than three months. He made the common mistake of buying the rally. Even I made the same mistake in the early days of my investing journey.

But if you can’t help staying away from a rally, there are cheaper alternatives. Most of the time, it is the market leader that rallies and represents the market. But there are other players ­that rank second or third and respond similarly to market dynamics, unless there is a company-specific issue.

Here are three stocks that are cheaper alternatives to their market leaders:

Chorus Aviation stock

The airline industry isn’t taking flight as expected, as the virus scare still haunts people worldwide. While there is pent-up demand, governments are cautious, as they don’t want another lockdown or relapse of the pandemic. The airline stocks will return to glory, but they will face a lot of turbulence, like cash burn, renewed restrictions, and more. It will take a significant amount of money to acquire and maintain capacity. 

Like all airline stocks, Canada’s largest airline, Air Canada stock, is trading closer to its 2021 pandemic low of $23. But if $23 a share is too high a price, Chorus Aviation stock is available for less than $4.

Chorus leases aircraft and provides commercial passenger and charter services. It also offers aircraft maintenance, aircraft component, and contract flying services. One of its clients is Air Canada. Chorus stock has been moving in tandem with AC stock year to date, which means you can get exposure to the airline industry’s rally for $4/share (Chorus Aviation) instead of $23/share (AC). 

Keyera stock

Another bullish segment is pipeline stocks. Growing oil demand, especially in the United States, is driving pipeline stocks. 98% of Canada’s oil exports are to the United States, and the export happens through pipelines. The pipeline operators earn more toll money, as more volumes of oil flow through their pipes. The largest North American pipeline operator Enbridge’s stock is trading above $41, having surged 29% year to date. 

But there is a cheaper alternative to Enbridge, and it is Keyera. While Keyera is not the largest pipeline operator, it caters to the Western Canada market. It offers a 6% dividend yield, which comes close to Enbridge’s 6.45% yield. Keyera stock is trading around $31 and has surged 39% year to date. Both the stocks move in the same direction on market dynamics. 

Hive stock

Blockchain technology is gaining pace. A technology, if successful, can spread like wildfire and make early investors millionaires. Look at those who invested in Bitcoin before the 2017 crypto bubble. The current Bitcoin frenzy made these investors millionaires.

Stock of BitFarms, a Bitcoin mining company founded in 2017, have surged 193% so far and is now trading at $6.39. If this price is expensive, you have a better alternative in Hive. Hive mines Bitcoin and Ethereum. Moreover, it has lived through the 2017 crypto bubble, surging 3,530% in the last five years. To give you an idea of what this means, a $1,000 investment in 2016 is worth $36,300 now. 

Hive is currently trading at $3.63, almost half the price of Bitfarms, and is also looking for other blockchain applications. Even if Bitcoin and Ethereum perish to regulators’ opposition, other blockchain applications will flourish. Instead of BitFarms, you might want to consider Hive.

The takeaway 

Investing is not just about finding the right stock but buying it when it is cheap. While market leaders grow with the market, smaller players have an added growth of gaining market share. The smaller player can give you higher returns, but they come with higher risks than the leaders.

If the risk works in your favour, it can grow your money. And if the risk backfires, you only lose what you invest. So, take a calculated risk, and don’t rush to buy a good stock in a rally or sell it in a downturn. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CHORUS AVIATION INC and Enbridge. The Motley Fool recommends KEYERA CORP.

More on Dividend Stocks

edit Person using calculator next to charts and graphs
Dividend Stocks

Better Buy: Fortis Stock vs Enbridge

Fortis stock and Enbridge are top dividend stocks on the TSX today. Which stock is better buy for safe dividend…

Read more »

Canadian Dollars
Dividend Stocks

How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

Read more »

Dividend Stocks

TFSA: How to Easily Turn $10,000 Into $500/Year of Passive Income

You don't need to be a stock market expert to turn $10,000 into a $500 of tax-free passive income. Here's…

Read more »

protect, safe, trust
Dividend Stocks

Worried About a Recession? 2 TSX Blue-Chip Stocks to Protect Your Capital

If you fear a recession coming on soon, here are two blue-chip Canadian stocks to add to your portfolio for…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

New TFSA Investors: 2 Top TSX Stock to Create a Self-Directed Retirement Fund

Top TSX dividend stocks are now on sale for new TFSA investors.

Read more »

money while you sleep
Dividend Stocks

Worried About the Market? 2 Dividend Stocks That Let You Sleep at Night

Here's why Restaurant Brands (TSX:QSR) and Enbridge (TSX:ENB) are two top dividend stocks to buy in this uncertain market right…

Read more »

money cash dividends
Dividend Stocks

How 1 Absurdly Cheap Stock Can Generate $100 in Monthly Passive Income

You can generate $100 or more in monthly passive income from one high-yield stock trading at an absurdly cheap price…

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

How I’d Invest $1000 in February to Make Easy Passive Income

Looking to earn some extra passive income in February but don't have much cash? Build an easy portfolio with these…

Read more »