Investors after high-risk, high-reward exposure to artificial intelligence have a wealth of prospective penny stocks to consider, but those seeking more of a balance between quality and return should consider stocks up to $10 per share.
The benefits of a higher share price may include a larger, more-established market share, which entails pricing power; a larger market capitalization, which can facilitate index inclusion and capital raising, including from institutions; as well as greater investor interest and awareness, given how penny stocks outweigh the average investor’s risk tolerance.
In this article, we’ll introduce you to artificial intelligence stocks under $10 whose underlying businesses merit strong long-term conviction thanks to the quality of their income statements.
How we picked the top 10 artificial intelligence stocks under $10
To determine our stock picks, I turned to The Globe and Mail stock screener and conducted searches in both Canadian and U.S. markets for the following characteristics:
- Last closing share price between $1 and $10.
- Positive trailing twelve month price-to-earnings (P/E) ratio to ensure profitability (asset quality or longer-term positive adjusted EBITDA or P/E used as appropriate).
- Negative year-over-year (YoY) stock price to open the door for value plays contingent on your personal due diligence process.
Here’s what I came up with ordered by YoY loss:
- Ford, TTM P/E ratio of 12.49, YoY loss of 3.39 per cent.
- Electrovaya, positive adjusted EBITDA of US$3.2 million in 2023 plus quarterly average of US$0.9 million in 2024, YoY loss of 12.22 per cent.
- Roots, post-pandemic profitability and improving balance sheet in 2024, YoY loss of 20.36 per cent.
- Martinrea International, TTM P/E ratio of 7.34, YoY loss of 22.85 per cent.
- Perion Network, TTM P/E ratio of 5.39, YoY loss of 70.68 per cent.
- Patriot Battery Metals, globally relevant lithium resource, YoY loss of 71.89 per cent.
- TTEC Holdings, TTM P/E ratio of 9.5, YoY loss of 75.80 per cent.
- EW Scripps, a history of profitability and an active pivot towards high growth areas, YoY loss of 75.81 per cent.
- Chegg, a turnaround story with legs, YoY loss of 82.57 per cent.
- Cerence, a market leader with cash-flowing operations, YoY loss of 84.45 per cent.
- Note that Patriot Battery Metals, TTEC Holdings, EW Scripps, Chegg and Cerence came back with positive P/E ratios, though all are unprofitable over the past 12 months. This screener programming error called for sourcing alternative metrics to substantiate the attractiveness of these companies, as you shall read.
The top 10 artificial intelligence stocks under $10
10. Ford
Ford is a pioneering global automotive manufacturer specializing in trucks, sport utility vehicles, commercial vans, cars and luxury vehicles, as well as connected services and financial services. The company was incorporated in 1903 with only 1,000 shares and 12 investors, including its namesake, Mr. Henry Ford.
The company’s wide-ranging reliance on artificial intelligence covers everything from an early misfire detection system to quality assurance, driverless cars, data analysis for used cars, infotainment and all-wheel-drive functionality.
Positive net income in four out of the past five quarters hasn’t been sufficient to sway investors in Ford stock (NYSE:F), which has managed only a 3.39 per cent YoY return, leaving plenty of upside should cash continue to roll in. Shares last traded for US$10.73.
9. Electrovaya
Electrovaya is dedicated to preventing climate change by contributing to the energy transition through the supply of lithium-ion batteries, battery systems and battery-related products. The innovator is active in Canada and is planning on building a gigafactory in Jamestown, New York, to minimize costs through scale on its path to profitability.
Electrovaya’s forays into artificial intelligence include an automated assembly line with advanced laser welding and quality control in 2023, as well as upcoming strategic Government of Canada-funded investments into its Mississauga manufacturing facility.
Fundamental investors should be salivating at how Electrovaya (TSX:ELVA) has given back 12.22 per cent YoY, even though the underlying business has been adjusted EBITDA positive since 2022 while growing revenue by almost 3x to over US$44 million. Shares last traded for C$3.18.
8. Roots
Roots, founded in 1973, is a global clothing brand with over 100 retail stores in Canada, two in the United States and more than 100 partner-operated stores in Asia, in addition to an ecommerce platform and a dedicated storefront on Tmall in China.
When it comes to artificial intelligence, Roots has been no slouch, deploying the technology to enhance its order management and store fulfillment processes with eyes on minimizing shipping costs and improving customer service.
While a challenging macroeconomic environment for discretionary purchases like brand-name clothes has hurt the company in 2024 – leaving investors in Roots stock (TSX:ROOT) with an over 20 per cent loss YoY – the company improved its balanced sheet in Q1 and Q2 and posted net income profitability in the preceding three fiscal years, fostering confidence in a long-term investment. Shares last traded for C$2.19.
7. Martinrea International
Martinrea International develops and produces metal parts, assemblies and modules, fluid management systems and complex aluminum products primarily for the automotive sector. The supplier is active in 56 locations in Canada, the United States, Mexico, Brazil, Germany, Slovakia, Spain, China, South Africa and Japan.
In 2021, after losing a key contract, Martinrea reacted proactively by upgrading its Alfield plant in Toronto with advanced artificial intelligence-enabled manufacturing technology. The company followed this pivot with the 2023 acquisition of Effenco, a green tech company creating technologies to electrify and connect heavy-duty vocational trucks. At the time of the acquisition, Effenco had compiled over 1 million hours of operating data to run through its proprietary artificial intelligence algorithms and improve its technologies.
Investors in Martinrea stock (TSX:MRE) have been overly cautious about the auto industry’s cyclicality, tanking the stock by 22.85 per cent YoY, disregarding how the business’ consistent net income over the past five years and five quarters – minus a blip coming out of the pandemic – suggests ample upside to be reaped. Shares last traded for C$9.87.
6. Perion Network
Our next top artificial intelligence stock under $10 is Perion Network, a digital advertising technology provider across the consumer journey specializing in data, creative and channels. The company is active in over 34 global markets, including over 435,000 sites and screens, and has grown responsibly by generating positive annual adjusted EBITDA and operating cash flow over the past decade.
Among Perion’s products are numerous artificial intelligence solutions, such as:
- Sort, a cross-media audience segmentation tool without the use of cookies.
- WAVE, a generative AI audio tool that allows brands to speak to listeners with customizable content.
- Chat AI Ads, a custom AI chatbot to enhance consumer engagement and conversions.
- Creative Studio DCO, a suite of creative solutions for brands to hyper-personalize based on audience, location, weather, content and time of day.
It isn’t often that the broader market dismisses a stock with income statements worthy of idealization, but this has been the case with Perion Network (NASDAQ:PERI), whose shares are down by over 70 per cent YoY (67 per cent gain since 2019), despite:
- Positive net income in four out of the past five quarters.
- An almost 10x jump in net income over the past five years from US$12.89 million in 2019 to US$117.41 million in 2023, while growing revenue by 2.8x to US$743.16 million.
While Perion’s net income through 2024 has been a fraction of what it achieved in 2023 and 2022 largely because of a dip in advertising demand, operations remain profitable, demonstrating management’s ability to weather market volatility without losing sight of shareholder value. Shares last traded at US$8.42.
5. Patriot Battery Metals
Turing our attention to the lone miner on our list, Patriot Battery Metals is a lithium exploration company advancing its Shaakichiuwaanaan property (previously Corvette) in the Eeyou Istchee James Bay region of Quebec. The Shaakichiuwaanaan mineral resource is estimated at 80.1 million tons at 1.44 per cent Li2O indicated and 62.5 million tons at 1.31 per cent Li2O inferred, making it the largest lithium pegmatite resource in the Americas and the 8th largest in the world. Numerous spodumene pegmatite clusters on the property remain to be drill tested.
The Canadian lithium miner called upon Halifax’s KorrAI in 2021 to conduct a remote sensing survey blending satellite imagery, integrated artificial intelligence and machine learning to identify new mineral outcrops on the then Corvette property.
Even though The Globe and Mail’s screener insists on Patriot having a positive P/E ratio, this simply cannot be true given that the company is pre-revenue. That said, it earns its place on our list by:
- Providing exposure to a commodity tied to the energy transition.
- Housing a globally relevant resource.
- Commanding only about C$350 million in market capitalization, well below the US$2.9 billion in after-tax net present value estimated for Shaakichiuwaanaan in its preliminary economic assessment.
Patriot Battery Metals stock (TSX:PMET) has given back over 70 per cent YoY driven by lithium’s recent price drop, clearing the way for investors with conviction in electrification to pick up shares priced for pessimism. Shares last traded at C$2.48.
4. TTEC Holdings
Another stock under $10 with a compelling value proposition is TTEC Holdings, a global customer experience technology and services company whose artificial intelligence-enabled solutions have an established history of improving outcomes at each step of the customer journey.
The company’s TTEC Digital subsidiary designs, builds and operates omnichannel contact center technology, as well as customer relationship management, artificial intelligence and analytics solutions, while its TTEC Engage business delivers artificial intelligence-enhanced customer engagement, acquisition and growth, in addition to tech support, back office and fraud prevention services.
TTEC Holdings (NASDAQ:TTEC) has shed over 75 per cent of its value YoY because of a dwindling-demand environment since 2023 and net losses over the past five quarters, though management is hard at work diversifying offerings, cutting costs and improving the balance sheet to return to profitability. TTEC managed to grow revenue every fiscal year since 2019 while averaging over US$100 million in annual net income between 2019 and 2022.
3. EW Scripps
In the second runner-up position on our list of artificial intelligence stocks under $10 is EW Scripps, a diversified media company that stands as one of the United States’ largest local TV broadcasters and its largest holder of broadcast spectrum. The company, founded in 1878, operates more than 60 stations in over 40 markets driven by a brand portfolio highlighted by Scripps News, Court TV, ION, ION Plus, ION Mystery, Bounce, Grit and Laff.
EW Scripps partnered with artificial intelligence start-up Waymark in January to bring automated TV advertising technology to its stations, streamlining the process from creation to production down to mere minutes.
An advertising recession – which has struck Canada’s Corus Entertainment with a vengeance – has led to steep losses for EW Scripps over the past two years in the hundreds of millions of dollars. That said, an ongoing 2023 restructuring to better capitalize on industry growth areas such as news, sports, entertainment, datacasting and TV distribution puts the company on a path back to profitability. Operations averaged over US$195 million in annual net income from 2020 to 2022.
Investors in EW Scripps stock (NASDAQ:SSP) are sitting on an over 75 per cent loss YoY, with shares last trading for US$1.89.
2. Chegg
Coming in as our first runner-up is Chegg, an education stock that provides students all over the world with customized artificial intelligence-powered support, including access to subject matter experts and tools to develop life and job skills.
Chegg’s approach to artificial intelligence is wholistic, covering skills training for enterprises as well as in-house initiatives such as a generative AI learning platform and a textbook tool that offers solutions from over 34,000 ISBNs.
Operations have fallen into unprofitability as of late, including more than US$830 million lost in 2024, because of competition from free artificial intelligence tools and investments tied to the company’s pivot from a solutions-based business to an all-in-one educational platform.
Management is confident in executing on its pivot under a more streamlined organizational structure, as detailed in Chegg’s Q3 2024 results, and remains cash-flow positive with over US$630 million in cash and investments to weather the storm.
Chegg stock (NYSE:CHGG) has fallen by over 80 per cent YoY, enabling investors to build a position in this turnaround story when there’s blood in the streets. Shares last traded for US$1.73.
1. Cerence
Our top artificial intelligence stock under $10 is Cerence, an innovator in connected mobility advancing the possibilities of artificial intelligence-based communication between humans and their vehicles. The company has partnered with over 80 of the world’s leading automakers and original equipment manufacturers and boasts over 500 millions cars shipped with its technology on board.
Cerence’s technology portfolio is highlighted by applications for emergency vehicle detection, customizable conversational chatbots and speech enhancement to improve interaction with voice recognition technology, each equipped with a more robust feature set than competing offerings from Amazon and Alphabet (slide 14).
While Cerence stock (NASDAQ:CRNC) has given back almost 85 per cent YoY, primarily driven by its inability to turn a profit, the company’s significant share of the vehicle technology market and positive cash flow from operations achieved in Q3 and Q4 add heft to the thesis that shareholder value is on the horizon. Shares last traded at US$2.82.
Join the discussion: Find out what everybody’s saying about the top 10 artificial intelligence stocks under $10 on the Ford Motor Co., Electrovaya Inc., Roots Corp., Martinrea International Inc., Perion Network Ltd., Patriot Battery Metals Inc., TTEC Holdings Inc., Chegg Inc., EW Scripps Co. and Cerence Inc. Bullboards and check out the rest of Stockhouse’s stock forums and message boards.
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All data as of Nov. 20, 2024.
(Top photo of a robot typing with stock charts on a screen, generated by AI: Adobe Stock)
