Analysts love these cheap stocks.

With the S&P 500 near all-time highs and up nearly 90% from 2020 lows, it may seem like there are no cheap stocks left in the market. Many of the stocks trading under $10 these days are there for good reason and should be avoided at all costs. For investors willing to do some digging, the Morningstar analyst team says there are plenty of cheap stocks trading under $10 per share that have significant valuation upside. Here are nine of the best cheap stocks to buy for less than $10 per share, according to Morningstar.

Lloyds Banking Group (ticker: LYG)

Lloyds Banking Group is a British retail and commercial bank. Analyst Niklas Kammer says Lloyds reported strong first-quarter numbers and has demonstrated resilient net interest margins, or NIM, despite historically low interest rates. NIM has increased for three consecutive quarters since the emergency rate cut from the Bank of England last year. Kammer says Lloyds isn't out of the woods just yet, but the stock's risk-reward outlook is compelling given the U.K. macroeconomic environment is improving and the stock trades at less than $3 per share. Morningstar has a "buy" rating and a $3.40 fair value estimate for LYG stock.

Telefonica (TEF)

Telefonica is the leading telecommunications provider in Spain. Analyst Javier Correonero says revenue trends are improving, and Telefonica has superior pricing power relative to top competitors in the Spanish market. Correonero says Telefonica's strong fiber footprint differentiates the company, and it also generates impressive wholesale revenue from upselling sports, shows, movies and other content. Telefonica also has an opportunity to improve its balance sheet significantly via asset sales in 2021, including the divestment of Telxius Towers. The stock also pays an 8.8% dividend. Morningstar has a "buy" rating and a $10.20 fair value estimate for TEF stock.

Enel Americas (ENIA)

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Enel Americas is a conglomerate of South American electric energy companies. Analyst Charles Fishman says the recent acquisition of the renewable energy assets of Enel Green Power's Latin American business gives Enel more than 3 gigawatts of additional operating renewable energy assets. The economic recovery in Brazil has been sluggish and spot electricity prices dropped to $32 per megawatt-hour last quarter, down from $48 a year ago. However, Fishman says Enel provides investors with a rare combination of growth and a 3% dividend yield. Morningstar has a "buy" rating and a $10 fair value estimate for ENIA stock.

Telecom Italia (TIIAY)

Telecom Italia is an Italian wireless and fixed-line telecom provider. Correonero says Telecom Italia is focused on deleveraging its balance sheet over the next three years in what will likely be a difficult Italian prepaid mobile pricing market. The company intends to stabilize its revenue, cut costs, improve its working capital and reduce net debt via asset sales. Brazil represents about 20% of the company's total revenues, and Correonero says the Brazil market will serve as Telecom Italia's primary growth engine in the near term. Morningstar has a "buy" rating and a $7.30 fair value estimate for TIIAY stock.

Aegon (AEG)

Aegon is an insurance company that operates in the Netherlands, the U.K. and the U.S. Analyst Henry Heathfield says Aegon's consistency has been impressive in recent quarters. Healthfield says the stock is a show-me story at this point given it is a far cry from top European insurance stocks. However, he says Aegon's earnings power suggests the stock is significantly undervalued, trading at just 6.6 times forward earnings estimates. New leadership is focused on strengthening the company's balance sheet and enforcing more cost discipline. Morningstar has a "buy" rating and a $6 fair value estimate for AEG stock.

Equitrans Midstream Corp. (ETRN)

Equitrans Midstream is a natural gas transmission and storage company in the U.S. Appalachian Basin. Analyst Stephen Ellis says Equitrans has been dealing with multiple headwinds in recent quarters, including poor performance by its largest customer, EQT Corp. (EQT). In addition, the company's Mountain Valley Pipeline project faces several permitting challenges and a criminal investigation, and its completion date has been delayed until mid-2022. However, Ellis says the pipeline will eventually serve as a major earnings growth driver for Equitrans and a catalyst for the undervalued stock. Morningstar has a "buy" rating and a $15 price target for ETRN stock.

Frank's International (FI)

Frank's International is an oil and gas services company that specializes in tubular services. The oil industry took a big hit in 2020 thanks to economic shutdowns and travel restrictions. However, crude oil prices have roughly doubled in the past year, and economists are expecting a boom in oil demand during the 2021 summer travel season. Analyst Preston Caldwell says he is bullish on Frank's despite the fact that the company's pending merger with Expro seems to be "slightly unfair" to Frank's investors. Morningstar has a "buy" rating and a $5 fair value estimate for FI stock.

Mitsubishi UFJ Financial Group (MUFG)

Mitsubishi UFJ Financial is Japan's largest financial group. Analyst Michael Makdad says the environment for Japanese megabanks has been difficult. However, Mitsubishi has significantly expanded its overseas business since 2010. Makdad says the company's North American business will likely continue to struggle, but its domestic business is a key to overall profitability. Wall Street legend Warren Buffett made a big bet on Mitsubishi UFJ in August 2020, giving his stamp of approval on the stock. MUFG shares also pay a 4.2% dividend. Morningstar has a "hold" rating and a $5.46 price target for MUFG stock.

Aurora Cannabis (ACB)

Aurora Cannabis is one of the "big four" Canadian legal cannabis producers. Analyst Kristoffer Inton says Aurora's lack of profitability and the absence of a large financial backer puts the company at a disadvantage to other Canadian legal cannabis producers. However, Inton projects that Canadian medicinal marijuana sales will grow 5% annually through 2029 and Canadian recreational sales will also grow 15% annually. For investors willing to stomach the dilution and unpredictability, Inton says there is plenty of valuation upside in Aurora shares. Morningstar has a "neutral" rating and an $11 fair value estimate for ACB stock.

Nine of the best stocks under $10:

— Lloyds Banking Group (LYG)

— Telefonica (TEF)

— Enel Americas (ENIA)

— Telecom Italia (TIIAY)

— Aegon (AEG)

— Equitrans Midstream Corp. (ETRN)

— Frank's International (FI)

— Mitsubishi UFJ Financial Group (MUFG)

— Aurora Cannabis (ACB)

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