Investors are always trying to time the market. They want to get in at the lows and get out at the highs. While this simplistic goal sounds easy, it is almost impossible to achieve. Regardless of their timing abilities, one area where investors have seen good results is low-priced stocks. Single digit stocks are attractive to investors for many reasons, but when is it best to build them into your portfolio? Let's take a look at why now is a good time to buy low-priced stocks. Works at the Highs Low-priced stocks work when the market is at the highs because these are the stocks that have been overlooked. The market is too concerned with which stocks are soaring towards triple digits (or even quadruple digits in some cases) to look down the scale. This allows investors the chance to get in on something that is still fairly close to the ground floor. With the overall market raising all prices, the lower you go on your entry, the better chance you have of outperforming down the road. Wise investors know that you cannot have all your eggs in one basket. Apply this same idea to the high flyers with big price tags. Adding low-priced stocks to your portfolio works as a defensive measure. If things turn sour, the high priced stocks will be among the first that are sold. Works at the Lows When markets are at the lows, single digit stocks are among the best plays out there. They are the ones that stand to see significant returns when the market turns around. The small price tag alone will get many investors to "buy low." Another reason single digit stocks will work at the lows is because investors begin to scour the entire universe of stocks looking for what is working. Low-priced stocks tend to be among the first to recover from panic selling. Oftentimes we see investors getting burned on those high flyers. We don't hear many stories about investors losing everything on the stocks that are already beaten down. On the contrary, the time to be buying stocks like that is after everyone else has already abandoned ship. MORE . . . ------------------------------------------------------------------------------------------------------ Low-Priced Stocks with Sky-High Potential Zacks is now revealing its most exciting collection of stocks. Strong earnings growth plus other key indicators tell us which stocks have the best prospects for explosive growth AND long-term profitability. Gains of 2X, 3X or more are possible. Here's the best part: you can snap up shares for less than $10 each. Get in before they break out, then ride the profits high and long! Special Bonus Report: Get "Invest Like Warren Buffett" FREE until midnight Saturday, May 7. See Zacks' Best Stocks Under $10 Now >> ------------------------------------------------------------------------------------------------------ Have a Game Plan I know it sounds like I am talking out of both sides of my mouth here. It is true; I supported the idea of buying low-priced stocks at the highs and also at the lows, so which is it? The truth is, it always makes sense to have single digit stocks in your portfolio. You still have to know your target investment structure. By that I mean you should not have a portfolio of low-priced stocks built to reflect the Dow Jones Industrial Average. That tried and true mix of mega cap stocks behaves much differently than most low-priced stocks. Instead, look to a smaller index for guidance. The Russell 2000 is a much better benchmark to use when structuring a lower priced stock portfolio. Use the weighting in that index as a guideline and be overweight sectors that look likely to outperform. The Zacks Industry Rank can help you figure out which areas are seeing more strength. $5 to $50 The headline for this section isn't just an attention grabber, it really happens. In fact, it happens more than you think. Stocks that start out in the single digits hold the promise of being 5, 7, even 10 baggers over time. The key is to be patient and let the winners run. This is not to say that investing in this space comes without risk. Only a fool would believe all single digit stocks are destined to be double digits again. Along with patience, investors need to be able to accept the risk that comes along with under followed low-priced stocks. Balancing risk is key to a well-rounded portfolio. Maybe even more so in a portfolio of low-priced stocks. Let's look at some ideas on how to balance that risk for your low-priced stock portfolio. Limiting The Risk The first step in a single digit stock portfolio is diversification. I talked about benchmarking the portfolio to the Russell 2000, so be sure to use that as a guideline of what sectors should be overweighted or underweighted. Financials tend to be overweight in that index, so be sure to check that against the Zacks Industry Rank to see if you should follow suit. One should not only diversify among industry, but size as well. It is imperative to have some large cap stocks in your portfolio of low-priced stocks. It fits with the idea of not having all your eggs in one basket, so be sure to have a few big cap names in there as well. The big cap names will also serve to soften the blow if the small caps see a sector rotation. Leadership among stock classes changes frequently and often without warning. Having a few big cap names sprinkled in can only help if things take an unexpected turn. Stay On Top Of The Market In a low-priced stock portfolio it is important to keep your winners and sell your losers quickly. The Zacks Rank will help you get that early advantage you need to succeed. The Rank will tell you which stocks are seeing positive earnings estimate revisions, which often leads to higher stock prices. Remember you are an investor, not a trader. Use time to your advantage. Patience is one of the best weapons you have in your arsenal, so use it wisely. Make sure you have the fortitude to weather the storms of mild market pull backs, as churning and selling at the lows are sure fire ways to have an underperforming year. What's The Next Step? All the major indices have been dancing around all-time highs over the past few weeks. That means now is a great time to buy low-priced stocks that have been overlooked as the market soars. I'm keeping close tabs on strong companies with shares trading under $10. These stocks have an irresistible combination of top-notch fundamentals and small price tags. According to my research, a small number of these stocks have outstanding potential for both immediate growth and sustained profitability for months or even years to come. If you're interested in finding out more, you might want to look into Zacks Stocks Under $10 , one of the investing services I manage. There are 14 promising stocks in the portfolio right now. I'm excited about adding a 15th early next week. This Zacks Rank #1 stock is building momentum after announcing the launch of a new partnership with Google. On top of the strong sales growth reported last month, this company looks to be on the verge of a massive leap forward. In addition to checking out Stocks Under $10, you are welcome to download our Special Report "Invest Like Warren Buffett" absolutely free until midnight Saturday, May 7. Buffett is one of the greatest long-term investors in history, and in this report, you'll learn about the 3 "Buffett Principles" he has used to make so many brilliant investments. It also reveals 5 stocks that meet Buffett's criteria AND have strong Zacks Ranks today. Again, this free opportunity ends at midnight Saturday, May 7, so I suggest you look into it now. Learn more about Stocks Under $10 >> Good Investing, Brian Brian Bolan is Zacks' Aggressive Growth Strategist and the editor of the Zacks Stocks Under $10 portfolio. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report To read this article on Zacks.com click here. Zacks Investment Research