5 Stocks Under $10 Worth Buying
If you've got 10 bucks, I have some stock ideas for you.
I've been singling out attractive opportunities in low-priced stocks since my original "5 Stocks Under $10" column 10 years ago, and I've seen plenty of stocks with pocket change prices generate incredible gains.
There are risks, and they are readily apparent given the recent volatility. There are often good reasons for stocks to be ignored or beaten down. However, a market rally can work wonders for the unloved with positive catalysts in their pockets.
Let's go over my five picks from March 2009 -- when low-priced stocks bottomed out -- to prove my point.
Sirius XM Radio (NAS: SIRI)
Focus Media (NAS: FMCN)
Geron (NAS: GERN)
Ford (NYS: F)
The average gain of 459% in a little more than three years is remarkable.
Sirius XM has led the way, transforming itself from a company that was on the brink of bankruptcy three years ago to a media giant with a scalable model and growing profitability. Focus Media is a leading advertising platform provider in China. The country's growth has slowed, but it's still improving at a healthier clip than the rest of the world.
Geron has been the one loser in the lot. When you buy into young biotechs you're swinging for the fences. I seem to be striking out this time. Ford has been posting several months of strong sales, though the stock has been stuck in neutral lately.
Let's go over this month's picks.
The Active Network (NYS: ACTV) -- $4.94
Folks registering for triathlons, marathons, and other endurance events online have probably come across Active.com. The Active Network's website is the top dog in this growing niche.
The Active Network went public at $15 last year, but the stock cratered after reporting earnings earlier this month.
Yes, the report was brutal. Guidance was not kind. However, the company is still targeting growth of 12% to 14% in 2012 and again in 2013.
That isn't too shabby. The red ink is unfortunate, but the company is early in its growth prospects.
Molycorp (NYS: MCP) -- $6.13
It's been a long way down for Molycorp. The rare-earth minerals specialist was a market darling until its growth prospects became unhinged. China moved away from tightening production at home, and investors moved away, too.
These days the company is coming under fire. Molycorp revealed earlier this month that a formal SEC investigation into the company's public disclosures is under way.
The fundamentals have come down along with the share price. A year ago, analysts were expecting as much as $7.34 a share in earnings out of Molycorp for 2013. Yes, Molycorp was supposed to earn more than its share price today. Well, three months ago that 2013 target was whittled all the way down to $1.87 a share, and now it's down to a mere $0.42 a share.
Groupon (NAS: GRPN) -- $2.98
I'm not fan of Groupon's model. Sequential growth of its bread-and-butter non-direct revenue has been negative in back-to-back quarters, and merchants are starting to get fed up with the daily deals math.
However, Groupon is now trading for just a little more than the cash on its balance sheet. Along the way you have a company milking its merchant connections by offering a payment platform that will save them money.
Groupon has been a dog since going public late last year, but it's now a misunderstood bargain.
Marvell Technology (NAS: MRVL) -- $7.40
Shares of Marvell were trading merrily in the double digits for more than three years before slipping into the single digits a few weeks ago.
The developer of storage, communications, and consumer silicon is coming off a rough quarter. Revenue declined 4% sequentially, and profitability was shaved in half to $0.20 a share.
Marvell still relies on its flagship storage and networking markets to account for 47% and 23% of its business, respectively, but it's hoping to make a bigger splash in mobile and wireless connectivity.
Investors buying into Marvell will need to be patient. We're still waiting for the global economy to bounce back, giving companies the visibility to place more orders. Along the way, though, investors are getting a reasonable 3.2% yield.
Windstream (NAS: WIN) -- $8.27
There are plenty of fat yields to be found among stocks fetching single digits.
Regional telecom services provider Windstream is currently yielding a whopping 12.1%.
It's true that Windstream isn't exactly toiling away in a hotbed niche. Providing telecom services to consumers in rural markets may be a good way to keep the telecomm giants away, but there's also a limit to the upside.
Windstream is coming off a poorly received quarter, but it wasn't that bad. Pro forma revenue may have declined 1% to $1.55 billion from last year's third quarter, but the results actually were a top-line improvement sequentially.
Windstream's adjusted profit of $0.12 a share may call into question how long the company can keep paying its meaty $0.25-a-share quarterly dividend. Fellow Fool Dan Radovsky isn't optimistic. However, it's hard to turn away from a yield like this until the company does officially slash its rate.
Five for the road
These five stocks aren't trading in the single digits by accident. If I'm right about the catalysts, though, they may not be trading in the single digits for too much longer.
Finding promising stocks while they're still cutting their baby teeth is at the heart of the Rule Breakers newsletter that I write for. You can check it out for free this month with a 30-day trial subscription. There are roughly a half dozen active stock recommendations in the growth stock research service trading for less than $10 at the moment. Check those out, and I'll be back with more on the third Monday of next month.
Groupon's story is one of the American Dream. The company went from 400 subscribers in 2008 to more than 150 million today. While this story is definitely one of success on a business level, its success most certainly hasn't been shared by investors. Company shares have fallen over 80% over the past year and left investors panicked. Investors have to wonder: Will this company will live out its American Dream or leave shareholders empty-handed? In order to answer that question, our analyst has compiled a premium research report with in-depth analysis on whether you should buy or sell Groupon right now, and why. Simply click here now to get started.
The article 5 Stocks Under $10 Worth Buying originally appeared on Fool.com.Longtime Fool contributor Rick Aristotle Munarriz owns shares of Ford. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend The Active Network, Ford, and Focus Media Holding. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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