5 Stocks Under $10 Worth Buying
If you've got $10, I have some stock ideas for you.
I've been highlighting attractive opportunities in low-priced stocks since my original "5 Stocks Under $10" column 14 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.
*Bare Escentuals was acquired for $18.20 per share in 2010. Focus Media was acquired for $27.50 per share in 2013.
The average gain of 628% in a little more than six years is pretty remarkable. Yes, that also happened to be when the market was hitting rock bottom, but that still blows away every major market index in that time.
Let's go over some new potential winners at single-digit prices.
Freshpet -- $9.99Gourmet pet food is growing in popularity with the improving economy, and that's made the growing network of Freshpet Fridges busier than usual. There are now 14,354 Freshpet-branded refrigerators at pet supply stores and traditional supermarkets, up sharply from the installed base of 12,593 a year ago.
The refrigerators are being put to good use, and that makes sense since once you wean your dog or cat off stale dry food it's hard to leave high-end refrigerated fare. Sales rose 39% in its latest quarter since the prior year period, and sales growing faster than installations indicate that average sales per fridge are on the way up. Freshpet has recently branched out into baked snacks, giving it a new way to cash in on its brand.
Sirius XM Radio -- $3.82The only game in town when it comes to satellite radio continues to make waves, silencing the naysayers that figured this was merely a transitory technology that would become obsolete as free or cheaper mobile streaming apps take off.
Sirius XM keeps growing. It's up to 28.4 million subscribers, and the only things growing faster than its account base and revenue are free cash flow and profitability. Gabelli & Co. initiated coverage on Sirius XM last week with a bullish rating, slapping a price target of $4.75 on the stock.
Kandi Technologies -- $6.10Electric vehicles make sense in China as anyone that has seen smoggy skies in its most populous cities knows. China's government recently began offering chunky subsidies to buyers of plug-in vehicles, and that's huge for a company selling low-cost electric cars.
Most of Kandi's growth -- and it's been stellar with electric vehicle parts posting a 168% year-over-year surge in its most recent quarter -- has come mostly from auto-sharing programs that it has helped started up through China. If it can make a dent in retail sales with China making it a cost-effective choice things could really start revving in the right direction for Kandi.
Groupon -- $4.29You may not be buying as many prepaid experience vouchers on Groupon as you used to, but that doesn't apply to the world collectively. Groupon's gross billings hit $1.53 billion in its latest quarter, 10% ahead of the prior year period on a foreign exchange neutral basis. Things were hopping closer to home with North American billings posting a 12% year-over-year pop.
Groupon continues to be a cost-effective way for merchants to smoke out local leads, and the push into physical goods and business services will only help it maximize the value of its growing Rolodex. Profitability has been a challenge in the past, but with analysts eyeing net income of $0.14 a share this year and $0.18 a share come 2016 the real value at Groupon may be the stock itself.
Rite Aid -- $7.51Shares of the drugstore operator declined 13% last week after posting poorly received quarterly results. Adjusted earnings merely met expectations, making this back-to-back mortal quarters for a retailer that would routinely land ahead of Wall Street profit targets in previous quarters.
Comps growth has decelerated, but it still remains positive. It has now posted a dozen profitable quarters in a row, according toS&P Capital IQdata. It also recently followed its larger peers into the lucrative world of thepharmacy benefit management business after a game-changing acquisition. The stock has soared sevenfold since bottoming out under a buck nearly three years ago, and the pharmacy chain is no longer sick.
Five for the roadThese 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.
The article 5 Stocks Under $10 Worth Buying originally appeared on Fool.com.
Rick Munarriz owns shares of Ford and Kandi Technologies. The Motley Fool recommends Ford and Kandi Technologies. 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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