If you've got ten bucks, I have some stock ideas for you.
I've been singling out attractive opportunities in low-priced stocks since my original "Ten Stocks Under $10" column a dozen 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 | $3.72 | $0.198 | 1,779% |
| Bare Escentuals* | $18.20 | $3.66 | 397% |
| Focus Media* | $27.50 | $5.74 | 379% |
| Geron | $1.54 | $4.36 | (65%) |
| Ford | $17.11 | $2.19 | 681% |
*Bare Escentuals was acquired for $18.20 a share in 2010. Focus Media was acquired for $27.50 a share in 2013.
The average gain of 634% in four years is pretty remarkable.
Even with Geron crashing as the lone stinker, the other four multibaggers have easily trounced the market by excelling in satellite radio, cosmetics, cars, and Chinese advertising -- and two have been acquired at healthy premiums.
Let's go over this month's picks.
Nam Tai Electronics (NYSE: NTE ) -- $6.78
Shares of Nam Tai took a hit three months ago after posting uninspiring quarterly results.
The contract manufacturer made a big play for the booming liquid crystal display modules for smartphones last year, but cutthroat competition drove prices and margins lower and customer orders are coming in below Nam Tai's original forecasts.
This is the bad news that got Nam Tai down to the single digits, but there's also an opportunity here. Demand for consumer electronics isn't going away, and Nam Tai is still profitable and growing. The stock is fetching a reasonable 12 times next year's projected earnings. Along the way, Nam Tai's quarterly dividend of $0.15 a share leaves the stock currently yielding a tempting 8.8%.
BlackBerry (NASDAQ: BBRY ) -- $9.24
I hate BlackBerry in the double digits. It's a different story in the single digits.
Yes, this is a mess right now. BlackBerry is coming off a dreadful quarter where it sold just 2.7 million smartphones fueled by the BB10 mobile operating system that was supposed to make the wireless pioneer relevant again. Carriers slashing BlackBerry Z10 prices over the weekend will put even more margin pressure on the struggling company.
I saw the horrible quarter coming, and you probably did too.
Now it's time to assess the situation. As bad as things may be for BlackBerry's relevance, this is still a company with a healthy balance sheet flush with $3.1 billion in cash and equivalents. If things continue to head south, it can always improve its standing by spinning off either its hardware or software and services businesses.
Advanced Micro Devices (NYSE: AMD ) -- $4.32
AMD isn't in a good place right now. Revenue is falling and losses are mounting as PC sales plunge for the fifth quarter in a row. AMD's push into graphics hasn't been enough.
However, a few analysts upgraded the spunky chip maker last week, betting on an eventual turnaround.
It won't happen right away, but something interesting will happen when the Xbox One and PS4 hit the market this holiday season: AMD will be powering the guts of all three major video game consoles. AMD has also received some early favorable buzz for new products in its FX series of chips.
Wall Street sees AMD resuming its revenue growth and returning to profitability next year, and that's good enough to warrant attention now.
Tremor Video (NYSE: TRMR ) -- $7.97
Tremor went public at $10 a share late last month, and it's already a busted IPO.
The company seems to be at the right place at the right time. Tremor runs an online video advertising network at a time when everyone is gravitating to video content. Tremor's VideoHub platform analyzes in-stream video content to serve up optimal video ad campaigns. Its clients include all 10 of the largest automakers and all but one of the 10 largest packaged goods companies.
Growth is already there. In-stream video advertising rose 32% last year, and Tremor's top line popped 43% higher during this year's freshman quarter. Tremor is still delivering losses, but gross margins are expanding and net losses are shrinking.
Sure, it's not a good sign when an IPO falls apart in its first few weeks of trading, but the market eventually comes around when it can't ignore growth.
Office Depot (NYSE: ODP ) -- $4.30
Shares of the office supply superstore chain have more than doubled since being singled out in this column last summer.
Refreshed confidence in corporate America is partly behind the rise, but the real news here is that Office Depot is set to merge with rival Office Max later this year. The second- and third-largest office supply retail chains announced their intentions to join forces in February, and just last week the two masters of file cabinets and copy toner cartridges approved the union.
The move is a no-brainer as both retailers are expected to post slight declines in sales this year. The combination should create cost savings in the form of materialized synergies -- and that's just good business.
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.
With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.
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