5 Low-Priced, Five-Star Stocks

Buying stocks only because they trade for less than $10 remains one of the "lowest" -- but most tempting -- forms of investing out there.

After all, nothing trounces Mr. Market quite like a $2 stock that moves into double digits in a short time. Unfortunately, due to the numerous risks that low-priced stocks carry, these mega-multibagger returns don't occur as frequently as one wishes.

Price means nothing
Here at the Fool, we do our darnedest to diagnose and prevent the critical stock affliction known as "cheap-osis" -- the belief that a stock's per-share price, on its own, tells you whether a stock is cheap or expensive; attractive or unattractive; a winner or a loser.   

Through the use of splits and reverse splits, management can make the price of its shares literally anything they want. That's the reason a $280 stock likeIntuitive Surgical (Nasdaq: ISRG  ) might be a great opportunity, while most penny stocks are too wild to buy at any price.

Your weekly dose of sweet 'n' low
Sadly, though, some incidents of cheap-osis can never be cured. So, with the help of our Motley Fool CAPS intelligence database, we'll screen for stocks trading at less than $10 that also have enough investment merit to earn a perfect CAPS rating of five stars.  

Without further ado:

Company

Price

Market
Cap
(in
millions)

Industry

Grupo TMM (NYSE:TMM)

$2.56

$146

Shipping

Schiff Nutrition International (NYSE:WNI)

$5.30

$141

Drug Related Products

Transportada de Gas del Sur (NYSE:TGS)

$6.25

$993

Foreign Utilities

Century Casinos (NASDAQ:CNTY)

$6.62

$157

Resorts & Casinos

LeMaitre Vascular (NASDAQ:LMAT)

$7.31

$113

Medical Instruments & Supplies

Sources: Yahoo! Finance and Motley Fool CAPS. Prices as of Nov. 19 close.

As always, do not view these stocks as formal recommendations, but as ideas you may want to research further. With that said, Grupo TMM and LeMaitre Vascular might be worth some of your Foolish due diligence.

A Grupo effort
If buying low-priced U.S. stocks isn't daring enough for you, how about looking into an emerging market penny-stock opportunity? Grupo TMM, Mexico's largest logistics company, is one of our community's favorite plays on the growth taking place south of the border. Of the 46 CAPS All-Stars who've rated the stock, 42 are bullish.

Of course, the company has undergone a challenging recent restructuring to reduce its massive debt load and get back to consistent profitability. Expect a really bumpy ride going forward. However, management seemed confident in its latest report, stating that the company's future is "now certain." Fools should naturally take those words with a grain of salt, but with an EV/EBITDA of 8.4, the stock's risk/reward profile is worth a peak.                 

CAPS All-Star MArgersinger wrote this bullish excerpt back in February:

Intriguing potential turnaround story here ... as one of the larger Mexican logistics companies, it stands to benefit mightily from its exclusive port control agreements with the Mexican government, and new NAFTA initiatives that will allow Mexican trucking companies easier cross-border transportation rights

Blood lines
LeMaitre Vascular, a Massachusetts-based provider of peripheral vascular devices and implants, is another low-rider for which our community has high hopes. Only 11 players have rated the stock so far, but all are bullish, so LMAT may be one of those hidden micro-cap up-and-comers.  

Of course, the young LeMaitre currently operates at a loss while competing with medical device giants like C. R. Bard (NYSE: BCR  ) and Medtronic (NYSE: MDT  ) , so the stock is certainly on the speculative side. Still, the company's cash-rich balance sheet, and Chairman and CEO George LeMaitre's continued ownership of roughly 25% of the company, warrant giving the company a closer look.

CAPS All-Star razormd keeps the blood flowing:

Worthy products for vascular surgery...revenues steadily climbing...recent acquisition of Vascular Architects -- another respected private maker of vascular surgery devices -- will enhance market position and should become a strong positive long term although short term the merger might dampen profitability...2 bucks a share in cash and trading around $6-$7 a share...looks pretty good for speculative money.

The Foolish conclusion
Despite our Foolish attempts to educate the investment public about cheap-osis, the allure of low-priced stocks is simply undeniable. The good news, though, is that there are indeed single-digit wonders out there that can also make great investments.

So, if you really have a bad case of the 'osis and would like to find more good low-priced stocks for yourself, then head over to our Motley Fool CAPS community. It's 100% free -- the lowest price you'll find anywhere.   


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