Through 10 months of market rallies, the penny-stock masses have cleared out.
Set your favorite stock screener to single out only stocks trading below $1 but with market caps greater than $100 million, and you'll be in a pretty thin wading pool. Most of the companies that were splashing around in these waters a year ago have either rallied with the rest of the market or have gone Obit City.
If you revisit my "dollar menu" column in early March, you'll find that three of the five stocks I singled out at the time now trade for well over a buck. The other two stocks still trade for pocket change, but considerably more pocket change than they fetched 10 months ago.
Let's dive into this month's list.
1. Sirius XM Radio
Shares of the satellite-radio provider were trading for a mere $0.14 a share during my March checkup. Most investors wouldn't mind a quadrupling of their money in that time.
Sirius XM is in far better shape than it was back then. It's growing its subscriber base again. It surprised the market with breakeven results in its latest quarter. Credit rating upgrades have come as it successfully pushes away its debt maturities.
Every passing week finds Sirius XM treating investors to improving fundamentals. The gargantuan share count is keeping the stock in check at this point.
2. Blockbuster
The DVD-rental giant isn't going away. Even if we're changing the way we consume borrowed celluloid, Blockbuster is making sure it doesn't let the digital or Redbox revolutions leave it behind.
Blockbuster has forged ahead with "Blockbuster Express" kiosks, which spit out nightly rentals for a buck. It's testing out high-speed memory-card rentals and beating Netflix
The retailer's key to survival will ultimately be how it assures the relevance of its stores as entertainment destinations. That's the one thing that will always set it apart from kiosks or digital competitors.
3. XOMA
Biotech investing can be more art than science when we're talking about the XOMA gamble. Sure, the specialist in antibody therapeutics has been trading publicly since the 1980s, but a few swings and misses find the biotech survivor back on the farm team of the stock market.
XOMA 052 isn't a jersey number. It's the company's best shot at a potential blockbuster on the diabetes front. The catch is that the compound has completed just the first phase of clinical trials. Even if things go well for the treatment, it may not hit the market for years.
The feast-or-famine nature of biotechs makes this a sector well represented on the dollar menu. XOMA is joined by Insmed
4. Flagstar Bancorp
During a brutal year that has seen dozens of banks go under, this 176-branch bank has a new CEO and plans to raise funds to take advantage of market opportunities.
Sure, the Michigan-based bank has also posted wider-than-expected deficits in each of the past few quarters. Assets have also declined recently. However, the company is better capitalized than most of its fallen peers were. Analysts also see Flagstar's deficits narrowing substantially next year.
Flagstar's not in an ideal position, but investors should give the new leadership the benefit of the doubt to see whether it can improve on its loan portfolio and take advantage of the industry's consolidation opportunities.
Here are some other ways to buck the buck:
- The original Dollar Menu column came out 15 months ago.
- 5 Stocks Under $10 is a good place to go if you want more low-priced stock ideas.
- Here's Your Shot to Score Big
