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 nine 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 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 to prove my point.
|Sirius XM Radio||$2.33||$0.198||1,077%|
*Bare Escentuals was acquired for $18.20 a share last year.
The average gain of 483% in a little more than two years is remarkable. Shares of Sirius XM Radio (Nasdaq: SIRI ) have popped 11-fold, as the only game in town when it comes to satellite radio continues to gain listeners profitably.
Ford (NYSE: F ) and its rival automakers may have seen year-over-year sales growth slip earlier this year, but the automotive industry is holding up well, despite some supplier setbacks resulting from the Japanese tsunami.
Let's go over this month's picks.
Motricity (Nasdaq: MOTR ) -- $6.96
Motricity's mCore platform is popular with wireless carriers as a way to add smartphone-like data access to cheaper feature phones. The market has largely dismissed Motricity, given the undeniable shift to smartphones, but that's also why Motricity has made the right move by targeting larger international markets where the masses will continue to use cheaper handsets.
Shares of Motricity hit a fresh 52-week low Friday, making the stock's cheap valuation relative to its growth even more attractive. Analysts see earnings climbing 51%, to $0.62 a share this year, on a 30% boost in revenue. They see profitability soaring 58%, to $0.98 a share next year, with a 25% top-line pop. This is pretty heady growth for a stock now selling for just seven times next year's projected profitability.
Sify (Nasdaq: SIFY ) -- $6.09
India may be the world's second-most-populous nation, but it's surprisingly behind in terms of high-speed online connectivity. That's going to change in the coming years, and Sify is an intriguing play as an online services seller. Sify also has some skin in actual websites, as its Sify Movies site has quickly grown to become India's third-most-popular movie portal.
Revenue isn't growing quickly, but at least losses are narrowing. Either way, Sify is a bigger play on the future of India's dot-com potential than its uninspiring present.
Swisher Hygiene (Nasdaq: SWSH ) -- $5.02
Swisher provides cleaning and sanitation products and services to businesses and residential environments. It is headed up by Steve Berrard, who was Wayne Huizenga's right-hand man at Blockbuster when the video rental chain actually mattered.
Swisher toils in a highly fragmented industry, making it easy to grow through tactical regional acquisitions. A week or two doesn't go by without Swisher issuing a press release to announce a new buy.
How substantial are these purchases? Well, revenue for this year's first quarter soared 86%, but it was really just a 15% organic pop. Earnings growth hasn't been as impressive, but the long-term benefits of all of these related buyouts should pay off in time.
Phoenix New Media (Nasdaq: FENG ) -- $9.68
Not every dot-com out of China is a darling. Phoenix New Media went public two months ago at $11, and today can be had in the single digits.
It's a shame, because Phoenix New Media is every inch a growth stock. The company provides content, primarily through the Internet and to mobile users. Wall Street feels that Phoenix New Media will break from its current losses to post a profit of $0.44 a share next year -- and on nearly 50% revenue growth to boot.
JetBlue (Nasdaq: JBLU ) -- $5.61
It's hard to make money in airlines, even if you buy into the nimble, cool, and profitable ones.
JetBlue has been trading in the single digits since the summer of 2007, so it's no wonder that its shareholders are as blue as the carrier's signature corn chips. However, JetBlue appears to be doing a decent job navigating the choppy turbulence of high jet fuel costs.
The pros are banking on earnings to climb from $0.31 a share last year to $0.37 a share this year -- and $0.56 a share come 2012. They are also targeting double-digit revenue growth along the way.
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 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.