5 Stocks Under $10 Worth Buying

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 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.

 

3/15/13

3/13/09

Gain

Sirius XM Radio 

$3.11

$0.198

1,470%

Bare Escentuals*

$18.20

$3.66

397%

Focus Media 

$26.10

$5.74

355%

Geron 

$1.13

$4.36

(74%)

Ford 

$13.45

$2.19

514%

* Bare Escentuals was acquired for $18.20 a share in 2010.

The average gain of 532% in four years is pretty remarkable.

Even with Geron as the sole disappointment, the other four multibaggers have easily trounced the market by excelling in satellite radio, cars, and Chinese advertising.

Let's go over this month's picks.

Bazaarvoice (NASDAQ: BV  ) -- $7.96
Most of my Fellow Fools were skeptical when Bazaarvoice went public at $12 last year, and the skepticism was warranted. Despite spiking 18% higher last week on no material news, Bazaarvoice shares are still trading a third below its IPO.

It's hard to gain credibility with investors when your CEO steps down just nine months after going public. An antitrust investigation into a recent acquisition and mounting quarterly losses aren't helping, either.

However, there is a real business here under the coats of pessimism. Bazaarvoice's ability to help clients leverage social data from online word-of-mouth content into actionable improvements is sticky and growing. Revenue did spike 55% in its latest quarter, and Bazaarvoice's active enterprise client retention rate clocked in at an impressive 97%.

Analysts see losses continuing for the next couple of years, but it's hard to ignore the growth at a discounted IPO's price.

Heckmann (NYSE: NES  ) -- $4.15
Enjoy Heckmann while you can.

The environmental services provider isn't going out of business. It's not necessarily about to be bought out. Heckman is merely gearing up to change its name Nuverra Environmental Solutions in two months after shareholders approve the new moniker.

Last year's acquisitions of Power Fuels and Thermo Fluids have helped revenue more than double, broadening its offerings of environmental services. A new name makes sense.

Heckmann's stock popped 16% higher last week after surprising Wall Street with a quarterly profit. Its guidance for 2013 is solid, though suggesting that it will fare better during the latter half of the year finds analysts scaling back near-term projections.

Heckmann isn't perfect, but it's a profitable company that's moving beyond merely cleaning up fracking water.

MEMC Electronic Materials (NYSE: SUNE  ) -- $4.53
MEMC is another company that's two months away from a new corporate name.

It's a freaky coincidence. Deal with it.

The maker of silicon wafers for the semiconductor and solar industries will be switching its identity to SunEdison to reflect its solar bent after shareholders clear the move in late May.

MEMC posted a narrowing loss on a 7% decline in revenue in 2012, but it's easy to get behind the merits of solar energy at a time when gas prices are going through the sunroof. MEMC will make the migration process easier after forming a new subsidiary that will focus on financing for long-term ownership of solar energy projects.

Navidea Biopharmaceuticals (NYSEMKT: NAVB  ) -- $2.67
Stocks usually fall on bad news, but even good news can lead to a drop.

Navidea Biopharmaceuticals' shares plunged 20% last week, even after the FDA approved its lymph node diagnostic. One can argue that Lymphoseek's approval was a given. The regulatory agency's rejection last year stemmed from a problem with Navidea's third-party manufacturer. However, it's not fair to say that this was simply a matter of the old "sell on the news" adage poking out its head again.

Shares of Navidea are trading a lot closer to its 52-week low than last year's peak. Even if some may be questioning if a new lymph node diagnostic is even necessary at this point, Navidea's future will be brighter with Lymphoseek's approval than it was before.

Tellabs (NASDAQ: TLAB  ) -- $2.17
Despite its small share price, Tellabs is big business. It offers mobile backhaul, packet optical, and services solutions to communications service providers.

Business isn't exactly booming these days. Tellabs derives half of its revenue outside of North America, where networking initiatives aren't a priority in these dicey economic times. Wall Street sees Tellabs merely breaking even on a 14% drop in revenue.

Tellabs has also been challenged since its CEO lost his battle to colon cancer last year. Class action lawsuits have been piling up, accusing the company of failing to alert shareholders that business wasn't going so hot two years ago.

The good news for patient investors is that Tellabs has been paying a quarterly dividend of $0.02 a share for years. This may not seem like a lot, but given its low share price, we're talking about a yield of nearly 3.7% as the market waits for demand to improve.

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.

Want another small stock idea? Looking for more commodities-based ideas? Download the free report, The Tiny Gold Stock Digging Up Massive Profits. The Motley Fool's analysts have uncovered a little-known gold miner they believe is poised for greatness. Find out which company it is and why its future looks bright -- for free!


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 27, 2013, at 12:32 PM, rsinj wrote:

    "The good news for patient investors is that Tellabs has been paying a quarterly dividend of $0.02 a share for years."

    That's not so good news at all. As indicated in the company's Jan 31 earnings announcement:

    "The Tellabs Board of Directors did not authorize a cash dividend for the first quarter of 2013. We provide no assurance as to a future declaration or payment of a cash dividend or do we provide future assurance of a repurchase of common stock."

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