5 Stocks Under $10 Worth Buying

If you've got $10, 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 13 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 -- when low-priced stocks bottomed out -- to prove my point.

 

April 17, 2014

March 13, 2009

Gain

Sirius XM Radio

$3.14

$0.198

1,486%

Bare Escentuals*

$18.20

$3.66

397%

Focus Media*

$27.50

$5.74

379%

Geron (NASDAQ: GERN  )

$1.94

$4.36

(56%)

Ford 

$16.00

$2.19

631%

*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 567% in a little more than five years is pretty remarkable. Yes, that also happened to be when the market was bottoming out, but that still blows away every major market index in that time.

Let's go over this month's picks.

Plug Power (NASDAQ: PLUG  ) -- $7.32
You won't find too many stocks hotter than Plug Power this year. The fuel cell specialist is up a whopping 372% this year, and things continue to look up as alternative energy grows in popularity. The biggest catalyst for Plug Power this year was when Wal-Mart, the world's largest retailer, announced that it was tripling the presence of its hydrogen fuel cell charging stations at its distribution centers.

Losses have been narrowing, and the market sees Plug Power turning profitable next year. Along the way, we're seeing growth on a tear. Analysts see revenue more than doubling this year, followed by a 79% top-line pop next year.

STMicroelectronics  (NYSE: STM  ) -- $8.88
This may seem like a lousy time to warm up to STMicroelectronics. The Swiss semiconductor giant has surprised the market for three consecutive quarters by posting losses when analysts projected profits. With its next quarterly report set a week from today, the trend suggests that we're looking at another disappointing report.

However, at least the pros are ready for a quarterly deficit out of STMicroelectronics this time. They see a return to profitability during the current quarter, and that's important if it expects to sustain its healthy 4.5% dividend yield. The past year has been disheartening, but STMicroelectronics is fetching a reasonable 15 times next year's earnings forecast.

New Residential Investment  (NYSE: NRZ  ) -- $9.49
Mortgage real-estate investment trusts provide healthy yields, but there are naturally risks involved with real estate these days. New Residential stays a step ahead of the pack by specializing in mortgage servicing rights, a healthy stream of revenue that actually benefits from rising rates.

New Residential was spun off just 11 months ago, so it's not exactly a household name for yield chasers, but the logic of buying into REITs specializing in mortgage servicing rights is sound. As mortgage rates move higher, folks are less likely to refinance their loans, extending the value of these servicing rights. New Residential shelled out payouts of $0.495 per share through its abridged 2013. The healthy distributions should continue.

Inovio Pharmaceuticals (NASDAQ: INO  ) -- $2.53
Biotech stocks have corrected recently, giving investors with the risk tolerance to buy into feast or famine players working on potentially blockbuster treatments a compelling entry point. Inovio is a nascent biotech with a vaccine for HPV-caused pre-cancers and cancer working its way through the long FDA approval process. There's an important mid-stage data readout for the vaccine, VGX-3100, due likely this summer.

Inovio has no shortage of gamblers. Daily trading volume has averaged more than 8 million shares lately, and that's a lot for a stock commanding a $600 million market cap. The good news for those willing to wait is that Inovio was able to raise enough money last month to likely see it through at least 2017. That's a pretty big deal since biotech upstarts often have to deal with cash burn rates as much as the treatments that they're actually working on.

Harmonic  (NASDAQ: HLIT  ) -- $6.72
You can find companies that are starting to put it all together in the bargain-priced bin. Harmonic seems to be doing more than a few things right. It has posted better-than-expected earnings in its three past quarters, and the growth trajectory on the bottom line is encouraging. Wall Street sees a profit of $0.29 a share this year after posting net income of $0.17 per share last year. They see earnings of $0.37 per share come next year.

Harmonic helps video content creators and distributors in creating, preparing, and delivering programming for television and new media platforms. It reports tomorrow afternoon, giving Harmonic a good shot at stretching its streak of market-thumping results to four quarters in a row.

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.

6 More Stock Picks Poised for Incredible Growth
They said it couldn't be done. But David Gardner has proved them wrong time and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, one of his favorite stocks recently became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.


Read/Post Comments (2) | Recommend This Article (7)

Comments from our Foolish Readers

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 April 22, 2014, at 1:40 PM, AnsgarJohn wrote:

    Why is $HERB trading in single digits?

  • Report this Comment On April 23, 2014, at 5:42 PM, davidscott1 wrote:

    Plug Power came into greater prominence when the company announced in late February that a deal

    has been reached with Wal-Mart Stores Inc. to provide the largest retailer in the world with 1,738

    GenKey fuel cells. http://goo.gl/65ZLcf

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2921927, ~/Articles/ArticleHandler.aspx, 10/30/2014 12:47:19 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement