To be clear, share price generally doesn't matter.
Whether a stock is trading at $10 or $100, the earnings power of the company is a far more important metric. Although cheaper stocks allow individual investors to buy more shares, the number of shares an individual shareholder owns is less important than their overall ownership stake. An investor who owns a single share of an extremely expensive stock may own more of that company, percentage-wise, than someone who owns many shares of a company with a much cheaper stock.
Still, for many investors, there's something alluring about cheap stocks -- perhaps it's because they're often more volatile. If you happen to fall into that camp, there are a fair number of promising tech stocks to choose from. Below are three whose shares are currently trading for less than $10.
BlackBerry has certainly seen better days
It wasn't that long ago that Canadian handset maker BlackBerry (BB 3.21%) ruled the smartphone market. But today, its handsets are basically irrelevant -- rarely seen even in boardrooms. Still, trading at around $9 per share, BlackBerry is one of the more interesting cheap tech stocks out there. BlackBerry has a number of notable aspects that could eventually overshadow its declining handset business.
Its mobile messaging platform, BBM, faces intense competition, but has around 100 million active users. WhatsApp, a similar service, had about 450 million users when it sold for $19 billion last year. Obviously, BBM isn't worth $19 billion, but it could be worth a fair amount to the right buyer. BlackBerry's current market cap is less than $5 billion, and it has more than $3 billion of cash, so the market may be dramatically undervaluing BBM.
BlackBerry's embedded operating system, QNX, is becoming a popular platform for automotive manufacturers. In December, Ford announced that it would use QNX to power its infotainment system, Sync. And while BlackBerry isn't selling as many of its handsets to enterprise users, it has a number of enterprise mobility software apps, such as WorkLife, that work across all major mobile platforms. Longer-term, it has Project Ion, its play on the Internet of Things.
Frontier Communications pays an enormous dividend
Telecom provider Frontier Communications (FTR) makes this list because of its attractive dividend. Frontier's dividend yield has come down significantly in recent years as its share price has appreciated, but if you're looking for a low-cost stock with a solid dividend, it's hard to find anything better. Frontier yields about 5.7%.
Frontier's principal business centers on providing broadband services to customers in smaller markets. Last year, it acquired AT&T's U-Verse video and broadband business in Connecticut, and earlier this year it announced a deal with Verizon to purchase wireline assets and its FiOS business in California, Florida, and Texas. Frontier had roughly 3.5 million customers at the end of 2014, including about 2.4 million broadband subscribers -- a number that should nearly double after the Verizon deal closes.
Frontier, however, is significantly leveraged, with about $10 billion worth of debt and less than $700 million in cash. But it generated about $800 million in free cash flow last year, and it expects to do the same in 2015.
Zynga is in the midst of a turnaround
Social gaming giant Zynga (ZNGA) has been, to put it bluntly, a mess since it entered the public markets in late 2011. Its business model -- social games built on top of Facebook's platform -- proved to be transitory, as many of the casual gamers who lapped up Zynga's titles shifted to mobile platforms and app-based gameplay in recent years. In an attempt to catch up, Zynga purchased OMGPOP in 2012, but the acquisition to proved to be a disaster, and Zynga later shuttered the company outright.
In 2013, Zynga hired Don Mattrick away from Microsoft. The former Xbox head has been attempting to turn the troubled company around ever since. Almost two years later, Mattrick is still chasing that turnaround. The company's share price has remained depressed -- hovering around $2.80 -- as its performance has stalled. Zynga's revenue actually declined on an annual basis last year.
But there are some positive signs. Zynga is slowly transitioning its business to mobile, and expects that about three-quarters of its bookings will come from mobile platforms by the end of next year. As a game creator, Zynga's success will depend on its ability to create attractive new titles, and it could have a winner on its hands in the form of its upcoming game, Dawn of Titans.
Titans doesn't have an official release date, but should debut sometime this year. The game certainly looks impressive, with highly detailed graphics unusual for a mobile game. If it proves to be a success -- on the level of Clash of Clans -- it could propel Zynga's stock in the months ahead.
