Since I've committed to reviving the annual 10 Under $10 series that dates back to 2001 with monthly installments, I guess a quick review of last month's picks is in order. It illustrates the inherent risks of panning for gold in the shallow, single-digit waters.
|
9/14/07 |
10/12/07 |
Gain/Loss |
|
|---|---|---|---|
|
Sun Microsystems |
$5.73 |
$6.23 |
9% |
|
Sirius |
$3.52 |
$3.54 |
1% |
|
Secure Computing |
$9.18 |
$10.23 |
11% |
|
Candela |
$7.45 |
$7.96 |
7% |
|
MIVA |
$4.66 |
$3.05 |
(35%) |
Four of the five are trading higher, but the holdout -- online advertising specialist MIVA -- fell sharply when it hosed down its near-term outlook. One huge winner can offset a portfolio of stinkers, but sometimes one huge stinker can sink a portfolio of steady performers.
So let's move on to this month's batch of compelling stocks trading for less than $10 a pop.
LivePerson
Selling online isn't always easy. Old-school shoppers are uncomfortable doing business with a server farm and even savvy cyberspace pros sometimes need answers that aren't readily available. LivePerson is there to engage the potential shopper, providing human customer service before the fence-straddling visitor clicks away.
If it sounds hokey to see the LivePerson options on a website, e-commerce would have to disagree with you. LivePerson grew its top line by 57% year over year this past quarter. The company has been consistently profitable for years. It's a growing company in a growing field at an eye-opening price.
Bluegreen
Like its multicolored moniker, Bluegreen comes in two colors. On the one hand you have a thriving timeshare business, growing nicely as it posts record sales. Then you have the paler hue of residential communities, where Bluegreen has felt the real estate weakness even though that subsidiary is still notching a profit.
So forget the homebuilders posting steep losses. Bluegreen is comfortably in the black, trading at just 7 times earnings (on both a trailing and next-year basis). Bluegreen trades at a healthy discount to its $11.70 in book value. Sure, homebuilder bulls have been burned on stocks with melting shareholder equity, but Bluegreen's book value has actually grown over the past year.
While there are concerns that a struggling developer -- Levitt
Circuit
City
I didn't think that I would see consumer electronics superstore chain Circuit City fall back into the single digits. The company has certainly struggled lately. From layoffs to retail softness, Circuit City has failed to make the most of the popularity of electronic gizmos, gadgetry, and huge flat-screen televisions.
The upside here is that Circuit City has fans out there, even if it blows it. The company received buyout offers at $8 back in 2003 and for $17 two years ago. It turned the offers down. It has only gotten stronger since then, leading the home theater movement with its firedog service and installation offering.
CNET
Buyout speculation is beginning to swirl around CNET again. Like Circuit City, a potential buyer is never reason alone to buy into a company. Diving into CNET entails an appreciation for its valuable collection of developed websites and juicy domain names.
Whether it's the company's Gamespot website for diehard video gamers or its TV.com hub for couch potatoes, CNET's got something for everybody. Yes, page views haven't kept pace with the market in recent quarters, but a new hit site or two can go a long way to improve CNET's chances if a buyout at a premium doesn't come first.
Six Flags
You know the chain of regional amusement parks. You probably didn't know that you could buy a share for what a large soda will run you once you step through one of its turnstiles.
Now take a step back and look at the bigger picture. If you pull up a five-year chart, you will find that the stock has bounced back nicely the three other times that it has dipped below the $4 mark. Now you have to factor in the family-friendly remodeling that is driving per-capita spending higher, although it will take at least another year before young families trust the brand again.
I'm not all that optimistic about the upcoming quarterly report, but I became a shareholder over the summer, convinced that the shares will be sharply higher after Mark Shapiro's third season at the helm.
Five for the road
Obviously I don't expect all five of these stocks to take off like bottle rockets. You're taking chances at this level. The key is to hope that a single winner or two is able to more than offset potential losses elsewhere.
Finding promising stocks while they're still cutting their baby teeth is at the heart of the Motley Fool Rule Breakers newsletter. You can check it out for free with a 30-day trial subscription. There are six 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 next month.
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