Ten bucks may be enough to buy you a digital album on iTunes or a pair of fast-food value meals, but it usually doesn't add up to a whole lot on Wall Street. I can't change that reality, but I have been running an annual "10 Under $10" series since 2001 to help showcase some of the intriguing stocks out there trading in the single digits.
Then, two months ago, the annual installments became third-Monday-of-every-month installments. What day is it today? Right. It's stock-pickin' time.
Before I get into the five stocks for the month, let me repeat my warning about due diligence. It is important to always do your own homework, but even more so when we're talking about risky low-priced equities.
Got that? OK, let's go.
IMAX (Nasdaq: IMAX ) -- $4.66
Big screens. Little share price. Even though moviegoers flocked to see Beowulf in its inspiring IMAX incarnation over the weekend, investors are still shunning IMAX the stock as if it were Pluto Nash showing on the big, big screen.
IMAX deserves a lot of the treatment it's getting. The company has suffered through lumpy profitability, accounting hiccups, and rudderless management. Its third-quarter report earlier this month wasn't exactly titillating. The one constant is that the company's installed base continues to grow and, with it, the money that IMAX makes from releasing Hollywood flicks on its bigger-than-life theater systems.
Whether IMAX stumbles its way toward the promised land or finds a sugar-daddy suitor, the Motley Fool Rule Breakers newsletter recommendation remains a disruptive force in a lethargic industry that can use a little disrupting.
eLong (Nasdaq: LONG ) -- $8.02
Being a travel portal in China can be a beautiful thing. Just check with Ctrip.com (Nasdaq: CTRP ) shareholders. Unfortunately, the already small eLong continues to lose market share to the larger Ctrip.
eLong's latest quarterly report is emblematic of its relative misfortune -- a small profit turned into a small loss. Despite the economic boom within China, eLong grew its top line by a mere 8% during the period.
So why is eLong even on this list? Well, its balance sheet is holding $6.23 per American Depositary Share in cash. The company also brought in a new CEO. He's young but pedigreed. Then you have the upcoming Olympic Games in Beijing. There's just no way that eLong can mess that one up.
The Orchard (Nasdaq: ORCD ) -- $7.46
If you can't beat the iPod, you may as well ride its coattails. The Orchard is a leading distributor of music through digital channels -- including Apple's iTunes Music Store, its largest source of revenue. The Orchard was privately held, but then it combined with the smaller -- yet publicly traded -- Digital Music Group last week.
Each company watched over a growing library of content creators, so one should expect the similar models to combine into a company with healthier operating results. Digital Music Group never delivered profitability, but now that The Orchard is in the mix, it stands a better shot at earning the market's respect.
The market ignored last week's birthing of The Orchard. I'm guessing that the market will ultimately come around if the company's financials live up to the potential.
Jupitermedia (Nasdaq: JUPM ) -- $3.85
Jupitermedia has had a rough year. Ever since negotiations to be acquired by Getty Images broke off earlier this year, the stock has surrendered more than half of its value.
Deriving 77% of its revenue -- and a larger chunk of its operating profit -- from its digital-images business, Jupitermedia would have been a perfect fit with market leader Getty. However, Getty's loss can be your bargain-bin gain.
Despite its price tag, Jupitermedia remains profitable. It earned $0.02 a share before charges from continuing operations this past quarter, and it's looking to earn the same amount in the current quarter.
More than just a source for website publishers to secure millions of royalty-free images, Jupitermedia runs several career-oriented websites, including the recently acquired MediaBistro.com. Growth has been anemic, but profitability will keep it floating as it tries to make Getty regret its decision.
Caribou Coffee (Nasdaq: CBOU ) -- $4.87
Caribou is no Starbucks. Given its recent financials, it's no Peet's (Nasdaq: PEET ) , either. Yet it's still a recognized brand in the premium coffeehouse niche, and it trades at a price where you can swap single shares for the price of a double latte.
Caribou watches over a chain of 473 namesake stores, most of them company-owned. You may also find Caribou products at your local grocer -- and don't stop at the beans. Try the coffee-coated granola bars.
Caribou isn't profitable, unlike Starbucks and Peet's. EBITDA has been slashed in half through the first three quarters of 2007. Bears hunting Caribou have been rewarded in the past.
So why bother? Well, change is on the way. The company's CEO resigned last week. Pursuing new licensing opportunities and turning to higher-margin franchisees for expansion is a sound recipe to turn the company around.
Five for the road
The risks are significant with these five companies. Just one is profitable, though all but IMAX are growing their top lines -- and even with IMAX, its film-based revenue continues to grow. They won't all succeed, but a big winner or two can offset the failures elsewhere.
Finding promising stocks while they're still cutting their baby teeth is the philosophy at the heart of the Rule Breakers newsletter. You can check it out for free with a 30-day trial subscription. There are seven active stock recommendations in the growth-stock research service trading for less than $10 at the moment. That includes IMAX. Check those out, and I'll be back with more next month.
Check out other installments in this series: