Big things can come from stocks with small price tags. Low-priced stocks are risky, of course, but there's also plenty of upside when some of these neglected and out-of-favor investments earn their way back up.
There are plenty of stocks trading in the single digits, but some of them have clearer catalysts for a potential pop. Let's take a closer look at Groupon (GRPN -9.62%), Trivago (TRVG), and GoPro (GPRO -0.56%), three names that could be among the top stocks trading under $10 a share.
Image source: GoPro.
Groupon
The top dog in daily deals is rewarding bargain hunters that approached the stock as an opportunistic investment this summer. Shares of Groupon have soared 60% since bottoming out in June, but it's still trading for less than a combo meal.
Groupon is coming off of its third straight profitable quarter. Revenue may be declining as it retreats out of poorly performing international markets and less profitable domestic categories, making this a great example of a company that's making more out of less.
Getting back to basics is paying off. Analysts see profitability continuing to scale, rising from $0.12 a share this year to $0.16 a share come 2018. They also see a return to modest top-line growth starting next year. We're a nation of deal seekers, and Groupon's audience of 31.9 million in North American and growing is worth watching.
Trivago
Let's go from a company that's roaring back in Groupon to one that has fallen into our single-digit price-scouring lap in Trivago. The metasearch travel portal specializing in lodging went public at $11 late last year, trading as high as $24.27 this summer on its impressive growth relative to other publicly traded travel sites.
Shares of Trivago started to slip on concerns about growth and its heavy concentration of advertisers. Back in early August Trivago was sticking to its earlier forecast of 50% revenue growth for all of 2017, but that was pared back to 40% last month. It also warned that EBITDA would be lower relative to last year. The latest dagger came earlier this week when it revealed that it's now targeting just 36% to 39% top-line growth in 2017. Most online travel sites would love to grow at that pace, but this is a company that had grown its revenue at a 67% pace through the first half of 2017. Revenue decelerated sharply to 17%, suggesting further deterioration in the current quarter. Trivago is also warning of a challenging first half of 2018.
Things look pretty bad for Trivago, and with average revenue per qualified referral slipping and its largest advertisers scaling back their reliance on the platform the stock fell into the single digits for the first time ever on Wednesday. Trivago is now the latest broken IPO, but the monetization and growth challenges offer an opportunity for opportunistic investors to grab a piece of a global juggernaut that's an online leader in generating booking leads for the hotel industry.
GoPro
After back-to-back years of losing more than half of its value, GoPro stock is finally trading higher in 2017. The company behind the namesake wearable cameras is growing again, and last year's miscues with its delayed and ultimately fumbled drone rollout are fading in the rearview mirror.
GoPro has now come through with three straight quarters of double-digit percentage growth, and while that is coming off of depressed levels a year ago it's at least moving in the right direction. Longbow analyst Joe Wittine seems to think so, he upgraded the stock last week. Wittine feels that the stock is a compelling value at current levels in light of its execution improvements.
The long-term future of wearable cameras is debatable, but that brings us to next month's debut of Fusion, GoPro's first 360-degree camera. Whether it's a game changer or merely a new product line to drive incremental sales, Fusion could team up with last month's rollout of GoPro's flagship Hero 6 camera to deliver a monster holiday quarter for investors.
