A $10 bill can go a long way these days. Many investors tend to think that the universe of low-priced stocks is a speculative cesspool, stocked only with obscure companies that are there for a reason. However, there are plenty of household names and potentially promising investments there for the fishing -- if you're patient enough.
Vipshop Holdings (NYSE:VIPS), Ford (NYSE:F), and Sirius XM Holdings (NASDAQ:SIRI) are three of the stocks currently trading in the single digits that stand a good chance of breaking out. Let's go over why they're trading this low and what it will take to get them back over the $10 mark.
There was a time when Vipshop Holdings was the market's shiniest star, more than doubling for three consecutive years between 2012 and 2014. It's a different story these days for the Chinese online discounter of brand-name apparel. Revenue growth has decelerated for 11 consecutive quarters, slowing to a 7% increase its latest quarter.
The bottom line was a more challenging situation for Vipshop. Margins were getting squeezed as it was resorting to heavy promotional activity to boost its flash sales, along with investments in infrastructure to improve its fulfillment. It wasn't until earlier this year that earnings started growing faster than Vipshop's top line.
There's a lot to like at Vipshop. It recently closed on a $422 million deal for a growing chain of retail outlet shopping centers, a move that will help it reach deeper for its consumers. The stock is also surprisingly cheap, now fetching less than 10 times next year's expected earnings.
Ford has been weaving in and out of the single digits like one of its cars on a test track course. It dipped below $10 again late last week after the company posted mixed financial results. Revenue beat expectations but was actually slightly below where it was a year earlier. Adjusted earnings rose marginally but fell short of expectations.
There are plenty of problematic trends working against automakers these days. Fewer people are driving, given the popularity of ridesharing services, and young consumers are deciding they can save on car payments and deploy that money elsewhere. Ford has also struggled within its industry. However, Ford continues to be an iconic brand in its industry. Ford is also beefing up its product lines between now and next year, and it's showing signs of bottoming out in China. Patient investors, meanwhile, are handsomely rewarded by the stock's beefy 6.3% yield.
Sirius XM Radio
Satellite radio has never been as popular as it is right now. There were 29.1 million self-pay subscribers and 34.2 million total subscribers at the end of March for Sirius XM's namesake premium radio platform, and we'll find out on Tuesday if subs are still hitting fresh highs. Sirius XM was a speculative investment a decade ago, but it's surprisingly smooth these days. The satellite-radio giant is consistently profitable and coming through with modest revenue gains.
Sirius XM also shells out a steady and growing quarterly dividend, but the appeal is going to be how well it integrates the Pandora acquisition it completed earlier this year. Sirius XM is now a major player in satellite radio and streaming, and it will be interesting to see how it can capitalize on the corporate combination in the next few quarters.