In theory, it shouldn't matter. In the same sense that two $10 bills are the same as one $20 bill, two shares of a $10 stock is the equivalent to one share of a $20 stock. In fact, companies can raise or lower their share price on a whim just by simply splitting or reverse-splitting their stock. You're investing in a company rather than a stock that fits a particular profile.
Nevertheless, there's just something about lower-priced stocks for companies that compels. To the extent it matters anymore -- which isn't much -- it's certainly easier to acquire a true "round lot," or 100 shares of a stock that used to be easier to buy and sell. There's also some broad evidence suggesting lower-priced equities perform better than higher-priced tickers, even if it's greater volatility doing the bulk of that heavy lifting.
With all that as the backdrop, here's a rundown of three of the market's top prospects among stocks currently trading at less than $10 per share.
1. Sirius XM: Currently trading around $7.18 a share
It seems incredible that in the era of wireless internet, a satellite radio company would still be necessary. Yet, Sirius XM (NASDAQ:SIRI) is not only surviving, but it's also thriving. Its single-digit revenue and profit growth pace are far from thrilling, but it's reliable growth with more of the same on the way. The company reached new record levels of subscribers again last year.
It's a testament to how well the organization has adapted, not just to new, rival technologies, but to the kinds of audio content consumers want, and how they want it. Even before it acquired internet radio platform Pandora, for instance, it offered online access to its programming available to satellite subscribers. Sirius XM has also forged relationships with the likes of the NBA, hip-hop festival Rolling Loud, and a slew of groups ranging from Coldplay to The Chainsmokers as a means of bringing more exclusive content to its customers.
It seems to be one step ahead of competitors, enjoying consistent positive cash flow that provides the company with the time and flexibility it needs to remain on the cutting edge of the industry.
2. FS KKR Capital: Currently trading around $6.30 a share
At first blush, FS KKR Capital (NYSE:FSK) may look like any other business development company (BDC). The organization provides cash to young, promising companies that need it -- usually as a loan -- which in turn generates the cash flow passed along to shareholders in the form of healthy dividends. Its current dividend yield of 12.1% is far better than the average dividend payer and one of the highest in the BDC industry, and it's not failed to pay a reasonably healthy dividend in any quarter since 2009.
There's more to the investment than meets the eye, however. FS KKR Capital is the result of a 2018 union between a fund managed by Philadelphia's alternative investment manager FS Investments and Corporate Capital Trust, the former of which also has relationships with other BDCs and credit companies with a moniker that includes KKR. The parent company itself, in fact, now manages two of the three biggest BDCs, and with the close ties among the parent and its publicly traded partner companies still in place, FS KKR Capital has above-average access to prospects that otherwise might be out of reach.
3. Zynga: Currently trading around $6.82 a share
Finally, mobile game publisher Zynga (NASDAQ:ZNGA) is shaping up again as a name worth owning that doesn't cost a lot.
That wasn't always the case. While the company got started with a bang on the heels of hits like Farmville and Mafia Wars, the proliferation of smartphones largely left Zynga behind, taking a toll on the stock's value. It wasn't until former Electronic Arts executive Frank Gibeau took the helm as CEO in 2016 that it was able to regroup, and it wasn't until 2017 that investors were able to buy into the idea that Gibeau's vision was on target. That's when the game company's top line took a turn for the better, driving Zynga out of the red and into the black.
There's still the occasional stumble. But the ongoing growth of mobile games driven by faster connections and increasingly powerful mobile technology is a shift Gibeau has been counting on. Analysts are starting to take notice of the company's preparedness, too. KeyBanc's Tyler Parker noted in a report this week: "We believe the mobile gaming market is attractive given the strong growth expected over the next few years, which should benefit scale mobile-first publishers," pointing to Zynga's "proven brands and a deep pipeline" as the basis for his new overweight rating of Zynga shares.