No mention of the COVID-19 pandemic should begin without acknowledging the devastating effect it has had on our lives as we work, first and foremost, to keep ourselves and our loved ones safe. In turn, it has also had a major effect on the economy, the markets, and businesses -- big and small.
While the stock market is gradually climbing up from its lows, many good, solid companies have seen their stocks plummet to near all-time lows. Here are three good stocks trading at $5 or below that investors would be smart to consider -- Ford Motor Company (F 1.21%), Sirius XM Holdings (SIRI), and B2Gold (BTG).
It might seem unlikely that this automobile manufacturing giant is trading at about $5 per share, but that is indeed the case. Ford has had its share of problems over the years, but it has been moving in the right direction under new CEO Jim Hackett. It has improved its balance sheet, with $22.3 billion in cash at the end of 2019, and focused on revamping and modernizing its lineup of cars and trucks with a big focus on electric vehicles, as my colleague John Rosevear recently pointed out. It also ramped up a strategy to boost sales in China.
Then came the coronavirus, and all of a sudden, the best-laid plans were thrown to the wayside as factories shut down and sales plummeted. The stock price has dropped almost 50% year to date. But the business got a boost when it was awarded, along with General Electric, a $336 million contract from the Department of Health and Human Services to produce 50,000 ventilators to treat COVID-19 patients. This should help stem some of the revenue loss in the second quarter, along with an expected sales increase in China as that market starts opening up. Plus, that great liquidity that Hackett built up will help the company through this downtime. Ultimately, things will return to normal and Ford should continue on the road to recovery that it had been on, making it a good long-term buy.
Sirius XM Holdings
Satellite radio provider Sirius XM is down 30% this year, with just about all of the decline coming after the coronavirus took hold in the United States in February. As my Foolish colleague Rick Munarriz wrote recently, Sirius XM has suffered directly from the pandemic as new car sales, a significant source of new subscribers, have dried up and some existing subscribers are trimming costs to save money during the economic downturn. Many people listen when they commute, so if they're not commuting, why continue to subscribe?
Those numbers should both bounce back as the recovery begins to take hold. Sirius XM has been one of the steadiest performers out there and has a great long-term track record. It has not had a negative annual return in 12 years. This may be the first since 2008, but as Munarriz pointed out, some analysts expect the stock price to move up to $6 per share by the end of year. At Tuesday's closing price of $5 per share, it remains a great buy.
Unlike the other two, B2Gold, a Vancouver-based gold producer, is enjoying positive returns this year. The stock price was up 14% as of Tuesday's close. The company's success is due to a couple of factors. Gold prices are up over $1,700 an ounce, which is the highest since 2013. Prices are up over 13% this year, and analysts expect it to go higher and potentially reach over $1,800 an ounce -- and possibly higher -- by the end of the year. Prices are rising due to the coronavirus as investors seek out a safe haven.
B2Gold operates three gold mines in Mali, Namibia, and the Philippines and has several exploration and development projects in Colombia, the Philippines, Mali, and Namibia. In April, B2Gold reported record production in the first quarter, producing 262,632 ounces, and record revenue of $380 million, a 44% increase over the first quarter of 2019. The company also improved its cash position in the quarter and, based on a gold price of $1,500 per ounce, would generate more than $700 million in cash flow for the rest of 2020.
From 2020 through 2024, the company expects gold production to average 950,000 ounces per year with an all-in sustaining cost (AISC) -- the cost of producing an ounce -- averaging $825 per ounce, which is well below the price. With gold prices expected to continue to rise in a low interest rate and economic slowdown, expect B2Gold to continue to rise for some time.