Penny stocks tend not to live up to the hype that draws investors to them. But that doesn't mean anyone has to shell out a ton of dough just to buy more than a few shares of a great company. Plenty of worthy stocks are currently trading for less than $10 each.
If a low-priced stock is more palatable to you than higher-priced one, take a look at ADT (ADT 0.15%), Glu Mobile (GLUU +0.00%), or First BanCorp (FBP 0.49%). All three are compelling prospects, and you can own a full 100-share round lot of each for less than $1,000 apiece.
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Not the ADT you think you know
Share Price: $9.45
You'll almost certainly recognize the name. While it's only been publicly traded since early 2018, it's one of the oldest and biggest names in the home security market. More than 6 million customers across the U.S. rely on the company to keep their homes and businesses protected, making regularly monthly payments for that protection.
It seems like a dying business in light of the do-it-yourself options now available that don't require monthly maintenance fees. But ADT is stepping up its game and earning the right to ask for recurring payments by offering a superior suite of products. For instance, the company offers medical alert solutions for at-risk consumers, and can turn a customer's smartphone into a complete smart home management interface. ADT is even providing mobile security solutions for Lyft drivers.
It's never going to be a high-growth business. But it's a business model that reliably collects recurring revenue, month in and month out. Its third-quarter numbers were down a bit, as the COVID-19 pandemic crimped the need for security systems. Most people were always home, and very few new businesses were being started. Before that quarterly lull, sales growth was the norm, and is expected to return to the norm this year.
That being said, investors may not yet fully appreciate the potential impact of ADT's growth plans. Last year the company disclosed it was working closely with Alphabet's Google to develop new security products to be released later this year. It's not clear exactly what that partnership will lead to, but there's little doubt Google knows how to promote itself.
Glu Mobile is still bargain priced
Share Price: $9.16
Glu Mobile may not be a household name, but there's a good chance your household is familiar with some of Glu Mobile's products. This company is the developer of mobile video games like Disney Sorcerer's Arena, Tap Sports Baseball '20, Deer Hunter, and Diner Dash, just to name a few.
Last year was a good one for the obvious reason. Stuck at home and starved for entertainment, consumers spent an estimated $112 billion on mobile gaming last year, up 25% from 2019's tally, according to mobile app market monitor App Annie. And Glu scored more than its fair share of this new business. Through the three-quarter stretch ending in September, sales are up 34% and gross profits are higher by a similar degree. Its fourth-quarter numbers due on Feb. 9 are expected to continue this trend.
This growth pace isn't going to last forever, of course. The analyst community anticipates this year's sales will only be 9% better than whatever 2020's final tally ends up being. Earnings are projected to improve only slightly more.
Still, Glu Mobile is modestly priced at only 17 times this year's projected per-share earnings despite last year's big bullish run. Given that, in addition to its respectable history of exceeding expectations, this sub-$10 name looks worth a shot.
First BanCorp is snapping back from the pandemic
Share Price: $9.78
Finally, add First BanCorp to your list of great stocks priced below $10.
Odds are slim you've heard of the company, and even slimmer that you're a customer. The regional bank does business as FirstBank Puerto Rico, serving customers through only a few dozen branches located in Puerto Rico, the U.S. Virgin Islands, the British Virgin Islands, and Florida.
The obscurity hasn't shielded the small bank from the impact of the pandemic. Neither has its focus outside of the U.S. Pre-tax income for 2020 has essentially been cut in half after adjusting for Q3's acquisition of Banco Santander Puerto Rico. Like its bigger U.S. bank counterparts, First BanCorp was forced to prepare for the prospective onslaught of soured loans stemming from the coronavirus pandemic.
But as was the case with the big American banks, that meltdown seems to be mostly sidestepped. After earmarking $46.9 million worth of capital in the third quarter for expected credit losses, that figure was dramatically dialed back to a loan-loss provision of only $7.7 million for the fourth quarter. Charge-offs of 0.45% in Q3 fell back to 0.3% during Q4.
Things are going to remain challenging for a while longer, and visibility into the future is minimal. Broadly speaking, however, we're already seeing hints that the worst is behind the banking industry. Analysts are collectively modeling per-share earnings of $1.14 for First BanCorp this year, up 15% from 2020's bottom line, and easily covering the stock's current annualized dividend payout of $0.28 per share.
That dividend, by the way, translates to a healthy yield of 3%.
