The sharp correction in growth stocks finds some surprising names exchanging hands at low price points. There are now more than 950 stocks with market caps north of $300 million trading in the single digits on stateside exchanges. Many -- if not most -- of them won't bounce back. Let's take a look at some of the names that could recover.
Sirius XM (SIRI), Palantir (PLTR -0.23%), and Velo3D (VLD -2.29%) are out of favor, but these three low-priced stocks seem to have more upside than downside at this point. Let's see why they are some of top stocks going for less than $10 right now.
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Sirius XM
It would seem as if satellite radio has been dealt a bad hand since 2020. The initial phase of the pandemic kept our cars idle with stay-at-home orders. Canceling our premium in-car services must have come naturally. We're out and about again, but high car prices and lofty gas prices are keeping us from taking the wheel.
Sirius XM is holding up better than you would probably expect. There are now 32 million self-pay subscribers on the platform, up from just 30 million at the start of 2020. Trailing revenue is rising slightly faster, up 14% to nearly $8.7 billion in that time. If Sirius XM is growing in this challenging climate, can you imagine how it will fare when it's firing on all cylinders?
The only game in town when it comes to satellite radio is a money machine. It expects to generate $1.55 billion in free cash flow, and it's doing a great job in returning money to its shareholders. The stock's 1.4% yield may not seem like much, but Sirius XM has been a voracious eater of its own stock. The 4.1 billion shares outstanding now may seem like a lot, but Sirius XM has repurchased 40% of its shares over the past decade.
Palantir
Palantir traded as high as $45 early last year, a few months after going public. It's now in the single digits. Investors have lost interest in the defense and commercial data analytics company that was a big data unicorn ahead of its market debut.
Revenue growth may be decelerating -- going from a 47% top-line surge in 2020 to 41% last year -- but it's still clocking in with year-over-year growth north of 30% in recent quarters. Demand is certainly there for Palantir from businesses and the public sector hungry for ways to turn their data into actionable information.
Palantir is now profitable on an adjusted basis, and top-line growth should stabilize here. The company expects annual revenue growth of 30% or better through at least 2025. As a result of its cash-rich balance sheet, Palantir is fetching an enterprise value that is just 10 times its trailing revenue.
Velo3D
A smaller recent debutante with a cash-flush balance sheet is Velo3D. Nearly half of its current $350 million market cap is backed by its net-cash position. Velo3D isn't a household name, and it will probably never be. It provides 3D printing solutions for the heavy machinery market.
Companies in the aerospace, aviation, industrial power, and oil and gas industries turn to Velo3D's Sapphire platform for their additive manufacturing needs when it comes to metal parts. Velo3D has boosted its chances to land deals with the recent introduction of Sapphire XC, which generates mission-critical parts faster and cheaper than its previous model.
Business is booming. Guidance calls for $89 million in revenue, more than tripling the $27.4 million it delivered last year. It's a small number, but we're talking about an enterprise value that is less than twice that top-line target. With Velo3D growing its client list, as well as its international reach, it's playing an important role behind the scenes of industrial giants.
