If you have 10 bucks, then I have some stock ideas for you.
I've been singling out attractive opportunities in low-priced stocks since my original "5 Stocks Under $10" column a dozen years ago, and I've seen plenty of stocks with pocket-change prices generate incredible gains.
There are risks, and they are readily apparent, given the recent volatility. There are often good reasons for stocks to be ignored or beaten down. However, a market rally can work wonders for the unloved with positive catalysts in their pockets.
Let's go over my five picks from March 2009 -- when low-priced stocks bottomed out -- to prove my point.
Jan. 17, 2014
March 13, 2009
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The average gain of 642% in five years is pretty remarkable.
Let's go over this month's picks.
Huntington Bancshares (NASDAQ: HBAN) -- $9.63
There are only four stocks in the S&P 500 currently trading in the single digits, and Huntington is the only one that's expected to grow its revenue in 2014.
The regional banker with 700 retail branches across Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky is in good shape. It announced encouraging financial results last week, capping off 2013 with an 8% increase in tangible book value per share.
Huntington's a steady performer, and it managed to beat Wall Street's profit expectations every single quarter in 2013. Its $0.05-per-share quarterly dividend may not seem like much, but it does add up to a yield north of 2%, given its single-digit share price.
China Ming Yang Wind Power Group (NYSE: MY) -- $2.72
Shares of this Chinese wind-turbine maker more than doubled last year as orders spiked nicely higher and it powered its way closer to profitability.
As far as clean energy goes, wind isn't as prolific as solar. It's also naturally not as popular as more conventional energy sources. However, demand for China Ming Yang Wind Power's wind turbines continues to build, up 39% through the first nine months of 2013 with 1.04 gigawatts worth of signed orders. It's also starting to receive more orders outside of China, and there's potential as it ramps up offshore wind power solutions.
China Ming Yang Wind Power isn't widely followed. There were just two analysts asking questions at its most recent earnings call, and the first merely wanted to know when the it would turn profitable. It didn't provide an explicit answer, but did point to the improving pricing that's reflected in its gross margins in recent quarters.
Pretium Resources (NYSE: PVG) -- $6
Gold took a big hit last year after several years of ascending prices. The decline has naturally weighed on gold miners, with their fixed procurement costs, but it still makes this an opportune time to buy into the sector while it's out of favor.
Pretium turned heads late last year when a bulk sample test taken from its Valley of the Kings mine produced more gold -- 16 grams of gold per ton -- than the 13 grams per ton that it was originally targeting. The move came as a big surprise, since a third party hired to survey the mine's potential had walked off the job a month earlier warning that Pretium's claims were exaggerated.
Pretium appears to be having the last laugh for now. This is a risky play on a young mine, but it could pay off handsomely if the mine delivers as the price of gold recovers this year.
inContact (NASDAQ: SAAS) -- $9.16
There are plenty of tech companies thriving in the cloud as software-as-a-service -- or SaaS -- grows in popularity, but there's only one company that owns the acronym as its ticker symbol.
As a provider of cloud-based software solutions to call centers, inContact has been able to post steady growth in revenue. Analysts see inContact's top line growing 18% last year and accelerating to a 19% boost in 2014. The problem here has been a lack of profitability, but inContact's been posting narrower-than-expected deficits in three of its past four quarters.
The stock rose 51% last year, and it's already up 17% so far this year. Profitability would be nice, but that is still likely a couple of years away.
Higher One (NYSE: ONE) -- $8.18
College is a time of fiscal responsibility, and Higher One has been able to carve a cozy niche by teaming up with higher learning institutions to serve as a financial bridge between students and administrators to lower administrative costs and improve retention. What started out as simply a way for students to get their refunds and other disbursements processed sooner has evolved into a popular financial platform where money and data move more efficiently for both students and info-hungry administrators.
Higher One isn't perfect. Growth has slowed dramatically, disappointing investors along the way. However, right now Higher One is too attractively priced to ignore, at less than 13 times this year's projected profitability.
Five for the road
These five stocks aren't trading in the single digits by accident. If I'm right about the catalysts, though, they may not be trading in the single digits for too much longer.
Finding promising stocks while they're still cutting their baby teeth is at the heart of the Rule Breakers newsletter that I write for. You can check it out for free this month with a 30-day trial subscription. There are several active stock recommendations in the growth stock research service trading for less than $10 at the moment. Check those out, and I'll be back with more on the third Monday of next month.