The BlackBerry PassPort. Source: BlackBerry.
For many investors, cheap stocks can be alluring. Those trading for less than $10 per share are often prone to volatility, which may be attractive to some, and their inexpensive sticker prices make it possible for investors with just a few thousand dollars to scoop up hundreds of shares.
While one rarely finds blue chip companies trading so cheaply (except in times of extreme economic turmoil), investors interested in such firms still have quite a few stocks to choose from. Groupon (GRPN +0.83%), Sprint (S +0.00%), and BlackBerry (BBRY +2.87%) currently trade for less than $10 per share, and while they don't dominate their respective industries by any means, all could offer more adventurous investors potential upside.
The daily deals giant is no more
Throughout its relatively short history, Groupon has been a source of both controversy and excitement. The company got its start as a daily deals website, offering a different coupon each day to a group of buyers eager to save money. The model proved immensely attractive -- at one point, Groupon was the fastest-growing company in history -- but short lived. Competition intensified, and the trend in general proved to be something of a fad. Groupon stock plunged in the months following its public debut, and its CEO was eventually ousted.
Since then, the company has been working to retool, transforming itself into a deals platform and mobile app where customers can come to pursue long-lasting deals and discounted goods. Results have been mixed, but it's found some success recently. Last quarter, Groupon posted 4% global revenue growth, exceeding analyst expectations, and raised its outlook for its full-year performance.
More recently, Groupon has attracted the interest of outside investors. In February, China's Alibaba disclosed that it had purchased a 5.6% stake in the firm. It's a passive investment, and it isn't significant, but it suggests that the Chinese e-commerce giant may see something it likes in Groupon's potential and depressed valuation.
The nation's fourth-largest wireless carrier
Sprint was once the nation's third-largest wireless carrier, but was overtaken by fast-growing rival T-Mobile last year. The company, which is controlled by Japan's SoftBank, has found it difficult to compete with its larger rivals, as its network still suffers from sluggish speeds and poor coverage in many areas. In order to retain its base of subscribers, Sprint has pursued aggressive promotions in recent months, offering discounts to those who would switch to its network.
It may be working. Last quarter, Sprint reported its highest postpaid phone additions in three years, and its lowest-ever third-quarter postpaid churn. Postpaid customers are the most creditworthy and valuable customers in the wireless business, and a growing base of them could help Sprint turn its performance around. The Sprint platform added just over 366,000 postpaid phones in the third quarter, up from a loss of 205,000 in the same quarter last year. Its postpaid phone churn (the percentage of customers leaving its network) declined 68 basis points to 1.62%, the best annual improvement in 12 years.
Sprint is still losing money, but management expects the firm's situation to improve in the quarters ahead. Previously, the company had expected to post an operating loss of $50 million to $250 million in its fiscal year 2015, but now expects to generate operating income of $100 million to $300 million.
Forget about smartphones
Like Sprint, BlackBerry has fallen on hard times in recent years, but shows some signs of positive momentum. The company's BlackBerry smartphone platform has long since ceded its dominant position to iOS and Android, but the Canadian mobile giant could reward investors as a hardware OEM and enterprise software player.
BlackBerry's management has continued to insist that it will support its own proprietary mobile operating system, BB10, but has simultaneously begun investing in Android. Its first Android-powered smartphone, the BlackBerry Priv, received fairly strong reviews when it went on sale last fall, and the company has promised that more Android phones are in the pipeline. The Android market is competitive, but the BlackBerry brand has a reputation for security. That, combined with its trademark hardware keyboard, could give it a sizable niche within the Android sphere.
More interesting could be BlackBerry's enterprise software ambitions. The company has undertaken something of a shopping spree in recent quarters, snatching up companies with applications designed for mobile enterprise users. In September, BlackBerry purchased Good Technology, a former competitor that offered mobile device security solutions to enterprise customers. Other recent mobile security acquisitions have included WatchDox and Secusmart. In the past, BlackBerry sold enterprise customers its secure devices. Now, it will offer them security services across a wide range of platforms. BlackBerry's adjusted software and services revenue rose 183% on an annual basis last quarter, and 119% sequentially. It now accounts for more than 28% of BlackBerry's sales.
BlackBerry isn't profitable, but the company is generating positive free cash flow and adjusted EBITDA, and expects to do so for the foreseeable future.
