If you appreciate the Rule Breakers newsletter service's goal of seeking out superior growth and can accept the risk that comes with buying into low-priced stocks, I won't bother to mince words. I've looked far and wide to find 10 attractive stocks trading in the single digits, but they're often marked down this low for a reason. Keep that in mind. Read my article from last week explaining the thought process that goes into this annual ritual and how the last three lists have panned out.
That said, here's the list.
1. TheKnot.com (OTC BB: KNOT): $6.10. While it's easy to spot the flaw in the wedding resource site's plan -- it's an attractive draw for brides-to-be and nervous grooms-in-waiting for just a sliver of time -- what a great time to have someone's attention. With an audience that's young and ready to spend a ton of money, it's easy to see why online advertising rose by 41% for TheKnot.com last year. It turned a modest profit of $0.06 per share, and I like what I see in the company's recent moves to grow its audience beyond the current 1 million active members.
TheNest.com is the company's new site for newlyweds. It's an underserved and lucrative niche. The company also acquired a pair of dating sites a few months ago. Put together, you have a dynamic company that is now reaching out earlier in the courtship cycle, while also extending its grasp to the other side of "I do."
This year the company is looking for earnings to come in between $0.60 and $0.70 per share with revenues climbing another 39% higher. If the earnings growth seems modest, that's because the company went public in December and will be dividing its profits by 26% more diluted shares. The upside? The IPO has the company sitting on nearly $3 a share in cash.
3. CNET Networks
More like a media company with a dot-com bent, CNET's revenue growth won't blow you away -- it saw the top line climb by 18% last year and it's looking at revenue growth to come in between 17% and 22% in 2005 -- yet it also makes it a more steady play as a casual observer of trends and passing fancies. With the media's gradual migration online a given, CNET's portfolio of interlocked properties is right smack dab in the middle of where an investor would want to be.
While the new massively multiplayer online game, APB, won't hit the market for another two years, the company's cash-rich balance sheet will provide a cushion despite its aimless profitability. Its headstrong entry into the stateside market may lead to some intriguing possibilities even before 2007 rolls around.
5. Jones Soda (OTC BB: JSDA): $4.00. Tapping into my inner Peter Lynch, I tend to have a soft spot for public companies behind products that I enjoy. I didn't even know that Jones Soda, the maker of premium bottled soft drinks with eclectic flavors and user-submitted photographic labels, traded publicly until I had gone through way too many colorful bottles of green apple and blue bubblegum sodas.
Available at all of the usual suspects, such as Starbucks, Panera, and Barnes & Noble, the company has started to market canned soda products at Target. The end result is that while soda sales have been sleepy for Coke and Pepsi, revenues rose by 37% for Jones last year as earnings tripled to $0.06 a share.
6. Sirius Satellite Radio
Yes, Sirius has just 1.1 million subscribers while rival XM Satellite Radio started out the year with 3.2 million listeners. There is plenty of market to share, and now that XM has hiked its prices, we will begin to test the pricing elasticity of this very dynamic sector.
7. Six Flags
A shakeout is in the cards. You don't sit on prized assets for so long, underutilized, without reason eventually pumping through the veins of the company's clammy heart. If you look at the company's chart over the past few years, you see that perpetual late summer disappointments shatter the stock in the fall, yet it is now trading at the low end of its range. In other words, the typical pre-summer price buildup is no longer there as optimists are hard to come by. What a wonderful time for a contrarian to defy the odds and bank on either the company finally getting it right this summer or coming to its senses and cleaning house.
8. Krispy Kreme
10. Radyne ComStream
This past quarter found earnings clocking in at $0.18 a share, a respectable improvement over last year's $0.16 showing during the year's final period. Sure, revenues came in essentially flat -- up just 2% -- yet it did so on meatier margins and a greater uptick in its order backlog. While the consistently profitable company was also packing more than $2 a share in cash when 2005 began, that will all go into acquiring amplifier maker Xicom -- a move that will grow the company's revenue base by 77%.
So there you have it: 10 under $10.
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Longtime Fool contributor Rick Munarriz hates counting to 10, but he doesn't mind doing it backwards. He owns shares in Jones Soda. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.