There's just something about low-priced stocks that catches the eye. In fact, one of the largest mutual funds, in terms of assets under management, is the Fidelity Low-Priced Stock Fund, which looks for stocks trading under $35. A lot of people are out there looking for good stocks that trade at even lower prices.
I've been trying to find those low-priced stocks for Foolish readers for a few years now. Since 2001, I've been singling out promising stocks that trade for less than $10 a pop. On average, it's turned out pretty well.
I've got my 10 picks lined up for this year's installment. Let's go over the first five (the prices are as of this writing).
1. Willamette Valley Vineyard
I stumbled on this Oregon-based winery last year, when I was doing a story on shareholder perks. The Pinot Noir specialist provides some pretty generous discounts to its investors, from as little as 10% on a bottle to as much as 30% for a pair of cases.
The CEO wrote me to elaborate on the company's perks. Beyond shareholder-exclusive wine releases and specials, the company has an ambitious active volunteer program, where shareowners earn "points" for their work. Active shareholders can apply those points to Willamette's wines at a 50% employee discount.
Sweet perks aren't a good reason to buy a stock, but they had me feeling good about a company that uses such incentives to foster shareowner loyalty and brand ambassadorship.
Through the first nine months of 2006, revenues inched 10% higher. Earnings per share dipped from $0.17 to $0.15 through those three quarters, but that's because the company is being fully taxed now. Profits before taxes actually grew by 24%.
The company was hit in the quarter that ended in September by an inventory shortfall. That stung the top and bottom line at Willamette, as the company moved to ramp up production. Aged wines take time, naturally, and the third quarter's misfortune should pay off in the long run. There isn't a single published analyst estimate on this stock. To be frank, I like that.
2. Jamba Juice
I'm a Jamba Juice addict. I live within walking distance of one, so my Strawberries Wild or Orange Dream Machine fix is never too far away. I became an investor last year, after the company went public in an unusual merger with a shell company.
The fast-growing smoothie chain is coming off a bad quarter. Profits fell 23% on a 12% top-line uptick. That's not pretty. This could be another case of "great company, bad stock," but I believe that new, seasoned management will help it find its way. Steve Berrard, who was Wayne Huizenga's right-hand man as he grew Blockbuster Video, Swisher, and AutoNation, is now at the helm.
Jamba is looking to grow its chain at a 20% annualized clip, and earnings should grow even faster.
3. Six Flags
The thrills run high at Six Flags. Unfortunately, so does the red ink. That's a nasty byproduct of the company's $2.1 billion in debt, but the leverage works both ways. Unfortunately, it's been ages since Six Flags has been strong enough to show investors the upside of leverage.
I expected that to change when Mark Shapiro came over from ESPN to buff up the brand and make the regional parks more family-friendly. 2006 was a challenge. The turnstiles clicked slower, yet patrons spent more. However, Shapiro's team didn't have a whole lot of time to prepare last year. Shapiro's second season should be more productive. More kid-magnet properties like Thomas the Tank Engine and The Wiggles are being introduced. The cleaner parks are now drawing classier sponsors like Cold Stone Creamery and Nintendo as well.
All of the right ingredients are in place. Kinder weather in 2007 would be the perfect final garnishing touch.
4. TiVo
If only I were a day early! Shares of the leading digital-video-recorder maker -- and the only brand that matters in this space -- shot up 9% yesterday, after Amazon.com
But jaded TiVo-watchers know the score. TiVo is always in the news with cool deals. DVR ad placements. Patent-licensing deals. Neat broadband features like the ability to check up on fantasy football scores or to send content to your PC. Despite all the nifty news, the stock hasn't moved much. Investors want the company to turn a profit. That may be two years away, but I think digital delivery will help speed up that timetable.
5. Hollywood Media
Despite its celluloid moniker, Hollywood Media derives 84% of its revenues from selling show tickets through Broadway.com. With this week's purchase of Showtix, expect live-event ticket sales to grow even more important. The company also runs the Hollywood.com movie portal, has entertainment data services, and owns a minority stake in the MovieTickets.com virtual box office.
There's potential there -- especially in building out Hollywood.com -- but the company is losing money from its continuing operations. Analysts expect the company to fade to black this year. Like most good shows, it's better to get in early than to arrive unfashionably late.
Want more? Come back next week, when I'll reveal the next five low-priced stock picks that I like. Can't wait? Join me over at the Rule Breakers discussion boards, as a subscriber, where we're always unearthing quality growth stocks early in their life cycles.
Longtime Fool contributor Rick Munarriz really does relish panning for gold in dirty waters. It's why he always keeps a wet-nap handy. He does own shares in TiVo and Jamba Juice. Amazon.com and TiVo are Stock Advisor recommendations. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
