If you’ve got 10 bucks, 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.
| 3/15/13 | 3/13/09 | Gain | |
|---|---|---|---|
| Sirius XM Radio | $3.11 | $0.198 | 1,470% |
| Bare Escentuals* | $18.20 | $3.66 | 397% |
| Focus Media | $26.10 | $5.74 | 355% |
| Geron | $1.13 | $4.36 | (74%) |
| Ford | $13.45 | $2.19 | 514% |
* Bare Escentuals was acquired for $18.20 a share in 2010.
The average gain of 532% in four years is pretty remarkable.
Even with Geron as the sole disappointment, the other four multibaggers have easily trounced the market by excelling in satellite radio, cars, and Chinese advertising.
Let’s go over this month’s picks.
Bazaarvoice Inc (NASDAQ:BV) — $7.96
Most of my Fellow Fools were skeptical when Bazaarvoice went public at $12 last year, and the skepticism was warranted. Despite spiking 18% higher last week on no material news, Bazaarvoice shares are still trading a third below its IPO.
It’s hard to gain credibility with investors when your CEO steps down just nine months after going public. An antitrust investigation into a recent acquisition and mounting quarterly losses aren’t helping, either.
However, there is a real business here under the coats of pessimism. Bazaarvoice’s ability to help clients leverage social data from online word-of-mouth content into actionable improvements is sticky and growing. Revenue did spike 55% in its latest quarter, and Bazaarvoice Inc (NASDAQ:BV)’s active enterprise client retention rate clocked in at an impressive 97%.
Analysts see losses continuing for the next couple of years, but it’s hard to ignore the growth at a discounted IPO’s price.
Heckmann Corporation (NYSE:HEK) — $4.15
Enjoy Heckmann while you can.
The environmental services provider isn’t going out of business. It’s not necessarily about to be bought out. Heckman is merely gearing up to change its name Nuverra Environmental Solutions in two months after shareholders approve the new moniker.
Last year’s acquisitions of Power Fuels and Thermo Fluids have helped revenue more than double, broadening its offerings of environmental services. A new name makes sense.
Heckmann’s stock popped 16% higher last week after surprising Wall Street with a quarterly profit. Its guidance for 2013 is solid, though suggesting that it will fare better during the latter half of the year finds analysts scaling back near-term projections.
Heckmann Corporation (NYSE:HEK) isn’t perfect, but it’s a profitable company that’s moving beyond merely cleaning up fracking water.
