The S&P 500 (INDEXSP:.INX) has been hitting record highs lately, leading some to wonder whether the stock market is overpriced. Yet when you look at certain stocks within the S&P 500 (INDEXSP:.INX), you’ll notice a few with very low share prices, making it seem like perhaps they’re a better deal.
By itself, share price can’t tell you how much a company is worth, as you also have to look at the number of shares that are outstanding. For instance, Bank of America Corp (NYSE:BAC) has a relatively low share price of around $13, which is just a fraction of most of its big-bank peers. Yet Bank of America Corp (NYSE:BAC) has far more outstanding shares than most of its peers, putting its overall market cap much closer to its rivals’ figures.
Even with that caveat, low share prices can indicate that a stock hasn’t performed to its full potential. So with that in mind, let’s take a closer look at the four stocks in the S&P 500 (INDEXSP:.INX) that have the cheapest shares.
4. Sprint Nextel Corporation (NYSE:S), $7.32
Sprint has plunged in value since the end of the tech bubble in the late 1990s, with shares back then fetching as much as $70 per share. Even after the stock’s impressive rebound over the past year, it still trades at barely a tenth of its all-time high.
Right now, the big question for Sprint Nextel Corporation (NYSE:S)’s future involves who’ll win a fight to take a major stake in the company. With Japan’s Softbank having made a bid only to have DISH Network Corp (NASDAQ:DISH) come in with a rival offer, Sprint Nextel Corporation (NYSE:S) has no shortage of buyers who apparently see value in the company’s assets. For longtime shareholders, though, the gains will be too little too late to rescue them from substantial losses.
3. LSI Corp (NASDAQ:LSI), $7.23
Chipmaker LSI Corp (NASDAQ:LSI) has gone through much of the same experience as Sprint, with its shares also having traded above the $70 mark in early 2000 before the bottom fell out of the tech sector. Since then, the company has seen little movement in its share price, as the semiconductor industry goes through cyclical ups and downs without any firm upward trend.
LSI Corp (NASDAQ:LSI)’s future depends largely on its ability to find lucrative niche areas like flash storage and networking chips that can play a role in the Big Data revolution that’s going on right now. Yet given the huge amounts of competition in the area, LSI faces a tough road ahead to make the most of its opportunity.