Although most of us won’t cop to it, investors love low-priced stocks. Finding stocks that trade for less than $10 gives investors a sense of finding a bargain — and they can buy a greater number of shares of a particular issue.
But this is a particularly dangerous area; many single-digit stocks are low-priced for a reason. Many of them have seen their stock price decline as fundamentals worsened and large investors dumped the shares, driving the price down. Others may have financial difficulties and or are still unproven in the marketplace.
Fortunately we can use Portfolio Grader to find which low-priced stocks have the right fundamentals to see their stock price power higher.
Fortress Investment Group (FIG) has been turning in sparkling performance. The company just reported its largest quarterly profit since 2010, and growth is accelerating. The investment manager is seeing strong results from its hedge fund and private-equity offerings as well as traditional investment management programs. Their private-equity funds have been seeing spectacular returns this year and this should continue to drive asset and revenue growth for the firm.
Analysts have been raising their estimates for the alternative asset manager of both 2013 and 2014. The stock trades around $7 and was upgraded by Portfolio Grader back in March to the highest grade of “A.” This stock is a “strong buy” right now.
Wall Street analysts apparently are consistently underestimating Americans’ desire to exercise — or to spend money on exercise equipment, anyway. Fitness equipment manufacturer Nautilus (NLS) has blown away the consensus analyst expectations for four quarters in a row. Consumers are lining up to buy new products like the Bowflex Uppercut strength trainer and the Tread Climber workout machines.
Nautilus’ sparkling fundamentals caused the stock to be upgraded to “A” back in November. The stock is currently trading at $7.85 and remains a “strong buy.”
It appears that some couch-potato types are also spending money right now. Value Vision Media (VVTV) operates Shop NBC, a television shopping channel and Internet site offering goods to consumers. The company is still showing a loss, but it has posted four positive surprises in a row as results exceed analyst expectations. Improved sales of health & beauty products and consumer electronics should help the company become cash-flow positive this year.
The rapid improvement in its fundamentals caused the stock to be upgraded back in January to a “buy.” The company has continued to improve, and with the stock trading right below $5 a share, Value Vision was upgraded to a “strong buy” this week.
Although fundamentals matter far more than nominal cost, stick with Portfolio Grader if you prefer low-priced stocks — it can help you find the ones that have the type of superior fundamentals that lead to superior returns.
Louis Navellier is the editor of Blue Chip Growth.