Hit the Jackpot With These Cheap Stocks
Why do people gamble? The thrill of winning it big. The chance to make a fortune by putting up just a little bit of money.
Well, you can do the same with stocks, and if you pick the right ones, you’re odds are a heck of a lot better than they would be in any casino.
We’ve put together a list of some of the best low-priced stocks to buy. Each is currently trading below $7 per share and has the potential to explode and double or even triple your money.
Horizon Lines (HRZ)
Horizon Lines (NYSE: HRZ) is the largest oceangoing shipping company in the United States with a dominant market position along protected shipping lanes. One look at the steady resurgence in shipping demand, coupled with the company’s improving financials, and it seems the worst is behind them — making now the perfect time to scoop up this stock at a discount.
HRZ is up almost 30% since September, and I expect it to continue moving higher. Recent data show more goods are being manufactured, and they need to be shipped. Horizon will be one of the biggest beneficiaries.
Buy HRZ on pullbacks under $5.
Local.com Corp. (LOCM)
Local.com Corp. (NASDAQ: LOCM) operates a local business directory site and search services that are a result of its local syndication network of regional media sites powered by its patented technology. Those sites offer business directories and associated services, and fuel their growth by sales and advertising. LOCM is among the top three fastest-growing companies in local online advertising, and it has joined with several of its partners to offer daily online deals, coupons and retail offers.
LOCM batted it out of the park in its third quarter, growing sales 48%, to $22.5 million, and its adjusted net income increased a whopping 249%, to $4.6 million or 27 cents per diluted share! That translated into some very nice margins, with adjusted net income margin coming in at 20%.
LOCM is growing at roughly twice the rate of its competition, and is in a prime spot for one of the behemoths in the industry like Yahoo (NASDAQ: YHOO) or Google (NASDAQ: GOOG) to take a bite. Buy LOCM under $6.70.
Tii Network Technologies (TIII)
Tii Network Technologies (NASDAQ: TIII) helps protect expensive telecom equipment with its overvoltage surge protection devices. This is especially useful during lightning strikes and power surges. Its Total Failsafe products offer modular station protectors, while its In-Line products protect broadband coaxial cables.
Naturally, large telecom carriers like Verizon Communications (NYSE: VZ) are big customers and account for 34% of sales. DIRECTV (NASDAQ: DTV), Power & Telephone Supply and Tyco Electronics (NYSE: TEL) are also customers. With Verizon and other cell phone providers upgrading to 4G, Tii’s sales should remain very strong.
The stock is a good buy, but it is thinly traded, so use a limit order within 10 cents of the previous day’s closing price. Buy TIII under $3.
PMI Group (PMI)
PMI Group (NYSE: PMI) offers mortgage insurance products to meet the capital and credit risk mitigation needs of its customers, who are primarily mortgage lenders, depository institutions, commercial banks and investors.
The stock has been stuck under $4 for a while now, but several factors lead me to believe it is ready to break out in the right direction. There has been some stabilization and even improvement in mortgage applications and housing inventory. Interest rates remain incredibly low, and banks are starting to lend again. And the government’s unwinding of support for mortgages leaves opportunity for PMI.
Buy PMI under $4.80.
Lionbridge Technologies (LIOX)
Lionbridge Technologies (NASDAQ: LIOX) provides language, development and testing services to businesses all over the world. Its focus is on technology, and it helps its clients manage their enterprise content and technology applications, and supports those efforts with training materials, as well as sales and marketing information. By affecting optimal communication in local languages, it helps its clients capture market share, escalate adoption of their global content and products, increase the return on their enterprise application investments and boost workforce productivity. All while reducing costs! So it’s no wonder that the 10 largest software companies and the five largest Internet portals in the world use LIOX to help them internationalize their products and services.
This strong customer base helped the company weather the recession, as its top 10 customers expanded their business by more than 8% in the fourth quarter over the third quarter. This helped the company generate $11.7 million in cash flow, improve its gross profit to 33.5% and revenues grow 7% quarter over quarter. That’s definitely a great sign, especially since technology spending is taking flight, and globalization of industry is in a rapid phase of expansion. Buy LIOX under $4.50.
Express-1 Expedited Solutions (XPO)
There is nothing exciting about the shipping business except that the growth in this industry can be exponential in an economy that is barely improving. Business conditions for shippers improve much more dramatically than the overall economy, and that’s exactly why you want to own shipping stocks in an economy emerging from recession — like we are right now — and avoid them in a slowing economy. Of all the shipping and transport companies out there right now, I like -1 Expedited Solutions Inc. (AMEX: XPO) the best because it grows faster from a tiny revenue base.
In November, XPO announced Q3 results that beat by 150%, coming in at 5 cents per share versus an analyst estimate of 2 cents. Revenue rose by 70% to $44.4 million, up from $26.1 million in the same quarter of last year. The stock soared flowing the report and should continue to gain as shipping and freight companies are the first to rebound in an economic recovery. Buy XPO below $3.
SMTC Corp. (SMTX)
SMTC Corp. (NASDAQ: SMTX) is a Canadian company that provides contract electronics manufacturing services, such as surface-mount and through-hole circuit board assembly, product design, testing, packaging and supply chain management. Manufacturers use products built or assembled by SMTC in their computer servers, networking devices or communications products.
In its most recent earnings report, the company said Q3 sales rose 48% in the quarter to $65.4 million, and earnings per share were 16 cents, up from 3 cents in the same quarter of 2009. Eight of its top 10 customers increased orders as a result of strong market demand for electronics manufacturing. The addition of five new clients added $10 million to the company’s sales in the quarter. SMTX’s year-over-year gross profit more than doubled to $7.9 million, as a result. Generated cash flow reached $4.6 million and the company used much of this extra cash to pay down debt. That’s why SMTX’s debt was just $18 million at the end of the quarter, the lowest level in the company’s history.
SMTX is in an excellent position to profit from increasing electronics and technology demand, which will continue to climb next year. Buy SMTX below $4.