by James Brumley | December 2, 2013 12:09 pm
It’s hard to believe, but the new year is right around the corner.
That means now is the time to start thinking about any additions (or subtractions) you’ll want to make to your portfolio heading into 2014.
If you’re like many investors, you’d just as soon pick a stock with a low nominal price than a higher one. Granted, 100 shares of a $20 stock costs the same as 10 shares of a $200 stock or 10 shares of a $2,000 stock. Plus, a low nominal price doesn’t necessarily mean a cheap stock is a good value.
Still, it is easier to buy big, round lots of cheap stocks, especially if you don’t have much to invest with in the first place.
So if price does matter to you, here are 10 of the best sub-$20 stocks to buy as we get ready to usher out the old year and ring in the new one.
12/2 Price: $10.10
That’s right: The world’s most-storied riches-(relatively)-to-rags story is a buy again.
Yes, Ron Johnson’s fame at Apple (AAPL) and Target (TGT) never translated into success at JCPenney (JCP), and in fact he steered the ship straight into the ground. However, JCP is (thankfully) at least trying “business as usual” again under Mike Ullman.
While it’s still not clear if the turnaround effort will take hold before JCPenney runs short of cash again, the market looks willing to at least give JCP the benefit of the doubt long enough to let the stock make progress — if that’s what’s indeed in the cards.
12/2 Price: $14.37
Contrary to popular belief, the business of insuring mortgages and bonds isn’t a thing of the past, hindered by a lack of demand. Indeed, the industry is finally starting to find some stability again.
Radian Group (RDN) is the pick of the litter, largely driven by the fact that mortgage insurance revenue in the third quarter was the company’s second-strongest ever.
RDN also is on pace to swing back into the black during the coming year, which could be a huge catalyst.
12/2 Price: $8.65
Photronics (PLAB) is a semiconductor photomask manufacturer whose products are used in things such as semiconductors, data storage and flat-panel displays, putting PLAB in the technological sweet spot.
Don’t let the recent downgrade from Needham & Co., or the fact that sales and earnings have waned in 2013, turn you off of Photronics.
The past isn’t the future.
PLAB’s per share income is expected to double next year, from 2013’s profit of 30 cents per share to 60 cents per share in 2014.
12/2 Price: $1.15
The nuclear reactor disaster at the Fukushima (Japan) power plant in March 2011 nagged and dogged uranium mining stocks like Ur-Energy (URG).
As of the middle of this year, though, URG has finally started to spend more time above the key 200-day moving average line than below it. That’s got to mean something.
In fact, that same 200-day line has been acting as technical support since September.
12/2 Price: $11.56
For years now, the self-proclaimed experts have been calling for Xerox’s (XRX) death, explaining that the photocopier has gone the way of the Edsel.
Also for years now, Xerox has not only survived but even thrived, as it’s very much not just a photocopier maker anymore.
Xerox is waist-deep into digital document management… which is the future of the typical corporate office. It might not be a high-growth story, but what it lacks in firepower it makes up for in consistency.
Value fans also will love XRX’s forward-looking P/E of roughly 10.
12/2 Price: $13.28
There might be nothing special about an obscure crane manufacturer at first glance, but a closer inspection of Manitex International (MNTX) reveals this company is driving some serious sales and earnings growth now that it has found its niche. Profits should be up 33% next year.
Manitex certainly has gotten the attention of Forbes, which in October put Manitex on its list of America’s best small companies.
12/2 Price: $9.23
Anybody expecting to make a quick buck with a position in Huntington Bancshares (HBAN) is going to be sorely disappointed. On the other hand, HBAN has more pop-potential than some investors may be giving it credit for.
The Midwest-servicing bank has topped earnings estimates in 12 of its last 15 quarters, and some of them were pretty significant beats. Meanwhile, HBAN is expected to grow earnings less than 5% annually over the next five years — an awfully low bar to climb over.
The dividend yield of 2.2% isn’t too shabby, either.
12/2 Price: $19.65
In retrospect, the 37% dip that shares of homebuilder stock D.R. Horton (DHI) suffered between May and September didn’t make a lot of sense — earnings continued to grow in the meantime, and the company had no trouble meeting or beating estimates.
The market’s starting to realize the selloff was an errant one, as DHI shares are perking up again. There’s still a ways to go before the stock’s back to where it started, though.
12/2 Price: $15.29
Don’t sweat it if you haven’t heard of private equity and asset management outfit American Capital Ltd (ACAS) — most people haven’t. That doesn’t mean it’s not a compelling investment though, especially given the organization’s budding refocus on debt investments rather than equity holdings.
Equity investments provide little to no consistent cash flow, so new buyers can look forward to more debt-income in the future than previous buyers have enjoyed.
12/2 Price: $17.85
Defense contractor Exelis (XLS) is on pace to post its fifth straight year of declining revenue, and earnings haven’t fared much better. The pros say 2014 is going to be a sixth straight year of weaker revenue, though per-share income is at least expected to improve a bit (from this year’s $1.51 to $1.59 next year).
So what, pray tell, has run the stock up from less than $11 per share in May to the current price of more than $17?
Because Exelis has been winning contracts at a rapid pace of late, and the market recognizes the forward-looking estimates underestimate the opportunity … and at a forward-looking P/E of 11.1, there’s already plenty of value packed in here.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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