5 Stocks Under $10 Worth Buying

By Rick Munarriz
April 21, 2014
From http://www.fool.com/investing/general/

If you've got $10, 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 13 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 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.

 

*Bare Escentuals was acquired for $18.20 a share in 2010. Focus Media was acquired for $27.50 a share in 2013.

The average gain of 567% in a little more than five years is pretty remarkable. Yes, that also happened to be when the market was bottoming out, but that still blows away every major market index in that time.

Let's go over this month's picks.

Plug Power (NASDAQ: PLUG  ) -- $7.32

You won't find too many stocks hotter than Plug Power this year. The fuel cell specialist is up a whopping 372% this year, and things continue to look up as alternative energy grows in popularity. The biggest catalyst for Plug Power this year was when Wal-Mart, the world's largest retailer, announced that it was tripling the presence of its hydrogen fuel cell charging stations at its distribution centers.

Losses have been narrowing, and the market sees Plug Power turning profitable next year. Along the way, we're seeing growth on a tear. Analysts see revenue more than doubling this year, followed by a 79% top-line pop next year.

STMicroelectronics  (NYSE: STM  ) -- $8.88

This may seem like a lousy time to warm up to STMicroelectronics. The Swiss semiconductor giant has surprised the market for three consecutive quarters by posting losses when analysts projected profits. With its next quarterly report set a week from today, the trend suggests that we're looking at another disappointing report.

However, at least the pros are ready for a quarterly deficit out of STMicroelectronics this time. They see a return to profitability during the current quarter, and that's important if it expects to sustain its healthy 4.5% dividend yield. The past year has been disheartening, but STMicroelectronics is fetching a reasonable 15 times next year's earnings forecast.

New Residential Investment  (NYSE: NRZ  ) -- $9.49

Mortgage real-estate investment trusts provide healthy yields, but there are naturally risks involved with real estate these days. New Residential stays a step ahead of the pack by specializing in mortgage servicing rights, a healthy stream of revenue that actually benefits from rising rates.

New Residential was spun off just 11 months ago, so it's not exactly a household name for yield chasers, but the logic of buying into REITs specializing in mortgage servicing rights is sound. As mortgage rates move higher, folks are less likely to refinance their loans, extending the value of these servicing rights. New Residential shelled out payouts of $0.495 per share through its abridged 2013. The healthy distributions should continue.

Inovio Pharmaceuticals (NYSEMKT: INO  ) -- $2.53

Biotech stocks have corrected recently, giving investors with the risk tolerance to buy into feast or famine players working on potentially blockbuster treatments a compelling entry point. Inovio is a nascent biotech with a vaccine for HPV-caused pre-cancers and cancer working its way through the long FDA approval process. There's an important mid-stage data readout for the vaccine, VGX-3100, due likely this summer.

Inovio has no shortage of gamblers. Daily trading volume has averaged more than 8 million shares lately, and that's a lot for a stock commanding a $600 million market cap. The good news for those willing to wait is that Inovio was able to raise enough money last month to likely see it through at least 2017. That's a pretty big deal since biotech upstarts often have to deal with cash burn rates as much as the treatments that they're actually working on.

Harmonic  (NASDAQ: HLIT  ) -- $6.72

You can find companies that are starting to put it all together in the bargain-priced bin. Harmonic seems to be doing more than a few things right. It has posted better-than-expected earnings in its three past quarters, and the growth trajectory on the bottom line is encouraging. Wall Street sees a profit of $0.29 a share this year after posting net income of $0.17 per share last year. They see earnings of $0.37 per share come next year.

Harmonic helps video content creators and distributors in creating, preparing, and delivering programming for television and new media platforms. It reports tomorrow afternoon, giving Harmonic a good shot at stretching its streak of market-thumping results to four quarters in a row.

Rick Munarriz
April 21, 2014
From http://www.fool.com/investing/general/

Stocks Decline on Worries Fed Will Hit Brakes

By CHRIS DIETERICHUpdated May 16, 2013, 5:20 p.m. ET

Article from http://online.wsj.com/article/

Stocks fell from all-time highs amid concerns the Federal Reserve might tap the brakes on its efforts to stimulate growth.

The Dow Jones Industrial Average declined 42.47 points, or 0.3%, to 15233.22, while the Standard & Poor's 500-stock index fell 8.31 points, or 0.5%, to 1650.47. The S&P 500 had ended at records in nine of the past 10 sessions and snapped a four-session streak of gains. The Nasdaq Composite Index dropped 6.37 points, or 0.2%, to 3465.24.

Stocks dipped to the day's lows after Federal Reserve Bank of San Francisco President John Williams said in the text of a prepared speech that he is open to trimming the central bank's bond-buying program in coming months if the economy continues to improve.

Despite Thursday's weak economic news, his comments "raise the specter of the Fed tapering, and that is proving to be the big bogeyman out there," said Steve Sosnick, equity-risk manager at Timber Hill, the market-making unit of Interactive Brokers Group.

Initial claims for jobless benefits rose more than forecast last week, the biggest one-week increase since November. Housing starts for April declined far worse than expected, and the Federal Reserve Bank of Philadelphia's May index of business activity unexpectedly fell.

April's consumer-price index, a reading on inflation, fell 0.4% on the month, more than forecast.

The disappointing reports, paired with tame inflation, had bolstered conviction that the Fed would stick to its $85 billion monthly purchases in Treasury and mortgage debt to support the economy. Prices for Treasurys rose, as the yield on the 10-year note fell to 1.865%.

"What people have been oscillating back and forth with is whether the Fed will reduce [its bond buying] sooner rather than later. That's what the market is playing around with," said George Rusnak, head of fixed income for Wells Fargo Private Bank, which oversees $170 billion in assets.

In corporate news, Cisco Systems CSCO +11.21% jumped $2.68, or 13%, to $23.89, a 2½-year high. The blue-chip network-equipment maker reported quarterly earnings and revenue that topped analyst expectations, and projected growth in revenue and profit in the current quarter.

Wal-Mart WMT -1.70% Stores slid 1.36, or 1.7%, 78.50, weighing on the Dow, after the world's largest retailer reported quarterly earnings that fell shy of forecasts and provided a downbeat second-quarter outlook.

In Asia, Japan's gross domestic product, the prime measure of economic growth, expanded 3.5%, more than expected. Japan's Nikkei Stock Average rose to 5½-year highs in intraday trading but closed down 0.4%. China's Shanghai Composite Index rallied 1.2%.

In Europe, the Stoxx Europe 600 fell less than 0.1%, its first loss in three days. Data showed the euro zone's trade surplus in March rose to the highest level since the inception of the common currency in 1999. Germany's DAX index rose 0.1% to close at a record.

The dollar advanced against the euro and yen. Gold slumped 0.7%, to settle at $1,387.10 a troy ounce. Crude oil gained 0.9%, to settle at $95.16 a barrel.

In corporate news, Berkshire Hathaway's BRKB -1.09% Class-B shares slipped 1.23, or 1.1%, to 111.54, after Standard & Poor's Ratings Services cut the conglomerate's rating by one notch, citing the company's dependence on its core insurance operations for most of its dividend income.

Tesla TSLA +8.73% rose 7.41, or 8.7%, to 92.25, after the car maker said it plans to sell stock and convertible notes to repay debt and for corporate purposes, taking advantage of a recent rally in its stock price.

Kohl's KSS +4.73% climbed 2.35, or 4.7%, to 52.03, after the retailer's earnings beat the company's estimates and provided current-quarter earnings roughly in line with expectations.

Write to Chris Dieterich at chris.dieterich@dowjones.com

A version of this article appeared May 17, 2013, on page C4 in the U.S. edition of The Wall Street Journal, with the headline: Shares Decline on Worries Fed Will Hit Brakes.