10 Top Stocks Under $10 Right Now
As the market continues to make all time highs every day, it can be hard to find value stocks.
To weed out stocks that look valuable, but are cheaply priced because the company is crumbling, all the companies in this list have positive earnings over the past year and are expected to have year over year earnings growth in the upcoming quarter.
To find value, price/book and price/cash flow (which also helps to show quality) were compared to industry averages with just companies in the top 40th percentile of both metrics chosen.
As a kicker, institutional ownership has increased by at least three percent (and usually more) for each company.
First Citizens Banc Corp (NASDAQ: FCZA)
It is not surprising to see a community bank as a top value play. Acclaimed deep value investor Tim Melvin calls small banks the trade of the decade as increased regulation has pushed many of these banks below tangible book value, making them prime takeover targets. Wall Street misses a lot of these banks because there are so many of these small companies
First Citizens is expected to have 22.22 percent year over year earnings growth, institutions have increased their stakes by 8.81 percent and price to book is just 0.79. A price/book ratio so far below one limits downside risk for the stock.
Teekay Tankers (NYSE: TNK)
Teekay Tankers is an oil shipper that has been hurt by a downturn in the sector. Second quarter earnings are expected to grow 87.5 percent year over year, however shares have risen just 31.29 percent since the last report. Although 31 percent appreciation seems massive, the S&P 500 is up more than 15 percent over the period, with significantly lower earnings growth.
Teekay also has a price/book ratio near one and a price/cash flow ratio of just 4.65. Teekay is in the 88th and 89th percent of the industry with these metrics.
TICC Capital (NASDAQ: TICC)
TICC Capital is an investment company focused primarily on private debt via the purchase of bonds. In addition to scoring well on value metrics, TICC has an 11.76 percent dividend yield. For investors lacking dividend positions in their portfolio, TICC may be a good way to diversify.
The earnings yield (earnings as a percentage of stock price) is 9.44 percent, indicating that the company will likely be able to maintain a strong dividend. In addition, institutions have increased their stakes in TICC by 7.93 percent over the quarter.
Warren Resources (NASDAQ: WRES)
Warren Resources is an energy company focused on production of domestic onshore crude oil and gas. Warren Resources has oil recovery properties across the country, including California, Wyoming, New Mexico, North Dakota and Texas. In an industry that has been receiving a lot of Wall Street attention over the past year, small cap companies are likely to be a better value play than the giants.
Warren Resources has the lowest price/cash flow of the companies on the list at 4.39. This puts it in the 91st percentile of all companies in the oil and gas industry.
Ultra Clean Holdings (NASDAQ: UCTT)
Ultra Clean Holdings produces technology for semiconductor production. The company also produces subsystems for several other industries. Shares sold off at the end of April, but analysts reaffirmed their Buy ratings on the company: five of the six analysts covering Ultra Clean have a Buy rating with an average price target of $14.70 (69.9 percent upside).
Earnings for the upcoming quarter are expected to be 62.5 percent higher than the same period a year ago and institutions have increased their positions by 15.34 percent.
Vaalco Energy (NYSE: EGY)
Vaalco is another energy company. However, unlike Warren Resources, Vaalco gives investors exposure to African oil. Earnings are expected to grow 133 percent year over year, but shares are up just 6.85 percent since the comparable quarter’s earnings report. Shares were hit hard following a disappointing earnings report at the beginning of May, but much of that weakness was due to a dry well which was previously disclosed.
Vaalco has a 7.42 percent earnings yield, putting it in the top 40 percent of the list. Institutions have increased their stakes in Vaalco by 6.07 percent during the quarter with the significant drop in share price.
CBIZ (NYSE: CBZ)
CBIZ provides business services ranging from financial, to legal to real estate. CBIZ garnered a lot of fund attention this year. Westbury, the trust of the company's founder, adjusted its stake with a 13D filing and Whitebox disclosed a large convertable bond holding.
Between the aforementioned positions, total institutional ownership is up 12.56 percent for the quarter. In addition, the price/book ratio is just 1.11 as shares have dropped 3.29 percent.
Westell Technologies (NASDAQ: WSTL)
Westell Technologies is the cheapest stock on the list at just $2.45 per share. Westell provides intelligent site management and off plant solutions focused on wireless innovation.
Shares are down nearly 40 percent in 2014, however two factors support the theory that Westell may be undervalued. First, company executives have been paid heavily in stock options, most of which they have held onto. In addition, insiders have added 5.28 percent to their stakes over the quarter.
Magic Software Enterprises (NASDAQ: MGIC)
Magic Software Enterprises sells IT products and IT solutions to businesses. Magic Software has had the largest increase in institutional stakes on the list with a 69.41 percent quarter over quarter increase. Earnings are expected to grow 10 percent year over year.
Other key metrics are the price/book and price/cash flow ratios which put it in the 83rd and 69th percentiles of the industry. Magic Software currently pays a 2.7 percent dividend yield.
ClearOne (NASDAQ: CLRO)
ClearOne is the highest priced stock on the list. ClearOne produces audio and web conferencing technology. One of the company’s key technologies is a product that reduces echoes during conference calls.
ClearOne has strong valuation ratios. The price/book is at just 1.25 and the price/cash flow is 14.14. Although price/cash flow may seem high when compared to the market, comparing the metric to the industry puts ClearOne in the top 73rd percentile.
Disclosure: Author holds no positions in any of the equities mentioned in this piece.
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