3 Low-Priced Stocks That Make Smart Bets With all three of the major indexes continuing to break records, it may seem like most stocks are trading at very high prices. But there are still plenty of low-priced...
By David Cohne
This story originally appeared on StockNews
With all three of the major indexes continuing to break records, it may seem like most stocks are trading at very high prices. But there are still plenty of low-priced stocks that would make great additions to your portfolio. Stocks such as Sirius XM Holdings Inc. (SIRI), Catalyst Pharmaceuticals, Inc. (CPRX), and Nokia Corp. ADR (NOK) are all trading below $10 but have the potential for higher gains in the months ahead.
Many investors love to invest in lower-priced stocks as they can offer higher potential for gains. Low-priced stocks typically don't get the attention they deserve by the greater investment community.
But that doesn't mean lower-priced stocks are bad. On the contrary, plenty of stocks trading at low prices could be great additions to your portfolio. In fact, many of these stocks have higher market caps than you would think. The trick is to find the stocks with the best prospects for gains.
That's where our proprietary POWR Ratings system comes into play. Stocks with grades of A or B have a higher potential for gains than stocks with lower grades. That's why investors should consider companies such as Sirius XM Holdings Inc. (SIRI), Catalyst Pharmaceuticals, Inc. (CPRX), and Nokia Corp. ADR (NOK), which are rated highly in our system.
Sirius XM Holdings Inc. (SIRI)
At around $6 a share, SIRI is composed of two businesses, SiriusXM and Pandora. The company transmits music, talk shows, sports, and news via its two satellite radio networks, primarily to consumers in vehicles who pay a subscription fee. The firm's radios come preinstalled on a wide range of light vehicles in the U.S. and Canada.
The firm acquired Pandora Media in February 2019 via an all-stock transaction. Pandora is a streaming music platform that offers an ad-supported radio option and a paid on-demand service. The acquisition made SIRI the world's largest audio entertainment company and significantly expanded its listener base. The company is expected to continue its subscriber expansion through a strong content portfolio and its podcasting efforts.
SIRI has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. The company has a Momentum Grade of A as the company has shown bullish momentum over the past month. The stock is up over 3% in the past five days and 40% over the past month. The company also has a Quality Grade of B due to solid fundamentals.
As of the end of the third quarter, the company had $164 million in cash compared to no short-term debt. We also provide Growth Value, Stability, and Sentiment Grades, which you can find here. SIRI is ranked #2 in the A-rated Entertainment – Radio industry. For more top stocks in this industry, click here.
Catalyst Pharmaceuticals, Inc. (CPRX)
CPRX is a biopharmaceutical company. It focuses on developing and commercializing innovative therapies for rare, debilitating, chronic neuromuscular and neurological diseases. It offers Firdapse, a proprietary form of amifampridine phosphate for treating patients with lambert-eaton myasthenic syndrome.
The drug has shown strong momentum since it launched in January 2019. This trend is expected to continue. The company is also looking to develop Firdapse for other rare neuromuscular indications. If the label is expanded, it should help boost sales.
The stock, which is also trading around $6, has an overall grade of B and a Buy rating in our POWR Ratings system. CPRX has a Value Grade of A, which makes sense with a trailing P/E of 8.43 and a forward P/E of 12.55. The company also has a Sentiment Grade of B as it is well-liked by analysts.
For instance, five out of the five analysts that cover the stock, rate it a Buy with an upside potential of 61.5%. For the rest of CPRX's grades (Growth, Momentum, Stability, and Quality), click here. CPRX is ranked #30 in the Medical – Pharmaceuticals industry. For more top-ranked stocks in this industry, click here.
Nokia Corp. ADR (NOK)
Finland-based NOK is a leading vendor in the telecom equipment industry. The firm's network business derives revenue from selling wireless and fixed-line hardware, software, and services. Additionally, its technology segment licenses its patent portfolio to handset manufacturers and makes royalties from Nokia-branded cellphones.
NOK is poised to benefit from increased demand for next-generation connectivity. The company has so far made progress on its three-phase journey of value creation. This includes "Reset," which is this year's focus, plus "Accelerate" and "Scale" for next year and beyond. Its focus now is on capital allocation and technology leadership, as those factors will help growth this year.
Plus, its 5G portfolio is gaining traction among enterprises, making up more than 12% of total 5G deals. The company, currently trading around $5 a share, has an overall grade of B, translating into a Buy rating in our POWR Ratings system. NOK has a Growth Grade of B, which isn't surprising as analysts expect earnings to rise 34.5% for the year.
The company also has a Value Grade of B due to its low valuation. For instance, its forward P/E is 14.31, and its price-to-book ratio of 1.7 is well below the industry average of 3.7. To access all of NOK's grades, including Momentum, Stability, Sentiment, and Quality, click here. NOK is ranked #11 in the B-rated Technology – Communication/Networking industry. For more top stocks in this industry, click here.
Discover Today's Best Value Stocks
This article was written by David Cohne, Chief Value Strategist for StockNews.com. David has helped investors find the most profitable stocks for over 20 years.
If you would like to see more of his best value stock ideas, then click the link below.
See David Cohne's Favorite Value Stocks
SIRI shares were trading at $6.47 per share on Tuesday morning, up $0.01 (+0.15%). Year-to-date, SIRI has gained 2.66%, versus a 26.81% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.
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