Sunday, September 7, 2014

3 Solid Stocks Under $6 Per Share in 2013

Today, I would like to discuss three stocks that I found using a stock screener on May 8, 2013 at 10:55 am pacific time. Previously, I had ran this screen at the end of last year and had identified companies that fit this criteria. Those have done well since. This article will attempt to do it again over both the short and long term. As always though, please conduct your own research and due diligence before deciding whether or not in any of these stocks.
The stock screen had the following criteria:
  • Component of the NYSE or the NASDAQ.
  • Market caps that qualify them as a small cap or larger.
  • Share prices between $1 and $6.50.
  • Current fiscal year EPS growth of at least 10%.
  • PE ratio of 10 or less and/or a PE ratio of below the industry average over the trailing 12 months.
The only thing I changed in the screener this time was that I lowered the high end of the share price to $6.50 from $7 the last time I ran it. One of the stocks found in this screener was Siliconware Precision Industries (SPIL). Since I have already written about that stock very recently as referenced above, I will not repeat the analysis of it here. For those of you following that screen though, please note that this company was found again using this same criteria.
Originally, the screener was only going to go up to $6 in share price. On May 8, 2013, ION Geophysical Corporation went up to over $6 per share after closing at less than that the previous day. In order to still include it, the upper limit of the share price was adjusted after I started writing this article to say up to $6.50 per share. The true results of this screen on May 8th for shares from $1 to $6 in price included ION Geophysical so I wanted to make sure to include it as well.
This stock screen was designed to uncover stocks that are priced low, but that still have solid fundamentals that would give a preliminary indication that they are earning good money and growing. A relatively low PE ratio cannot be achieved without positive earnings, and the growth in earnings may help us find stocks poised for great growth. The low share price makes it easy for someone to get 100 shares for $650 or less.
The stocks we are going to discuss and highlight here that were found in the screener are Amkor Technology, Inc. (AMKR), ION Geophysical Corporation (IO), and MCG Capital Corporation (MCGC). The following is a one year price chart as of today, May 8, 2013, for the three companies. It is expressed as percentage changes.
AMKR Chart
AMKR data by YCharts
As the chart shows, the best performing company over the past year has been MCG Capital Corporation. ION Geophysical corporation is up today (May 8, 2013) by 6.77%. The fact that these companies have not performed great as a whole over the past year when compared to the S&P 500 makes me optimistic that we may have identified companies that could outperform over the next year. I am a believer that individual stocks have periods of underperformance and periods of outperformance that is hard to predict, all else being equal.
Amkor Technology provides outsourced semiconductor packaging and test services. Per Yahoo Finance!, the stock is trading today at $4.46 per share and that is right in the middle of its 52 week range. The company beat analyst estimates for its earnings in the last two quarters reported. It is expected that it will earn .57 per share this year, compared to .46 last year. Next year, analysts expect the company to earn .72 per share. Its five year growth rate per year is expected to be 10%. On April 25th, the company surged 9.84% after beating analyst expectations for earnings and revenue. If the company can continue to beat expectations, and deliver on or exceed its forecasted growth, a rise in share prices seems quite likely to me.
ION Geophysical Corporation is the next stock in this article. Today, the company's stock is up 6.56% at the current time. Yesterday it was announced that an insider purchased an additional 196,000 shares at a price of $5.90 to $5.94 on 5/6/2013. This is a huge catalyst for the stock as the purchase price of this, being around $656,000, represents a significant portion of ownership interest for a single insider purchase. The company serves the energy industry. Analysts expect it to earn .44 per share this year, compared with .37 per share last year. Next year, analysts expect the earnings to jump to .60 per share. The company is expected to have a great annual growth rate over the next 5 years of 18% per year. Continued insider purchases and a realization of this healthy growth rate are two large factors that could fuel a rise in share prices for this company.
MCG Capital Corporation is a private equity firm. The company goes ex-dividend as of today (May 8, 2013) and it currently has a huge dividend yield of 9.4%. Over the past year, coupled with its large dividend, the stock has significantly outperformed the S&P 500 and any investor who had it during this time has to be very happy. The fact that it is expected to earn .47 per share this year compared to .25 last year is a large factor that supports this price increase in my opinion. This comes despite the fact that the company has met expectations for earnings precisely the past four quarters. It is pegged for annual growth of 10% over the next five years. Forbes via DividendChannel published an article that highlighted the company as a high dividend payer that, at the time, was selling for less than book value. If the company can maintain and/or increase its dividend and earnings, look for this stock to continue to rise in price.
Thank you for reading this article.

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