After 11 years of a bull market, including 2019’s huge run-up, you would think it would be difficult to find great stocks selling for less than $10 a share. But there still are rich opportunities among low-priced bargains ranging from a beer giant and a smartphone pioneer to a global meat exporter and a gold miner. Some are profitable businesses that have suffered short-term setbacks, while others are small, fast-growing companies that have not received much notice yet. And many are foreign stocks, which haven’t gained as much as US stocks overall in recent years. My 10 favorites now…
These once-thriving companies have suffered various problems ranging from management missteps to falling revenues to jarring changes in their industries. They’ve begun to turn around, but most investors don’t understand their growth potential yet…
AmBev (ABEV) is the fourth-largest beer producer in the world, with best-selling brands such as Brahma, Corona and Skol, and a dominant market share in most Latin American countries. The stock has dropped about 30% over the past two years as Brazil, AmBev’s largest market, struggled to recover from a deep recession. Profits for this global blue chip should rebound in 2020 as the economic outlook in Brazil brightens and the company introduces more premier, higher-priced beers and lagers in countries such as Mexico and Chile. Recent share price: $4.45.
Aphria (APHA) is Canada’s third-largest cannabis company. The stock soared between 2016 and 2018, then fell 8.3% in 2019, a tough year for the industry, which suffered from growth pains, supply concerns and sky-high expectations. However, I believe the industry will rebound, especially in Canada, which recently legalized new forms of recreational cannabis including edibles and beverages. Aphria is expanding its global footprint, recently acquiring a major German medical cannabis company. Aphria’s sales are expected to double in each of the next five years and exceed $1 billion by 2023. Recent stock price: $5.76.
Banco Santander (SAN) is one of the world’s 20 largest global banks, with three times as many branches as Bank of America and $1.6 trillion in assets. The Madrid-based bank’s profits have suffered in recent years because of weak European economies and uncertainty over Brexit, the British exit from the European Union. In 2019, a botched CEO succession plan at Banco Santander sent the stock price down 30%. All this negativity is overdone. Its future is in emerging markets such as Chile, Mexico and Poland—where business remains strong. Recent share price: $3.96.
BlackBerry Limited (BB). The early leader in smartphone hardware and software boasted more than 85 million subscribers at one point. But over the past decade, the Canada-based multinational’s market share eroded due to the runaway success of Apple’s iPhone and the Android operating system. In 2016, it ceased production of its own smartphones, reinventing itself as a software firm built around the so-called “Internet of Things,” the interconnection via the Internet of devices ranging from light bulbs to refrigerators to cars. Blackberry, whose stock is down about 95% from its high in 2008, is once again profitable thanks to fast-growing subsidiaries such as QNX, which provides software for automotive infotainment systems, and Cylance, a cybersecurity firm that uses artificial intelligence to head off Internet-transmitted malware invasions and viruses. Recent stock price: $6.66.
Calumet Specialty Products Partners (CLMT) was a century-old petrochemical refiner that processed crude oil into gasoline and jet fuel. Faced with a prolonged slump in the energy industry, the company, based in Indianapolis, has been making a dramatic shift since 2016 to providing more profitable specialty oils for consumer products ranging from Jergens body lotion to WD-40. The switch initially caused debt to soar at Calumet, which then suspended its dividends. Impatient investors fled, and the stock dropped 76% since 2016. This year, earnings should improve substantially as Calumet completes its bumpy transition process. Recent share price: $4.47.
Most investors have never heard of these small- and medium-sized companies because they operate in unexciting, fledgling or hard-to-evaluate market niches. But they all are likely to achieve robust revenue growth, at least 15% annually for many years…
BRF (BRFS). Plant-based alternative meat may be popular in the US, but across much of the developing world, the business of real meat is still a huge growth story. This Brazilian company is a leading global exporter of fresh and frozen poultry, pork and cattle, selling about five million tons of meat annually in 140 countries. For 2020, I expect earnings to grow 35% year over year as demand for Brazilian pork in China surges because a nationwide outbreak of swine fever has decimated Chinese pig herds. Recent share price: $8.29.
Five Prime Therapeutics (FPRX) has no FDA-approved products on the market, but it does have a potential blockbuster treatment in protein therapeutics, which use the body’s own immune system to block specific proteins in cancerous cells that allow them to grow and reproduce. The treatment is in late-stage clinical trials targeting gastric cancers and could earn FDA approval this year. Five Prime, based in South San Francisco, also has a deep pipeline with several other treatments for breast, ovarian and pancreatic cancers. Recent share price: $5.83.
Iamgold (IAG). Gold prices soared 18% in 2019 and are likely to do well this year as nervous investors look for safe havens from Middle East tensions, global trade wars and the desire to protect profits from last year’s big stocks gains. This small Toronto-based company, which operates four gold mines in Canada, South America and West Africa, has been overshadowed by larger competitors but is pursuing about 30 possible new mines in several countries and has no debt. It’s also an attractive takeover target for Chinese mining companies looking to diversify and replenish their reserves. Recent stock price: $2.95.
Super League Gaming (SLGG). One of the fastest-growing Internet phenomena is “e-sports.” Millions of fans watch tournaments online and in person as competitors play popular online games such as Fortnite, Call of Duty and Madden NFL. This Santa Monica–based e-sports company hosts and broadcasts these amateur and professional events nationwide. It just went public last year and is a leader in this fledgling market, whose overall revenues are expected to hit $2 billion by 2022. Recent stock price: $3.
Veon Ltd. (VEON), based in Amsterdam, operates wireless communication networks for more than 200 million customers across 10 countries, stretching from Russia to Pakistan to Algeria. Investors still regard Veon as a traditional telecom, but profits are ramping up thanks to its innovative digital add-on services. Example: Veon’s mobile network in Pakistan offers its own digital TV service with hundreds of movies as well as an online banking service. Recent share price: $2.67