Stock prices come in all shapes and sizes. While only the rarest investors can afford the $116,520 per share for Berkshire Hathaway (BRK.A), very few investors can purchase Apple (AAPL) at $419.81 or even IBM (IBM) at $179.16. Although those high-end stocks can be very profitable, there is a multitude of people who want to invest. For these individuals, there are a number of very cheap stocks in this expensive market to consider. Among those to be found at affordable prices are Sirius XM Radio Inc (SIRI), ATP Oil & Gas Corp (ATPG), ZAGG Inc. (ZAGG), YRC Worldwide Inc. (YRCW) and XPO Logistics Inc. (XPO).
Sirius XM Radio Inc.
Great product, bad luck. After the 2008 merger of Sirius and XM Radio, the satellite radio service provider was all alone in the U.S. market. The problem? The new car market was busy crashing and burning. The good news is that today, the car industry is looking up, and SIRI is one of the hottest stocks on the market in 2012. With a share price that has risen about 20% in just two weeks and a forward P/E of 30.57, the company appears to be poised for a big comeback.
While Internet radio and music streaming services have started competing for this market, things look very good for Sirius. Some analysts have given Sirius a $3.00 target for 2012, and its share price has taken a bullish turn and crossed over both its 50-day and 200-day moving averages. With year-to-year quarterly earnings and levered free cash flow of $475.42 million, this is one stock that investors at any level should consider.
ATP Oil & Gas Corp
Investing in the energy sector can be tricky. Balancing big risks and rewards is always tempting, and this year’s temptation may come in the form of ATP Oil & Gas Corp. Currently riding near the bottom of the 52-week range, ATPG has received attention from analysts lately due to some very promising projects and its estimated gains this year.
Specializing in the acquisition, development, and production of natural gas and oil projects, ATP has some exciting locations in the Mediterranean, the Gulf of Mexico and in the North Sea. Although it carries nearly $2 billion in debt and nearly 50% of its stock float is held in short positions, an anticipated increase of nearly 50% in its share price ($6.85 currently, rising to $10.15) may be too tempting for investors to ignore when they are looking for good, inexpensive stock purchases.
Salt Lake City, Utah-based ZAGG Inc. has established a solid presence in the personal electronics sector with its protective coverings, audio accessories, and power solutions for a variety of applications, including: iPods and iPads, laptops, cell phones, digital cameras, watch faces, rotary blades of military helicopters and much more. Largely capitalizing on its successful relationship with Apple, (AAPL) the company has soared, reaching its 52-week high in August 2011 at $17.10. After finding what appears to be its floor around $6.50, the stock is on the rise again, with a price per share of $8.10 and a hefty one-year target estimate of $18.60.
While some analysts are questioning ZAGG earnings, the future looks very solid for this small-cap. A forward P/E of 10.80 and 19.32% return on equity make a compelling case for its possible performance, while a levered free cash flow of -15.51 million deserves some additional investigation. For investors who already have a balanced portfolio that can tolerate some risk, this stock has some great potential gains just waiting to be made.
YRC Worldwide Inc.
It’s hard to imagine how far this Overland Park, Kansas-based transportation services company has fallen in the past year. At $1,584 per share early in 2011, the company plummeted, tumbling to less than $1 per share in December and only averting a delisting NASDAQ with a 44 for 1 reverse stock split. While the bleeding hasn’t yet stopped, Wall Street hasn’t totally abandoned the company.
Although YRCW beat its earnings estimates for Q3 2011, the picture still isn’t rosy. Trading far below its 200-day moving average, the share price is expected to drop nearly 33% this year from its current price of $10.90. The five-year PEG of -0.01 is another indicator of problems, as is the levered free cash flow of -$290.83 million. Although slightly encouraged by its marginally better third-quarter results, this is not a good investment for casual investors.
XPO Logistics Inc
Sometimes digging into the numbers makes a company look stronger as a potential investment; other times, the decision goes the opposite way. In the case of XPO Logistics, its prospects take a negative direction when looking at the statistics. This Buchanan, Mich., third-party specializes in logistics services utilizing network-based relationships with various land, sea and air carriers throughout the United States, Mexico and Canada. Trading just below its 52-week midpoint at $11.46, the stock appears bullish since it has been trading above both its 200-day and 50-day moving averages.
It’s when an investor goes past these numbers that the stock loses its appeal. The one-year target estimate for XPO is a paltry $3.45 or a drop of $8.00 per share over its current price. Although the company-building reputation of XPO Logistics CEO Bradley Jacobs offers some confidence, the numbers do not. XPO suffered a devastating 89% drop in year-to-year quarterly earnings, offering only a scant 4.28% return on equity. Similarly, the company’s return on assets was an equally low 3.68%. While XPO has some positive aspects, there is a large potential risk that seems to confirm the opinion to downgrade XPO to a hold.