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Overview

Last week, I wrote Round 3 of this article in which I listed and reviewed three low-priced stocks that I believed were worth buying. The stocks I reviewed in Round 3 were 8X8, Inc. (NASDAQ:EGHT), Farmers National Banc (NASDAQ:FMNB), and Magic Software Enterprises (NASDAQ:MGIC). Round 1 and Round 2 stock selections and reviews can be found here and here.

For Round 4, I will once again focus on stocks that are currently priced at under $10. In determining why I find these stocks attractive, I will be looking at each company's financial performance, current valuation, recent trading activity, earnings and future outlook.

Stock No. 1

DCT Industrial Trust (NYSE:DCT) is a real estate investment trust that owns, operates and develops high quality real estate properties throughout the United States and Mexico. DCT was founded in 2002 and is headquartered in Denver, Colorado.

Financial Performance

Profit Margin (Trailing Twelve Months)6.56%
Return on Assets (Trailing Twelve Months)1.17%
Return on Equity (Trailing Twelve Months)-0.90%
Revenue (Trailing Twelve Months)286.42M
Revenue per share (Trailing Twelve Months)1.04
Quarterly Revenue Growth (Year Over Year)20.70%

DCT has seen increases in revenue the past several years. In 2010, DCT had revenues of $239 million, in 2011, DCT had revenues of $253 million, and in 2012, had revenues of $261 million. DCT had similar increases in gross profit during this time ($170 million, $183 million and $190 million respectively).

Current Valuation and Recent Trading Activity

DCT has a current price-to-earnings value of 16.3x and a price-to-book value of 1.3x with earnings per share of $0.43.

DCT closed Friday at $6.84, $1.61 shy of its 52-week high and $0.86 higher than its 52-week low. It is trading below both its 200-day moving average of $7.46 and its 50-day moving average of $7.50.

Earnings

DCT reported earnings per share of $0.11 in its last quarterly report, an increase from the same period last year in which earnings per share were $0.10 per share. DCT has met or beaten earnings estimates in each of its last ten quarterly reports.

Company Outlook

DCT has paid a consistent quarterly dividend of $0.07 per share since 2009. For the past three years, DCT has improved its revenue, gross profit, and net income. The company is on pace to make it four years in a row. Currently priced just above book value, I find DCT to be slightly undervalued. I think recent acquisitions by DCT will yield significant growth in the coming years, allowing for significant increases in stock price and possible increases to its dividend. Because of this, I think DCT is worth taking a look at for a long term holding.

Stock No. 2

Himax Technologies, Inc. (NASDAQ:HIMX) designs, develops, and markets semiconductors for flat panel displays. Recently, HIMX entered into an agreement with Google (NASDAQ:GOOG) in which Google has agreed to invest in the Company's subsidiary, Himax Display, in order to fund production upgrades, expand capacity and further enhance production capabilities at HDI's facilities. These facilities produce liquid crystal on silicon chips and modules used in applications including head-mounted display such as Google Glass, head-up display and pico-projector products.

Financial Performance

Profit Margin (Trailing Twelve Months)7.67%
Return on Assets (Trailing Twelve Months)$6.53
Return on Equity (Trailing Twelve Months)$13.34
Revenue (Trailing Twelve Months)763.74M
Revenue per share (Trailing Twelve Months)$4.49
Quarterly Revenue Growth (Year Over Year)9.20%

Last year, HIMX saw significant increases in revenue and gross profit compared to 2011. For the first half of this year, the company has generated $383 million in revenue compared to $356 million for the first half of 2012.

Current Valuation and Recent Trading Activity

HIMX has a current price-to-earnings value of 18.4x and a price-to-book value of 2.5x with earnings per share of $0.33.

HIMX closed Friday at $6.08, $2.11 shy of its 52-week high and $4.36 higher than its 52-week low. It is trading above its 200-day moving average of $5.39 but below its 50-day moving average of $6.21.

Earnings

Last quarter, HIMX reported earnings of $0.11 per share, in line with analyst estimates. The company has a 33.33% one year earnings growth rate.

Company Outlook

HIMX appears to have some short term struggles in its future, but I believe the company's long term future to be bright. Another seeking alpha contributor has written a nice article outlining several specifics regarding the company here. At HIMX's current price and with the possibilities of large growth in the company's future, I consider HIMX a worthy buy at the moment.

Stock No. 3

The Wendy’'s Company (NASDAQ:WEN) owns and franchises Wendy’s restaurant system in North America and internationally. More than 6,500 company franchise and company-owned restaurants operate throughout the United States and a number of other countries around the globe.

Financial Performance

Profit Margin (Trailing Twelve Months)0.58%
Return on Assets (Trailing Twelve Months)2.88%
Return on Equity (Trailing Twelve Months)0.65%
Revenue (Trailing Twelve Months)$2.52B
Revenue per share (Trailing Twelve Months)$6.43
Quarterly Revenue Growth (Year Over Year)0.70%

Last year, Wendy's saw revenue increase from $2.43 billion to $2.51 billion. The company is on pace to see another increase in revenue this year.

Current Valuation and Recent Trading Activity

WEN has a current price-to-earnings value of 35.4x and a price-to-book value of 1.6x with earnings per share of $0.22.

WEN closed Friday at $7.78, $0.27 shy of its 52-week high and $3.69 higher than its 52-week low. It is trading above both its 200-day moving average of $5.95 and its 50-day moving average of $6.89.

Earnings

WEN reported earnings per share of $0.08 for Q2, $0.02 better than the estimate. This was the third quarterly beat for the company in a row. This is a significant improvement considering the company missed estimates on two of its three recent quarterly reports prior. The company has a one year earnings growth rate over 100%.

Company Outlook

Wendy's recently raised its quarterly by 25%, which gives the impression that management has a good feeling about the company's near term future. It's a feeling I share. When looking at fast food, McDonald's (NYSE:MCD) is the standard, but Wendy's has done a lot of things (such as offering healthier sides, creating an attractive value menu, etc.) to remain formidable.

Conclusion

In my opinion, the three companies reviewed above (DCT, HIMX, and WEN) are all solid buys at their current prices. I feel that the upside potential of each of these stocks far outweighs the downside risk associated with them. Each of these companies has made strategic decisions and actions to help achieve sustained growth and prosperity in the future.

DCT is in contract to sell its entire Mexican portfolio and has made significant acquisitions in Chicago and Dallas. Through its agreement with Google and other moves, HIMX has done a nice job of becoming less dependent on Innolux Corporation. Wendy's has made significant changes to its branding and menu options, allowing it to compete well in a fast food industry that is seeing increased competition from other restaurants such as Panera (NASDAQ:PNRA), Chipotle (NYSE:CMG), Subway, etc.

Source: Low-Priced Stocks Worth Buying: Round 4