Seeking Alpha
Long only, value, growth, dividend investing
Profile| Send Message|
( followers)  

Overview

Last week, I wrote Round 4 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 4 were DCT Industrial Trust (NYSE:DCT), Himax Technologies, Inc. (NASDAQ:HIMX), and The Wendy’'s Company (NASDAQ:WEN). Round 2 and Round 3 stock selections and reviews can be found here and here.

For Round 5, 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

Crown Media Holdings, Inc. (NASDAQ:CRWN) owns and operates a pay television system dedicated to high-quality family programming through channels such as Hallmark Channel and Hallmark Movie Channel. The company was founded in 1999 and is headquartered in Studio City, California.

Financial Performance

Profit Margin (Trailing Twelve Months)31.79%
Return on Assets (Trailing Twelve Months)8.84%
Return on Equity (Trailing Twelve Months)36.29%
Revenue (Trailing Twelve Months)354.39M
Revenue per share (Trailing Twelve Months)$0.99
Quarterly Revenue Growth (Year Over Year)3.20%

Recently, CRWN has seen strong operation and financial results. For Q2, adjusted EBITDA was up 11% over the prior quarter. Hallmark Movie Channel remains one of the fast growing cable networks in the United States.

Current Valuation and Recent Trading Activity

CRWN has a current price-to-earnings value of 9.5x and a price-to-book value of 2.9x with earnings per share of $0.31.

CRWN closed Friday at $2.88, $0.27 shy of its 52-week high and $1.33 higher than its 52-week low. It is trading below both its 200-day moving average of $2.33 and its 50-day moving average of $2.76.

Earnings

For Q2, CRWN reported earnings per share of $0.05. For the last four quarters combined, CRWN earnings per share were $0.31, compared to a $.07 per share for the previous four quarters combined.

Company Outlook

CRWN has seen increased revenues for several years and is on pace to see that streak continue. Programming costs for the company have declined while advertising sales and scatter volume have increased. Hallmark Movie Channel had its highest rated quarter in the network's brief history and is performing ahead of its competition, ranking 3rd in highest increase of all 100 Nielsen measured ad-supported cable networks.

CRWN's first original scripted series in primetime launched with very high ratings. With the company's entry into original programming along with its increased distribution and audience growth, I feel that CRWN is on the verge of increased revenue and earnings for years to come. I think that CRWN is a solid stock to look at as a long term investment.

Stock No. 2

Hawaiian Holdings, Inc. (NASDAQ:HA) through its subsidiary, Hawaiian Airlines, Inc., engages in the scheduled air transportation of passengers and cargo. In addition to routes between its neighbor islands, HA has North American, international, and charter routes. The company was founded in 1929 and is headquartered in Honolulu, Hawaii.

Financial Performance

Profit Margin (Trailing Twelve Months)1.75%
Return on Assets (Trailing Twelve Months)3.03%
Return on Equity (Trailing Twelve Months)14.13
Revenue (Trailing Twelve Months)2.07B
Revenue per share (Trailing Twelve Months)$40.01
Quarterly Revenue Growth (Year Over Year)10.20%

HA has seen steady increases in revenue and gross profit over the past several years. The company is on pace to see similar increases this year.

2009201020112012
Revenues$1,183M$1,310M$1,650M$1,962M
Gross Profit$479M$503M$564M$667M

Current Valuation and Recent Trading Activity

HA has a current price-to-earnings value of 10.1x and a price-to-book value of 1.3x with earnings per share of $0.72.

HA closed Friday at $7.13, $0.75 shy of its 52-week high and $1.97 higher than its 52-week low. It is trading above both its 200-day moving average of $6.13 and its 50-day moving average of $7.06.

Earnings

For Q2, HA reported earnings per share of $0.24, a $0.11 beat compared to estimate. This was the sixth earnings beat in the past eight quarters for HA. Hawaiian Holdings has a five year historical earnings growth rate over 50%.

Company Outlook

HA's revenues look to continue growing. With recent moves such as adding flights to and from China, expanding services of other routes, seeing increased traffic, and increasing capacity, I believe that the related revenue growth will translate to the company's bottom line. With the stock's current attractive price, I feel that HA will be a solid investment for long term investors.

Stock No. 3

Dean Foods Company (NYSE:DF), a food and beverage company, processes and distributes milk and other fluid dairy products as a leader in the specialty foods industry. The company was founded in 1925 and is headquartered in Dallas, Texas.

Financial Performance

Profit Margin (Trailing Twelve Months)4.39%
Return on Assets (Trailing Twelve Months)5.63%
Return on Equity (Trailing Twelve Months)14.09%
Revenue (Trailing Twelve Months)$11.40B
Revenue per share (Trailing Twelve Months)$61.36
Quarterly Revenue Growth (Year Over Year)-0.30%

For Q2, net sales remained pretty much flat from one year ago but milk sales volume for DF fell 1.4%. While it was a negative, it was better than the 2.1% drop in the industry wide milk sales volume.

Current Valuation and Recent Trading Activity

DF has a current price-to-earnings value of 8.50x and a price-to-book value of 2.7x with earnings per share of $1.15.

DF closed Friday at $9.69, $1.79 shy of its 52-week high and $3.31 higher than its 52-week low. It is trading higher than its 200-day moving average of $9.16 but below its 50-day moving average of $10.47.

Earnings

For Q2, DF reported earnings per share of $0.13. This was a $0.01 miss from expectation and the company has a negative one year earnings growth rate.

Company Outlook

DF's short term outlook is filled with challenges. The company's main problem is the decline in milk consumption. DF's management team has done a great job of dealing with this and related challenges. Through increased productivity and severe cost cutting (including the closing of several of its factories), I believe that the company has made the necessary moves to see increased earnings growth in future years. And with the company's spin-off of its WhiteWave division and the recent announcement of its upcoming 1 for 2 reverse stock split, management remains committed to boosting shareholder value.

I believe that this month's decline in DF's stock (from its $11.35 closing price on 8/5 to its current price) has presented a nice entry point for long term investors looking at this stock. While, the company will continue to face challenges in the near future, I think management has shown the ability to tackle those changes and take appropriate actions to see increased future growth.

Conclusion

In my opinion, the three companies reviewed above (CRWN, HA, and DF) 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.

CRWN is now creating original programming and its Hallmark Movie Channel has been a huge factor in the company's increased revenue and client base. HA is expanding its service, adding additional routes, and maximizing capacity to ensure increased revenue in future years. DF has done an admirable job in taking actions to cut costs in a current environment of declining sales and consumption.

Of the three companies, I think DF is the most risky, but I believe that its current price and management team still makes it a buy, along with CRWN and HA. As always, the recommendations in this article are my own opinion and I urge anyone considering the information I presented to do their own research and analysis before making any investment decisions.

Source: Low-Priced Stocks Worth Buying: Round 5