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Overview

Last month, I wrote Round 6 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 6 were ACCO Brands (ACCO), Student Transportation (STB), and LeapFrog Enterprises (LF). Round 4 and Round 5 stock selections and reviews can be found here and here.

For Round 7, 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

AK Steel Corporation (AKS) is a world leader in the production of flat-rolled carbon, stainless and electrical steel products, primarily for automotive, infrastructure and manufacturing, construction and electrical power generation and distribution markets. The company operates several steel plants, finishing plants, and tubular manufacturing plants across four states - Indiana, Kentucky, Ohio and Pennsylvania. The company was founded in 1993 and is headquartered in West Chester, Ohio.

Financial Performance

Gross Profit Margin (Quarterly)8.18%
Return on Assets ((TTM))-8.11%
Return on Equity57.78%
Revenue5.53B
Revenue per share$41.80
Quarterly Revenue Growth (YOY)-9.03%

AKS has seen its revenue remain fairly stable over the past few years, while seeing a very large decline in Net Income last year. Net income this year is improving, but is still negative.

AKS Revenue (Quarterly) Chart

AKS Revenue (Quarterly) data by YCharts

Current Valuation and Recent Trading Activity

AKS has a current price-to-sales value of 0.1x and a price-to-cash flow value of 4.8x.

AKS closed Wednesday at $5.23, $0.26 shy of its 52-week high and $2.47 higher than its 52-week low. It is trading above both its 200-day moving average of $3.69 and right at its 50-day moving average of $4.31.

Earnings

For its latest quarter, AKS reported negative earnings per share of $0.12. This was better than the -$0.24 per share estimate. This continues a long streak of meeting and/or beating earnings estimates for AKS that extends back to mid 2011.

Company Outlook

AKS is known as a well run company and is one of the largest steel providers out there. Its price is tied strongly with the overall steel market. Because of this and its still relatively low price, I think that AKS should be considered a buy for long-term investors.

Goldman Sachs recently raised its outlook on the overall steel industry stating that many of the associated risks of the steel market have already been priced in and that fundamentals look appealing. I share the same belief and view an investment in AKS as a low risk, high reward investment. As demand for steel increases, I think AKS is primed for significant gains over the next several years.

Stock No. 2

JetBlue Airways Corporation (JBLU) is an American low-cost airline that provides air transportation services for several destinations throughout the United States, as well as, The Caribbean, The Bahamas, Bermuda, Barbados, Colombia, Costa Rica, Dominican Republic, Jamaica, and Mexico. JBLU was founded in 1998 and is headquartered in Long Island City, New York.

Financial Performance

Profit Margin (Quarterly)4.92%
Return on Assets1.68%
Return on Equity6.33%
Revenue5.27B
Revenue per share$18.75
Quarterly Revenue Growth (YOY)10.24%

JetBlue has seen revenue and profit increase fairly consistently over the past several years and is on pace to see that continue this year.

JBLU Revenue (Annual) Chart

JBLU Revenue (Annual) data by YCharts

Current Valuation and Recent Trading Activity

JBLU has a price to earnings value of 23.28x and a price to book value of 1.21x.

JBLU closed Wednesday at $8.68, setting its 52-week high and settling $3.88 higher than its 52-week low. The stock is trading well above both its 50-day and 200-day moving averages.

Earnings

For its last quarter, JBLU reported earnings per share of $0.21. This was 1 cent less than the estimate, but was $0.07 higher than the same period last year. It was also the highest quarterly EPS JBLU has reported.

JBLU EPS Basic (Quarterly) Chart

JBLU EPS Basic (Quarterly) data by YCharts

Company Outlook

In addition to its latest quarterly report, JBLU has seen a lot of positive trends recently such as significant rises in revenue passenger miles, available seat miles, and total number of revenue passengers.

The general consensus is that the approved AMR and US Airways merger will help add to JBLU's good fortunes through gaining new landing slots in different airports.

I feel that JBLU's consistent rise in revenue and profit will continue and it seems as though the company is beginning to maintain positive earnings even when passenger numbers are not the best. The last time JBLU reported negative quarterly earnings was in mid 2010 and I don't expect to see negative earnings anytime soon. I think the company's earnings will continue increasing and because of this I think the stock should be considered a buy for long-term investors.

Stock No. 3

Select Medical Holdings Corporation (SEM), through its subsidiaries, operates specialty hospitals and outpatient rehabilitation clinics. SEM operates in two segments, Specialty Hospitals and Outpatient Rehabilitation. The Mission of Select Medical Corporation is to ensure high-quality healthcare and cost-effective outcomes by providing specialty inpatient long-term acute care and rehabilitation, and outpatient rehabilitation services. The company founded in 1996 is headquartered in Mechanicsburg, Pennsylvania.

Financial Performance

Profit Margin (Quarterly)14.60%
Return on Assets4.45%
Return on Equity16.11%
Revenue2.97B
Revenue per share$21.50
Quarterly Revenue Growth (YOY)1.29%

SEM's increase in revenue and profit has been consistent and substantial over the past several years.

SEM Revenue (Annual) Chart

SEM Revenue (Annual) data by YCharts

Current Valuation and Recent Trading Activity

SEM has a current price to earnings value of 9.55x and a price to book value of 1.55x.

SEM closed Wednesday at $8.57, $2.90 shy of its 52-week high and $1.36 higher than its 52-week low. The stock is trading above both its 50-day moving average of $8.52 and its 200-day moving average of $8.38.

Earnings

For its last quarterly report, SEM reported earnings per share of $0.17 per share. This was 2 cents below the estimate and 3 cents below the same period last year.

Even with the slightly disappointing quarterly results, the company's recent EPS has been much better than in past years.

SEM EPS Basic (<a href=TTM) Chart" _fcksavedurl=" >TTM) Chart">

SEM EPS Basic (TTM) data by YCharts

Company Outlook

SEM seems to be a very well managed company. It continues to increase its revenue while minimizing the effects of uncontrollable issues (such as Medicare changes and MPPR) on earnings. The company has a continued focus on returning shareholder value through its quarterly dividend as well as past share repurchases.

I believe that SEM should be considered as a buy for long-term investors given the company's commitment to shareholder returns and growing the company in a pressured and changing environment. I feel that SEM is well positioned to succeed in a newly modified healthcare industry.

Conclusion

Each of the three stocks reviewed above are buy worthy options for long-term investors in my opinion. AKS is well positioned to take advantage of a rebounding steel industry, JBLU has a strong history of increased revenue and profit and should benefit nicely from the recently approved AMR and US Airways merger, while SEM has made significant strides in maintaining a solid growth plan to handle the many changes happening throughout the healthcare industry.

I believe that each of the above stocks have limited downside risk and strong upside potential. I feel that all three stocks will reward long-term investors in the years to come. As always, I suggest individual investors perform their own research before making any investment decisions.

Source: Low-Priced Stocks Worth Buying: Round 7