Five Stocks To Buy Under $10

Infinera
While I would never proclaim to be an expert in digital optical networking it does appear the California company is heading in the right direction. Fourth quarter highlights include adding seven new customers (bringing the total to 56), building a broader geographic mix of customers with 24% of revenue generated in Europe, the Middle East or Asia with its top five customers including an internet content provider, a wholesale telecom carrier, a cable company and a tier one fixed-line incumbent. For the full-year, its adjusted GAAP earnings per share (EPS) were 15 cents. Adding back deferral adjustments, it earned 81 cents, giving it a current price-to-earnings ratio of 8.5. In early January, Renesys, a provider of internet analysis, revealed that some of the fastest growing internet networks in the world use Infinera’s products. The additional customers would seem to bear this out. This one’s a long-term play.

Focus Media
Focus Media sold its core assets to Chinese internet portal Sina in December in an all-stock deal. Its shareholders ended up owning just under half of Sina, while retaining assets that include an internet advertising company, a movie theatre advertising network, billboards and $381 million in cash. According to an analyst Barron's talked to, the remaining assets, including cash could fetch $13 a share, almost double its current price.

ValueClick
The online advertiser, owner of affiliate network Commission Junction, is making money this year, although at a much lower rate than originally anticipated. Out of the gates in 2008, management were calling for approximately $745 million in revenue and earnings per share of 81 cents. After an uninspiring third quarter, revenues for the entire year could be off by as much as $122 million and earnings per share by 26 cents. Despite the serious dip in its numbers, it’s still a decent profit, not to mention it’s sitting on a fair amount of cash and zero debt. Perhaps an acquisition is around the corner that will spur some more growth. (To learn more about acquisitions, be sure to read our Mergers and Acquisitions Tutorial.)

Logitech
There's not much good to say about Logitech's business right now. The well-known maker of computer mice and keyboards (the two product lines account for 41% of sales), amongst other things, is not faring well in this discretionary spending freeze. In the third quarter alone, the sales of mice were off 20% and keyboards 28%. So awful are its near-term prospects that it's cutting between 550 and 650 jobs to save $50 million annually. Grim indeed, but they should still make money in 2009, although nowhere near past years.

Gentex
As most are aware, Michigan is getting pounded in this recession as the auto industry slides off the map and into Lake Huron. Gentex, a maker of rear view mirrors and fire protection products, announced in late January its first quarterly loss in 25 years. 360 people were laid off to rectify the productivity imbalance. That's not a pretty picture. For the entire year, net earnings in 2008 dropped by half to $62.1 million from $122.1 million the year before. On a bright note, it repurchased 2.1 million shares in the fourth quarter at an average cost of $8.52, about where it sits now. Its first quarter estimates call for a reduction in year-over-year sales of 40%, which will no doubt affect its bottom line. Gentex hasn't been this low since around 2000.

Bottom Line
Each of these stocks has its warts, some more then others. Long-term, I believe they'll all do fine. If I were to wager which of the five will do the best over the next year or two, I'd go with Infinera because its customers can't seem to get enough of its product.