The number of stocks trading in the single digits is widening these days. I figured I would take a look at some of the market’s more compelling low-priced stocks that didn’t happen to start 2020 in the single digits.
Zuora (NYSE:ZUO), Tanger Factory Outlet Centers (NYSE:SKT), and Sonos (NASDAQ:SONO) are all trading below $10, even though none of them were in the single digits when the year began. Let’s look at these three potential turnaround candidates (prices quoted are from Friday’s close).
We live in subscription-hungry times, and Zuora provides the cloud-based tools to turn any business into a subscription service. The stock has taken a 46% hit year to date, and a good chunk of that came last week when it announced disappointing financial results and the surprising resignation of its CFO.
No one likes when an executive bolts for a leadership position at another company, and there’s an unfair stigma when it just happens to be the CFO moving on. Revenue growth did slow to 11% in its fiscal fourth quarter, and Zuora does see its top-line gains slowing to between 9% and 11% for the new fiscal year. But the subscription revenue that is now making up the lion’s share of its business is still projected to climb 16% to 18% higher in the year ahead. There are still ample opportunities to be had in the subscription economy, and Zuora shares are a bargain at nearly half of where they were at the beginning of the year.
Tanger Factory Outlet Centers ($8.95)
Shopping malls are naturally going to get clobbered in this coronavirus interruption, and that explains why Tanger Factory Outlet Centers has plummeted 38% so far in 2020. The leading operator of factory outlet centers serves as a landlord to clearance outlets for well-known retailers.
Tanger boosted its dividend in January, something that it has done every year since going public in 1993. There aren’t too many equity REITs that have been able to achieve that kind of payout aristocracy. The sell-off given the challenging operating climate and the market’s poor reaction to its holiday-containing quarter has pushed the yield up to 16%.
The near future will be rough. Tanger began 2020 with a hearty 97% occupancy rate, and it’s highly unlikely to stay that buoyant as the closures and social distancing edicts play out. But an outlet center operator specializing in bargain-priced brands seems like a good place to be when shoppers do eventually come out again.
Another name that has surprisingly crashed through the floor of double-digit pricing is Sonos. The stock likely made a…
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