Three Top Low-Priced Stocks for Investors

Searching for stocks priced under $10 that are still more likely than the average stock to be higher in a year's time? Look no further than these three high PowerRating stocks.

Low-priced stocks are often a favorite of traders who like to trade in large blocks. But many investors find cheaper (in dollar price) stocks to be preferable investments, as well--and often for the same reasons. But whatever reason an investor has for looking among the lower-priced stocks for the best investment bargains, as long as he or she sticks with the higher PowerRating stocks, their investment is more likely to outperform the average stock over the next year.

Of the three stocks in today's discussion, two of the stocks have PowerRatings of 8, while one has a PowerRating of 9. Stocks with PowerRatings of 8 or higher have been both more reliable and better performers compared to the average stock. Our research tells us that stocks with PowerRatings of 8, 9, or 10 have been higher one year later more than 74% of the time. Not only that, but 8-, 9- and 10-rated stocks have provided investors with average gains of more than 17% after one year.

Compare these performance numbers from high PowerRating stocks to those from the average stock. Compared to the reliability of high PowerRating stocks, the average stock has been higher one year later less than 68% of the time. These same "average" stocks have also underperformed the highest PowerRating stocks, producing average gains between 12-13% after one year. This is based on our research looking at thousands and thousands of simulated trades between 1995-2006, including delisted stocks that no longer trade.

Let's start at the top by looking at 9-rated Allied Waste Industries (AW@AW | Quote | Chart | News | PowerRating). With its PowerRating of 9, Allied Waste Industries belong to that cohort of stocks that has been higher one year later more than 79% of the time. 9-rated stocks have also tended to gain, on average, more than 18% after one year.

Allied Waste Industries trades at a P/E of 28.30. The stock is in the lower half of its 52-week price range of $14.10 to $8.88. Allied Waste Industries is in the business of collecting, transporting, recycling and disposing of non-hazardous solid waste for residential, commercial and industrial customers and clients. The company is a member of the 10-rated Waste Mangement industry, along with stocks such as Republic Services (RSG@RSG | Quote | Chart | News | PowerRating), Stericycle (SRCL@SRCL | Quote | Chart | News | PowerRating), Waste Management (WMI@WMI | Quote | Chart | News | PowerRating) all with PowerRatings of 7.

Del Monte Foods (DLM@DLM | Quote | Chart | News | PowerRating) was featured in our Stock Spotlight back in November 2007. (Click here to read our Featured Stock Spotlight on Del Monte Foods.) Del Monte Foods manufactures and distributes its own label of food and pet food products. Among its popular and widely-known brands are Starkist Tuna and 9 Lives Cat Food. Based out of San Francisco, California, Del Monte Foods is a member of the Processed and Packaged Foods industry, a 10-rated industry that includes several high PowerRatings stocks including Campbell Soup (CPB@CPB | Quote | Chart | News | PowerRating), General Mills (GIS@GIS | Quote | Chart | News | PowerRating), Kellogg (K@K | Quote | Chart | News | PowerRating), Pepsico (PEP@PEP | Quote | Chart | News | PowerRating), J.M. Smucker (SJM@SJM | Quote | Chart | News | PowerRating) and Sara Lee (SLE@SLE | Quote | Chart | News | PowerRating), all with PowerRatings of 9.

Del Monte Foods trades at 16 times earnings, and is in the middle of its 52-week price range of $12.94 to $6.38. The company has a PowerRating of 8.

The last stock in our group of high PowerRating, low-priced stocks is The Interpublic Group of Companies (IPG@IPG | Quote | Chart | News | PowerRating) with a PowerRating of 8. I wrote about this stock Monday morning in an article for our Industry PowerRatings section. (Click here to read "Up with Ads! Two Top Advertising Stocks for Investors.") The Interpublic Group of Companies is a holding company that operates a wide variety of communications, marketing, public relations and events promotions firms around the world. The Interpublic Group of Companies is a member of the 10-rated Advertising Services industry, along with 8-rated Omnicon Group (OMC@OMC | Quote | Chart | News | PowerRating). Most recently, the stock was trading in the lower half of its 52-week price range of $13.69 to $7.22.

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