Two tickets to paradise
The first company we are going to talk about is Hawaiian Holdings, Inc. (NASDAQ:HA). Hawaiian Holdings, Inc. (NASDAQ:HA), which operates through its subsidiary Hawaiian Airlines, is a regional airline that, as your probably guessed, offers daily routes between Hawaii and major cities along the west coast plus NYC. The company also offers a few scheduled flights to Pacific countries such as Japan, The Philippines, and Australia.
For some reason, people are still bearish on airlines. Although this may be a heavily regulated industry that is easily crippled by fuel costs, I feel that this provides an opportunity for great companies to stand out. It also helps that Hawaiian Holdings, Inc. (NASDAQ:HA) operates in such a niche environment.
From a fundamental standpoint, Hawaiian Holdings, Inc. (NASDAQ:HA) fits the model of an under valued company. The company currently trades at 5.69 times trailing twelve months’ earnings and at 0.15 times sales. The company has traded down from its 52-week high of $7.20 and sports $7.89 per share in cash. Hawaiian Airlines is positioning itself for growth. The company plans to purchase 16 Airbus A321neo aircrafts and is also in the process of hiring 1,000 employees to support the expansion. Hawaiian Holdings, Inc. (NASDAQ:HA) is also planning to establish new routes to Mainland China from Honolulu.
Global real estate
Another company under $10 is one that will most likely not be on anyone’s radar. The company is Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN). Why worry about the U.S. housing rebound when you can capitalize on the expansion of the Chinese middle class. Xinyuan develops residential real estate properties for middle-income consumers in Tier II cities in China. Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN) focuses on pre-selling all of its developments. This business model significantly decreases debt requirements and locks in cash flow. Xinyuan recently purchased three properties in the U.S. as it looks to expand operations outside of China.
Once again, the fundamentals show the company to be trading at a tremendous discount. Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN) currently trades at just 2 times trailing twelve months earnings and at just 43% of book value. The company also has a free cash flow yield (percentage of revenue available to return to shareholders) of 32%. As you wait for price appreciation, you will be rewarded with a nice dividend. Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN) currently has a 3.80% dividend yield with a very low 5% payout ratio.
Environmental protection
Our final buy under $10 is slightly more speculative then the companies above. Heckmann Corporation (NYSE:HEK) is heavily invested in the shale fracking business. However, the company does absolutely nothing with the natural gas/oil being extracted from the earth. Heckmann specializes in sourcing, storing, and transporting water. Seems simple right? Massive amounts of water need to pumped deep down into the earth in order to extract the oil/natural gas from the shale rock. Heckmann Corporation (NYSE:HEK) currently services 7 of the 8 shale basins in the U.S.
With Heckmann, you are paying a premium for growth, as the company is currently trading at 21.83 times forward earnings. The fracking industry is still in its infancy, and Heckmann Corporation (NYSE:HEK) is positioning itself well to capitalize on its expansion.
As we better understand the environmental costs of this fuel extraction process, Heckmann is positioned well for the long-term. In 2012, Heckmann Corporation (NYSE:HEK) acquired Power Fuels and Thermo Fluids, two companies that focus primarily on environmental services and waste recycling. Heckmann is attempting to emerge as a full service provider of water sourcing, transportation, and clean up.
Wrap up
It is important when you are investing your hard-earned money that you ignore all the headlines about the market. Whether people are bullish or bearish on the market as a whole, it is more important to identify companies that are undervalued, and placing your money in such companies.
The article 3 Buys Under $10 originally appeared on Fool.com.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
