Lower price leaves more to invest

Q: Any stocks under $10 a share worth buying?

A: First, it’s important to point out a stock’s price is arbitrary.

If Company A has 1 million outstanding shares of stock that trade for $5 and Company B has 100,000 shares that each trade for $50, both companies are worth the exact amount of $5 million.

Having said that, there are some advantages to lower-priced stocks. For one thing, you may be able to invest more of your money.

As I write this, one share of Amazon.com trades for $946. If you have $1,500 to invest, you can only afford to buy one share of Amazon, leaving $554 of your money sitting on the sidelines.

Lower-priced stocks also allow you to buy more shares, which is important if you like to use options strategies, as options trade in multiples of 100.

One to consider is Sirius XM. The company has a dominant position in the subscription-based radio industry, strong revenue growth in recent years, and it produces excellent free cash flow.

Staples is another low-cost stock. There certainly are some challenges in the retail industry right now, but Staples is well-positioned to come out on top in the office superstore business.

The company has a leading market share, a strong balance sheet and is adapting well to the evolving retail environment. It also trades for an extremely low valuation of just 10.5 times forward earnings.