SmartMoney.com: Three Bargain Stocks Below $10 (STMP, SMSI, SMRT)

Investors should have no reason to favor stocks with single-digit prices. But they do. One recent study found that, over the 81 years ended 2006, stocks priced below $5 a share beat those priced over $20 by an average of 0.83 percentage points a month.

(SmartMoney.com | Jack Hough) That noted, below are three more stocks with single-digit prices. I selected them from more than 1,500 large, midsize and small companies by eliminating worrisomely indebted and unprofitable companies.

Stein Mart
Stein Mart (SMRT) has more than 270 stores located largely in the Sunbelt states. Sales at its longstanding stores have declined since 2005, but a turnaround might be afoot. Over the past year, management has reduced expenses, paid down debt and added trendy, youthful brands to stores. In its last two quarters, the company delivered profits when analysts were predicting losses. Shares have multiplied from $1 and change to over $8 in a year.

Smith Micro Software
Based an hour drive down the coast from Los Angeles, Smith Micro Software (SMSI) specializes in software for mobile communications, networks and graphics. Analysts say it’s well-positioned for the rollout of 4G, or fourth-generation, cellular service because it receives revenue on new-phone software and has products that enable callers using 3G phones to connect with those using 4G ones. Sales are forecasted to rise 20% this year, and shares trade at about 11 times the 2010 consensus earnings estimate.

Stamps.com
Stamps.com (STMP) is perhaps best known for its PhotoStamps service, which lets users turn a picture of their kid or dog into real U.S. postage. The company’s core business, though, is providing frequent mailers with a way to print postage directly from their computers instead of buying or leasing postage meters. Sales fell last year as a weak economy reduced mailings, but the company is expected to return to growth this year with a modest sales increase. Shares are 16 times earnings or less than 11 times earnings after subtracting the company’s nearly $3 a share in cash from its stock price.

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