- Sirius XM offers steady growth and a rapidly ascending dividend.
- Latch is raising the bar in apartment buildings, helping landlords monetize keyless entry systems with new tech toys.
- Genius Sports is a leading provider of official sports data to the gaming and media industries.
Everyone likes to check their stockings over the holidays to see if any small gifts found their way inside. They naturally have to be compact presents to fit in a Christmas stocking, but sometimes, the best things come from the smallest of packages. It could be the same with stocks.
Sirius XM Holdings (NASDAQ:SIRI), Latch (NASDAQ:LTCH), and Genius Sports (NYSE:GENI) all trade in the single digits, but they have the potential to make outsized gains in the year ahead. Stocks in socks? Let’s see why these three stocks under $10 would make ideal stocking stuffers for your portfolio this season.
Image source: Getty Images.
Sirius XM Holdings
The satellite-radio provider has come a long way since it was on the brink of bankruptcy a dozen years ago. Sirius XM has emerged as a slow yet steady grower that’s consistently profitable as it generates a ton of free cash flow. Closing out its latest quarter with 32 million self-pay subscribers on its platform, Sirius XM has defied the skeptics that figured folks would abandon satellite radio-subscriptions, as connected cars now have access to cheaper audio solutions.
Revenue rose a better-than-expected 9% to $2.2 billion in the third quarter. A 32% surge in ad revenue for its Pandora streaming service helped lift the 5% increase in its original satellite-radio business, but it all fits the “slow yet steady” narrative. Net income is growing even faster, and Sirius XM now expects to generate $1.8 billion in free cash flow this year.
Sirius XM isn’t afraid to return money to its shareholders. It’s been aggressively buying back shares. It also boosted its dividend since initiating a payout policy in 2016, including a 50% hike for its quarterly rate two months ago.
One of this year’s more interesting debutantes is Latch, a company that’s revolutionizing the way apartment landlords and tenants access their digs. LatchOS is an operating system that allows folks to remotely open and close their front doors. It’s simple, in theory, but don’t dismiss this as a limited studio apartment without a lot of room to grow.
Cloud-based access solutions make it easy for landlords or realtors to show an available property without having to physically be there. The high-tech keyless platform also helps building owners move tenants in and out without having to collect physical keys and bring in a locksmith to change out the locks. Renters also benefit from the ability to let in houseguests, a cleaning service, or perhaps even a delivery when they’re not home. More than 1 in 10 new apartment buildings are now being constructed incorporating LatchOS into their premium designs.
This isn’t a one-lock pony. Latch and landlords can also upsell the platform so it works with intercom systems and smart-home hubs. Growth is pretty impressive, with revenue up 120% in its latest quarter. The pipeline is even more exciting, with total bookings soaring 181%.
Latch is small. Its guidance calls for roughly $40 million in revenue this year, and its market cap is just $1.1 billion. Growth should be explosive for the next few years, making this a bargain that’s trading for less than its debut earlier this year as a special purpose acquisition company.
There’s a lot of money being spent to make sure that sports statistics are accurate and delivered promptly, and Genius Sports is a leader in this niche. It provides data and software solutions for the sportsbook and media industries, as gamblers and journalists need official scores and stats in a timely manner. Individual leagues and teams also turn to Genius to help them collect, analyze, and monetize data and live video.
Genius has more than 700 long-term partnerships in place, and one of them is the NFL. More than 97% of the U.S. market uses NFL data provided through Genius Sports.
It’s not the only player in this market, but it’s growing quickly. Revenue rose 70% in its latest quarter. The bottom line will take some time to get going, but for now, it’s scoring more-than-enough points to win the Wall Street game in 2022.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Rick Munarriz owns Genius Sports Limited and Latch, Inc. The Motley Fool owns and recommends Latch, Inc. The Motley Fool recommends Sirius XM Holdings Inc. The Motley Fool has a disclosure policy.