All the talk this morning is about Greece and the prospect of it leaving the euro and the developing inability of Puerto Rico to pays its bills. I am watching the situation and am aware of developments, but I have nothing meaningful to add to the cacophony surrounding those two hot spots. I have a small position in two Greek banks and would love to snap up some Puerto Rican bank stock and bonds in a panic, but there is nothing to do today so I will simply keep an eye out for developing activities. There is little reason to either panic or celebrate.
In order to avoid the uniformed punditry, grand prognostication and general swell of noise that this week is likely to produce, I am declaring this to be low-priced stock week in my corner of Real Money. All of my career, I have heard all the pros and cons of buying low-priced stocks and dealt with the perception that they are somehow riskier than higher-priced stocks. If we use the same valuation and analysis approach to low-priced stocks that we do their higher-priced cousins, I think it is actually a level playing field. At the end of the day, the truth is that we like owning them. For right or wrong, it is more intellectually and emotionally satisfying to own 1,000 shares of a $5 stock than to own 50 shares of a $100 stock.
I am going to start the week by getting outside my carefully constructed value box and see if I can find some single-digit growth stocks. Although I prefer the value approach, many like to buy fast growers and my kids have a mild penchant for such as well. I looked for companies that have been growing sales and earnings by at least 15% a year for the past one- and five-year periods and are expected to continue to grow at that pace for the next five years.
One of the more interesting and potentially exciting stocks I uncovered is Enphase Energy (ENPH). The company has grown earnings -- or more accurately with this company, reduced losses -- by about 15% a year over the past five years while revenues have grown by 76% a year. If the analysts are anywhere near accurate, this stock may be on the verge of liftoff. It's no secret I am suspect of analyst projections, but if they are just in the general neighborhood of accurate with this stock, shares of Enphase could easily double or more over the next few years. The company is expected to be profitable in 2015 and nearly triple the bottom line in 2016 followed by EPS growth of around 35% annually for five years.
The company is in the right business for this type of growth. It makes semiconductor-based micro-inverter systems that the company says convert energy at the individual solar module level and bring a systems-based, high-technology approach to solar energy generation. Enphase says its products increase energy production, simplify design and installation, improve system uptime and reliability, reduce fire safety risk and provide a platform for intelligent energy management. The company is clearly doing something right, as the news feed for this company shows a continual string of contract wins and new solar partnerships. This stock may deserve a home in aggressive growth portfolios because, if it delivers on expectations, the stock will be a home run.
Hudson Technologies (HDSN) is in the refrigeration and coolant industry. It sells refrigerants and also provides reclamation services as well as system service and optimization. While that is not a glamorous business, the results have been solid as it has grown sales by over 18% and earnings by more than 30% for the past five years. Hudson is by far the largest declaimer of the commonly used refrigerant R-22, which will be phased out by 2020. This should create a huge opportunity for them over the next few years as the coolant is in short supply and users increasingly turn to reclaimers like Hudson. I am a huge fan of skin in the game, and Hudson management has plenty as they own more than 20% of the company. Earnings should grow at a very high rate for the next five years if not longer. This is probably a good fit for long-term, growth-oriented portfolios.
Tomorrow I will apply some of my more traditional value screens to find low-priced bargains with the potential for huge long-term returns.