Barron's Highlights 11 Stocks Under $10 (MOT, TLAB, LUV, BSX, SBUX, TSN)

In this down market, Barron's believes their are many bargains to be had so Barron's decided to run a screen for S&P 500 stocks under $10. Barron's narrowed the list of 80 stocks by screening for companies likely to increase earnings per share in 2009. Additionally, Barrons' further filtered out highly leveraged companies, by only focusing on companies with long-term debt obligations of less than 50% of total capitalization, which left it with 11 stocks. Keep this list handy as there are several good ideas presented here.

The list of stocks includes: four telco companies - Tellabs (Nasdaq: TLAB), Motorola (NYSE: MOT), Compuware (Nasdaq: CPWR) and Jabil Circuit (NYSE: JBL). It includes two food-related stocks: Tyson Foods (NYSE: TSN) and Starbucks (Nasdaq: SBUX). Rounding out the group is Boston Scientific (NYSE: BSX), Genworth (NYSE: GNW), Southwest Airlines (NYSE: LUV), Eastman Kodak (NYSE: EK) and Interpublic Group (NYSE: IPG).

Eastman Kodak fell to $6.60 after withdrawing its '08 guidance sales and operating earnings. Kodak has reduced long-term debt to about 22% of total capital, and generates enough cash to pay a dividend of 50 cents a share, for a yield of 6.9%. Kodak sells for less than half book value of $16.30 per share.

Motorola's shares are down YTD 74% to a recent 4.22. S&P's cut the Motorola's credit rating earlier this month to junk status, and two analysts reversed their 2009 profit outlooks to an expected loss. Yet, long-term debt equals only 21% of total capital, and the next payment isn't due until November 2010. Broadpoint thinks Motorola could appreciate over 140% over the next 12 months.

Genworth shares have fallen 90% this year, to 2.58. Profits have been hurt by loan defaults, scarce credit and investment losses, but fees from annuity and investment-advisory businesses should put a floor under earnings.

Compuware is down 30% YTD, compared with a 45% drop for the application-software sector. Compuware, which trades around $6 and operates on a fiscal year, could generate earnings of 57 cents a share for the 12 months ending March 2009, up 6% from fiscal 2008's results.

Jabil Circuit shares are down about 55% YTD, to 6.81, and sell for six times "09 estimates. Jabil reports quarterly earnings this week, could see profits jump 4% for the fiscal year ending in August, to $1.16 a share.

Tellabs' shares have fallen 40% this year, to a recent $3.91 apiece. Analysts expect Tellabs to boost '09 earnings by a penny a share, to 19 cents and Tellabs has no long-term debt.

Starbucks has fallen 53% this year, to about 9.50. Barron's wrote a positive piece on Starbucks back in September, when the shares were at 15, and Barron's continues to like steps management is taking to boost sales and profits.

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Tyson Foods' shares have fallen to around $7 a share from about 19.50. Yet, even as rival Pilgrim's Pride struggles in bankruptcy court, Tyson expects higher earnings in fiscal "09 and "10. T

Southwest Airlines is down about 35%, to $7 and change. But next year LUV's earnings could rally 50%, according to analysts, and the company's balance sheet looks healthy. The same story holds true for Boston Scientific, which faces harsh competition in its bread-and-butter business, cardiac stents, but still expects to show profit growth in 2009.

Interpublic is definitely still risky as advertising is expected to plummet, but analysts are still expecting Interpublic to post a one-cent gain in earnings in 2009.

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