A lot of stocks that started out 2020 with single-digit price tags either buckled under the financial pressure or graduated into the double digits. But there are still some potential winners among low-priced stocks looking for a kinder market in 2021.
Sirius XM Holdings (SIRI 0.22%), Glu Mobile (GLUU), and Casper Sleep (CSPR) all enter the new trading week below $10. Let's go over the catalysts that would make market-thumping returns possible in the year ahead. The prices quoted are as of Friday's market close.
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Sirius XM Holdings ($6.42)
Sirius XM's impressive streak of generating positive annual returns -- stretching all the way back to 2009 -- appears likely to end in 2020. But you have to like its chance of bouncing back next year.
The satellite radio provider stalled earlier this year, and understandably so. When the pandemic bared its "shelter-in-place" teeth it meant an end to back-and-forth commutes to work, and less of a reason to subscribe to a platform that's consumed largely behind the wheel. Folks also were hesitant to make big-ticket car purchases, also getting in the way of the biggest driver for subscriber growth.
The climate is getting kinder, and Sirius XM impressed the market with a quicker-than-expected return to growth in its latest quarter, boosting its subscriber guidance in the process. Earlier this month Sirius XM inked a five-year extension with its most popular on-air talent -- and the new Howard Stern deal locks up exclusive access to his show's audio and video archives through the end of 2027.
With the COVID-19 vaccines on the way, things should get better in the year ahead. Sirius XM should enter 2021 with momentum and roughly 800,000 more self-pay subscribers than it had a year earlier. The stock may have taken a breather in 2020, but that's just more upside for Sirius XM in 2021.
Glu Mobile ($9.15)
We've been spending a lot more time on our phones this year in pursuit of diversions, and Glu Mobile has been a big beneficiary. The developer of mobile games has always had a good read on what we want to play when we have small pockets of time to kill. Fans of the Kardashian family have been playing Kim Kardashian: Hollywood since 2014, and every annual installment of its Tap Sports Baseball is drawing more downloads than the previous record year.
Its biggest games the last couple of years have been Design Home, where folks get to tap into their inner interior decorators and doll up homes, and Covet Fashion, where budding fashionistas get to play stylists. The same Glu Mobile team behind those two releases is putting out a new game -- Table & Taste -- next year, where players compete on food pairings, meal aesthetics, and plate decor. It may not seem like a winning recipe, but folks probably thought the same thing about Design Home and Covet Fashion.
Momentum is definitely rolling in Glu Mobile's favor as 2020 plays out. Revenue went from rising 12% to 40% to 48% in each of this year's first three quarters. Investors are starting to pay attention to Glu Mobile again after back-to-back blowout quarters, but the low stock price tells you that you're still early to the game.
Casper Sleep ($6.77)
There have been a lot of hot IPOs in 2020, but if you bought into this consumer-direct mattress company you probably look like you've seen a ghost. Casper Sleep hit the market at $12 in February, but it's now trading for just a little more than half of its original IPO price tag.
The markdowns seem well earned at first. After seeing revenue climb 43% in 2018 and 23% last year the stock has been cut in half since its February debut. Contrasting Glu Mobile's growth accelerating through 2020, Casper Sleep followed up a 26% top-line gain in the first quarter with a 16% increase and then a 3% decrease in revenue in subsequent reports.
Thankfully the trend appears to be reversing itself in the current quarter. Casper Sleep's guidance calls for $132 million to $142 million in revenue, translating into single-digit consolidated growth and a double-digit increase in North America. We've been spending more time than usual in bed this year, and that's going to make replacing our mattresses a popular big-ticket purchase in 2021. It's a good time for Casper Sleep to finally give its investors a good night of sleep.
