NEW YORK (TheStreet) –- Investors looking for growth and value in 2015, a year poised to start with stocks near historic highs, may find them in Rite Aid (RAD) , Nokia (NOK) and Sirius XM (SIRI) , all of which are trading under $10 and have favorable business outlooks.
Investors will undoubtedly look for fresh opportunities for growth and value in 2015 after such heady returns. To that end, Rite Aid, Nokia and Sirius XM are three stocks to keep an eye on. Take a look at the chart.
Aside from trading under $10, they offer the sort of diversification conservative investors love, given that they're in three different sectors. Another advantage the stocks share are potential tailwinds that aren't currently factored into their prices.
Rite Aid, the nation's third-largest pharmacy retailer, has had a remarkable year, posting 2014 gains of close to 50%. Investors have made a lot of money. But they also remember that shares were up as much as 60% in the first half of the year. Chances are, Rite Aid, which has a high analyst 12-month price target of $8.50 (12.4% premium), will have another strong first half in 2015 thanks to its own promotional efforts and external factors like Obamacare.
The company is growing its profits margins, which should boost earnings. To better compete with CVS Health (CVS) and Walgreen's (WAG) , Rite Aid has invested in marketing and promotional activities which have begun to pay off.
In the most recent quarter, the company reported a 5.4% jump in same-store sales growth, which means Rite Aid is getting more customers into its stores. And they're spending more, too. Its third-quarter profits were 10 cents a share, doubling analysts' estimate of 5 cents per share.
For 2015, the stock should reach $9 on the basis of margin expansion and growing profits. Coupled with the company's growth in generic prescription drugs, and benefits from the Affordable Care Act, Rite Aid may surprise by raising guidance a couple of times next year, meaning $9.50, or a 25% premium to the current share price, might be attainable.
Next on the list is Nokia, which has been a relative disappointment in 2014, posting gains of just 2.65%. At around $7.97 a share, the stock is cheap, not just on price but also valuation.
Nokia is trading at just 10 times trailing earnings, which is more than half the average valuation of companies in the S&P 500, where the average P/E is over 21.
Still, over the last three years, Nokia shares are up 60%. And in 2015, those gains are likely to continue.
After selling its handset business to Microsoft (MSFT) in 2013, Nokia is no longer competing with Apple (AAPL) in smartphones, meaning it is no longer burning through cash trying to compete for a market it could never win.
By focusing more on services and not hardware, Nokia has been able to grow cash each quarter, and now has a net cash position of more than $6 billion. That means Nokia can now become more aggressive and attack new markets.
Nokia, which has a high analyst 12-month price target of $13 (63% premium), has a more attractive business, and its yield of 1.88% raises its investment profile.
Last but not least is Sirius XM, which is up just 1% on the year -- not what investors expected after gains of almost 500% in the last five years.
Though revenue has climbed close to 12% in 2014, the company's earnings haven't been enough to support a higher stock price. But that can change, boosted by strong auto sales, which Sirius needs in order to continue growing its satellite radio subscribers.
According to J.D. Power and Associates, auto sales are expected to climb in 2015, reaching 13.83 million -- the highest level in a decade. And when including fleet vehicles, rental car companies and vehicles sold to corporation and government agencies, industry experts believe sales can rise as high as 17 million next year.
All of this bodes well for Sirius, which has a median analyst 12-month price target of $4.30, suggesting gains of 22%, while its high analyst target of $5 would mean gains of 41%.
With the stock trading at just $3.53, Sirius is poised to rebound in 2015. But what's going to drive the shares higher is how well Sirius can turn its subscribers into profit-producers by getting them to pay more to help grow its bottom line.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.