NEW YORK – Fearing the “falling knife,” money managers often avoid stocks priced under $10. Frances Tuite has no such qualms.
“Low-priced stocks often carry the stigma of high risk and poor quality,” says Tuite, portfolio manager at Talon Opportunity Partners, a Chicago hedge fund with $40 million under management. “In many cases, that’s true,” she adds, “but you shouldn’t throw the baby out with the bathwater.”
One of Tuite’s under-$10 recommendations is Tyler Technologies (nyse: TYL – news – people ), currently priced at $3.75. The Dallas-based company provides software and technology systems for local and county governments, including 911 dispatch, utility billing, vehicle data and tax collection.
In an effort to clean up its balance sheet, Tyler Technologies has shed assets and sold businesses. Since mid-2000, the company has reduced its long-term debt load by 82%, to $12 million. Long-term debt now stands at 12% of shareholders’ equity “They have a very focused product line and improving cash flow from operations,” says Tuite.
Full story at Forbes.com