Andrew Snyder says that in today’s market it is vital to invest only in the companies with the best chance of survival. Prestige Brands (NYSE:PBH) gets little attention, but it has strong sales, a solid balance sheet and an undervalued share price. Andrew says this makes it one of the best stocks under $10 in the market right now.

This from Today’s Financial news:

Look through the reports surrounding just about every publicly traded company and you will see one thing, a significant drop in demand for their products. With unemployment soaring and economic uncertainty scaring the wits out of consumers, almost every industry is plagued with plummeting sales and reduced revenues.

In times like this, it is critical to have the skills to pick out the winners and invest in only the companies with the best chances of survival. Look for strong brand image and a history of steady sales and stay away from companies with shaky books and big bills.

For perfect examples of what to look for, turn to McDonalds (NYSE:MCD) and Wal-Mart (NYSE:WMT). Both companies are synonymous with their industries and have seen more than one recession thrown at them. More importantly, their shares have been relative safe havens over the past six months.

Buy what you buy

Another company that gets much less attention, but has equally strong brand presence is Prestige Brands (NYSE:PBH). You may know the company through its Comet, Spic and Span, Cutex or its Chloraseptic brands. Chances are, if you open any bathroom or below-sink cabinet in your house, the company’s products will be right there in your face.

Investing in this company is the definition of investing in what you use, the strategy Warren Buffet used to get rich.

Obviously it takes more than a few powerful brands to make a winning investment. It takes a strong set of books and an undervalued share price. Depending on your definition, Prestige has both.

First, on the most basic level, the company has a single digit price-to-earnings multiple. In this economy, those figures mean very little as earnings can change with the wind. But Prestige is expected to announce quarterly earnings that are down by just a few pennies per share, so we should see that figure remain below double-digit territory.

When it comes to managing its debt, the mature company does quite well. Over the next twelve months, Prestige has just under $38 million in bills. With nearly $89 million in short-term assets and anticipated positive cash flow, the company has more than enough in reserves to see it through these economic doldrums.

The only thing I am not too fond of with Prestige is its lack of a dividend. The company has been around for more than a decade and is realizing a healthy net income, yet it gives nothing back to its shareholders. Its paltry revenue growth is a sign of a mature company, yet its payout is indicative of an early-stage growth company.

Overall, the company is strong and is in a position to make investors that get in now a lot of money. It is not perfect, but is definitely one of the best stocks under $10.

Take a look at what Prestige has to offer and see if it is right for your investment portfolio. The next time you go to the grocery store you could be buying products that you already own a piece of.

Source: Prestige Brands: The best stock under $10?

Last 5 posts by Andrew Snyder

• Warning! Warning! This is not good news - November 25th, 2009
• What’s better than gold? Anything! - November 24th, 2009
• What Obama was really doing in China - November 23rd, 2009
• Watching the dollar: No more Chicken Little - November 23rd, 2009
• Capitalism is alive and well - November 20th, 2009