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5 stocks for less than 50 cents

While there is no immediate correlation between a stated share price and the market capitalisation of a company – you need to multiply the share price by the number of shares on issue to find that out – more often than not, companies trading for less than 50 cents per share are likely to be smaller companies and still in their formative years.

Here are four companies which fit that bill and could be worth investors monitoring for developments.

1)      Folkstone (ASX: FLK) is a property developer and fund manager which has recently boosted its funds under management thanks to two new fund raisings closing oversubscribed. Folkstone’s Managing Director is Greg Paramor who has previous experience as the CEO of property giant Mirvac (ASX: MGR).

2)      Rubik Financial (ASX: RFL) is a provider of software for financial institutions. The business has received a significant boost in its operations via the acquisitions of the Coin and Visor software businesses from Macquarie Group (ASX: MQG) and the acquisition of Provisio. Given both the continued demand for financial services and the need for organisations to rein in costs through initiatives such as process automation, Rubik would appear well placed to grow its business.

3)      AMA Group (ASX: AMA) operates in the automobile after-care market with businesses including smash repair panel shops and the manufacture and sales of vehicle protection equipment. The business is run by the very capable Ray Malone, who has a track record of acting in the interests of shareholders. The stock currently yields a 4.7% dividend.

4)      CogState (ASX: CGS) has developed computerised tests for analysing a person’s brain cognition. Cogstate’s products have a number of applications, including for use with sports injuries that result in concussion and for the monitoring of Alzheimer’s disease. There has been a reasonably steady flow of positive announcements from the company during 2013 along with a capital raising.

5)      Universal Biosensors (ASX: UBI) share price has fallen from a high of around $2 in 2010 to its current price of 46 cents. The specialist medical diagnostics company has developed a clever diagnostic test for patients. However, as with many early stage businesses it hasn’t been all smooth sailing.

Foolish takeaway

There are often higher risks associated with smaller early-stage companies, however the rewards for investors who discover a quality business early and hold it for the long-term can be substantial.

Smaller companies can be less reliable dividend payers.

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Motley Fool contributor Tim McArthur owns shares in Rubik Financail.

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