Caution: Stocks Under $5 With Bearish Sentiment from Short Sellers

We get it, low priced stocks are attractive investments. If price goes up, even by a few cents, your percentage gain can be quite handsome. But the same goes with the downside potential, so always look both ways before leaping into an investment.

With this in mind we’ve come up with a list of low priced stocks, between $1 and $5, that have displayed a warning sign that potential (and current) investors should note.

Short sellers, who benefit when share price falls, are very interested in these stocks. Month over month, their “short positions” have increased significantly – a sign of increased pessimism for their near term performance.

Short sellers aren’t always correct, but they are considered more sophisticated than average main street investors. Their collective trading activities can help predict near-term stock performance.

So, do you agree with short sellers on this one? Are they right to be pessimistic about these low-priced stocks? Use this list as a starting point for your own analysis. List Average 1-Year Return: -45%.

Press play on the Compar-O-Matic to compare changes in average analyst recommendation for the stocks listed below

1. Hampton Roads Bankshares Inc. (HMPR, Earnings, Analysts, Financials): Operates as the bank holding company for Bank of Hampton Roads (BOHR) and Shore Bank that provide community and commercial banking services primarily to individuals and small to medium-sized businesses. Market cap at $876.39M, most recent closing price at $1.28. Shares shorted have increased from 2.22M to 3.53M over the last month, an increase which represents about 6.17% of the company’s float of 21.23M shares. Days to cover ratio at 39.67 days.

2. Advanced Micro Devices, Inc. (AMD, Earnings, Analysts, Financials): Operates as a semiconductor company in the United States, Japan, China, and Europe. Market cap at $1.54B, most recent closing price at $2.18. Shares shorted have increased from 120.95M to 142.22M over the last month, an increase which represents about 3.37% of the company’s float of 630.69M shares. Days to cover ratio at 5.61 days.

3. Thompson Creek Metals Company Inc. (TC, Earnings, Analysts, Financials): Engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. Market cap at $467.38M, most recent closing price at $2.77. Shares shorted have increased from 21.46M to 23.00M over the last month, an increase which represents about 1.06% of the company’s float of 145.18M shares. Days to cover ratio at 10.33 days.

4. Heckmann Corporation (HEK, Earnings, Analysts, Financials): A holding company, acquires or makes investments in various businesses. Market cap at $638.7M, most recent closing price at $4.21. Shares shorted have increased from 34.47M to 38.33M over the last month, an increase which represents about 2.98% of the company’s float of 129.55M shares. Days to cover ratio at 9.32 days.

5. Power-One Inc. (PWER, Earnings, Analysts, Financials): Designs, manufactures, and markets power conversion and power management solutions for the renewable energy (RE), communications infrastructure, and other technology markets. Market cap at $539.12M, most recent closing price at $4.41. Shares shorted have increased from 5.58M to 6.75M over the last month, an increase which represents about 1.15% of the company’s float of 101.45M shares. Days to cover ratio at 3.11 days.

6. Dendreon Corp. (DNDN, Earnings, Analysts, Financials): Engages in the discovery, development, and commercialization of therapeutics to enhance cancer treatment options for patients. Market cap at $668.38M, most recent closing price at $4.33. Shares shorted have increased from 43.08M to 45.83M over the last month, an increase which represents about 1.88% of the company’s float of 146.13M shares. Days to cover ratio at 9.98 days.

7. Exelixis, Inc. (EXEL, Earnings, Analysts, Financials): Engages in the discovery, development, and commercialization of small molecule drugs for the treatment of cancer, metabolic, and cardiovascular disorders. Market cap at $843.89M, most recent closing price at $4.72. Shares shorted have increased from 37.18M to 38.66M over the last month, an increase which represents about 1.08% of the company’s float of 137.04M shares. Days to cover ratio at 9.44 days.

8. GT Advanced Technologies Inc. (GTAT, Earnings, Analysts, Financials): Provides polysilicon production technology and multicrystalline ingot growth systems, and related photovoltaic (PV) manufacturing services for the solar industry worldwide. Market cap at $566.06M, most recent closing price at $4.77. Shares shorted have increased from 28.46M to 34.25M over the last month, an increase which represents about 4.92% of the company’s float of 117.66M shares. Days to cover ratio at 10.12 days.