We looked for investing deals based on analyst ratings and P/E ratios, to find you 6 stocks under 5 bucks.
Micro-caps are riskier than many other stocks. The first concern is the fact that they're usually younger, more volatile companies. And since price changes are likely to be incremental, it's hard to make very much money investing in them without buying a lot of shares. But that means these stocks are also usually high-risk, high reward.
Biotech stocks in particular can be risky, because the success of their stock price often hinges on some sort of FDA approval – a process that can take years. But then, a blockbuster new drug with FDA approval and exclusive access to consumers can send prices soaring.
That being said, while the bargain bin is usually stuffed with more trash than treasure, we at Kapitall Wire are never wary about diving in for a closer look.
We decided to revive a popular stock screen from Kapitall Wire looking exclusively at stocks that are trading for less than $5. However, to be sure we were looking for bargains and not diving into dumpsters, we decided to add a couple more parameters this time around. The most obvious one? Analyst ratings.
Analyst ratings are released by the major firms who compile data on different securities and weigh the information into ratings. Ratings can refer to whether a stock is a 'buy' or a 'sell' or whether it's expected to 'outperform' its sector or not.
However, since the major banking firms are also in the business of getting their clients to actually buy these stocks – they have a tendency to be inflated. If every stock with a 'buy' rating was sure to go up, playing the stock market wouldn't be that hard at all.
So we screened for stocks under $5 with multiple 'strong buy' ratings. To do this we only looked at stocks that had been rated at least five times, and from at least two different firms.
Then, we wanted to consider how well the companies perform when it comes to generating returns for their investors. Since these firms are somewhat young we were interested in how they would perform in the future – so we also limited our universe to only include stocks with a forward price to earnings ratio (forward P/E) below 15.
Forward P/E looks at a stock's P/E ratio combined with estimated future earnings. If a company's forward P/E ratio is lower than the current P/E ratio, this indicates there is optimism about the stock's future earnings growth.
We were left with 6 stocks under 5 bucks. Deal or no deal?
Click on the interactive chart below to see analyst ratings over time.
Are any of these small cap stocks poised to grow? Use the list below as a starting point for your own analysis.
1. LoJack Corp. (LOJN, Earnings, Analysts, Financials): Provides technology products and services for the tracking and recovery of mobile assets, stolen vehicles, motorcycles, construction equipment, cargo, and people at risk. Market cap at $81.95M, most recent closing price at $4.75.
Forward P/E: 10.76.
2. SIGA Technologies, Inc. (SIGA, Earnings, Analysts, Financials): Engages in the research, discovery, development, and commercialization of novel products for the prevention and treatment of infectious diseases. Market cap at $182.12M, most recent closing price at $3.43.
Forward P/E: 4.7.
3. Rentech, Inc. (RTK, Earnings, Analysts, Financials): Provides alternative and clean energy solutions; and manufactures and sells nitrogen fertilizer products. Market cap at $472.98M, most recent closing price at $2.05.
Forward P/E: 10.62.
4. UR-Energy Inc. (URG, Earnings, Analysts, Financials): Engages in the identification, acquisition, evaluation, exploration, and development of uranium mineral properties. Market cap at $126.14M, most recent closing price at $1.03.
Forward P/E: 12.12.
5. Ultrapetrol (Bahamas) Ltd. (ULTR, Earnings, Analysts, Financials): Provides marine transportation services primarily in South America, Europe, and Asia. Market cap at $522.36M, most recent closing price at $3.71.
Forward P/E: 14.11.
6. Lloyds Banking Group plc (LYG, Earnings, Analysts, Financials): Provides various banking and financial services to personal and corporate customers primarily in the United Kingdom. Market cap at $88.77B, most recent closing price at $4.94.
Forward P/E: 10.98.
(List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research. All other data sourced from Finviz.)
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- LoJack Corp. (LOJN, Chart, Download SEC Filings)
- SIGA Technologies, Inc. (SIGA, Chart, Download SEC Filings)
- Rentech, Inc. (RTK, Chart, Download SEC Filings)
- UR-Energy Inc. (URG, Chart, Download SEC Filings)
- Ultrapetrol (Bahamas) Ltd.( ULTR, Chart, Download SEC Filings)
- Lloyds Banking Group plc (LYG, Chart, Download SEC Filings)
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