Deal or No Deal: 6 Stocks Under 5 Bucks With Buy Ratings

Deal or No Deal: 6 Stocks Under 5 Bucks With Buy Ratings

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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.)

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2 Responses to “Deal or No Deal: 6 Stocks Under 5 Bucks With Buy Ratings”

  1. Brian Brown says:

    Do you want to re-write this article? So far these don't look all that hot?

    • James says:

      Thanks for your comment!

      We run a screen on small-cap growth stocks pretty much every week, since though risky they're also an important part of a well-rounded portfolio and investors are less likely to know about them.

      Building a portfolio out of this list (or a similar one) alone is not a wise investing move. But some of these lists do perform pretty well, like this one we revisited this week:
      http://wire.kapitall.com/investment-idea/deal-or-….

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