This screen is a bit of a departure from my normal stock screens.
Usually I require my screens to have a minimum price of $10 per share.
But I do at times scan for stocks under $10. And that’s one of the screens I’m running for myself right now.
One dollar is a common threshold when screening for stocks. A lot of investors actively avoid penny stocks due to the speculative nature, the often wide bid/ask spreads, and the excessive volatility that is all too common in stocks under $1.00.
But some, of course, work out spectacularly well. And that’s probably what keeps people interested in them.
Seeing a stock make a 100% return or 200% return or more from a base of 50 cents, for example, seems easier than investing in a $50 stock or $100 stock and seeing that double or triple.
Five dollars is another common minimum when screening for stocks since many institutional investors won’t even consider a stock if it’s trading under $5. And since institutional investors are usually the ones that can move a stock; having stocks that are open to them is usually a bonus.
And quite frankly, lots of cheap stocks are cheap for a reason, i.e., that’s all they’re worth.
But being over $5 does put them into a different category of consideration. Maybe not the best category, but a step up from stocks less than a dollar.
Stocks Under $10
My minimum has typically been $10. With over 10,000 stocks out there, this minimum quickly lets me cull down several thousand stocks with a click of a button.
That doesn’t mean there aren’t any good stocks below that price point, because there are.
And I can recall several sub-$10 stocks in the past that worked out exceptionally well. Maybe it’s because I use them sparingly. Or maybe it’s because I’m ultra picky in selecting them.
Either way, there can be a place for cheaper stocks in your portfolio sometimes.
And that’s what we’re looking at today.
- Price less than or equal to $10
- Average Dollar Volume greater than or equal to $1,000,000
(Price x volume shows you how much money is trading in and out of the stock on a daily basis.)
- Weekly Volume greater than Previous Week’s Volume (any two out of three weeks)
(Want to see increasing volume to show greater investor interest and demand.)
- Zacks Rank less than or equal to 3
(No Sells or Strong Sells.)
- Average Broker Rating less than or equal to 3.5
(Average Broker Rating of a Hold or Better.)
- # of Analysts in Rating greater than or equal to 2
(Minimum of at least two analysts covering the stock.)
- % Change F1 Earnings Estimate Revisions — 12 Weeks greater than or equal to 0
(Preferably upward earnings estimate revisions, but definitely no downward revisions.)
Here are 5 stocks that made it through this week’s screen:
Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:
1. OfficeMax Incorporated (OMX, Earnings, Analysts, Financials): Distributes business-to-business and retail office products. Market cap at $668.78M, most recent closing price at $7.72. Click to view Zack’s Analyst Report.
2. Stewart Enterprises Inc. (STEI, Earnings, Analysts, Financials): Provides funeral and cemetery products and services in the death care industry in the United States and Puerto Rico. Market cap at $718.05M, most recent closing price at $8.41. Click to view Zack’s Snapshot Report.
3. Sealy Corporation (ZZ, Earnings, Analysts, Financials): Together with its subsidiaries, manufactures and markets various bedding products. Market cap at $213.06M, most recent closing price at $2.05. Click to view Zack’s Snapshot Report.
4. CalAmp Corp. (CAMP, Earnings, Analysts, Financials): Develops and markets wireless communications solutions that deliver data, voice, and video for critical networked communications and other applications in the United States. Market cap at $213.4M, most recent closing price at $7.42. Click to view Zack’s Snapshot Report.
5. National Penn Bancshares Inc. (NPBC, Earnings, Analysts, Financials): Operates as the bank holding company for National Penn Bank that provides commercial banking products and services to residents and businesses primarily in eastern and central Pennsylvania. Market cap at $1.42B, most recent closing price at $9.47. Click to view Zack’s Snapshot Report.
I think each one of these picks has big potential. And the entire list is worth a thorough analysis.
I would not suggest filling up an entire portfolio of stocks under $10 though. But adding a careful selection of some of the best cheap stock names could add some excess returns to your bottom line, not to mention a little excitement to your stock picking process as well.
Get the rest of the stocks on this list and start screening for the best stocks under $10 for yourself. And don’t forget to backtest your strategy so you’ll know how successful it’s been before you put any of your money at risk. You can do it.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: http://www.zacks.com/performance/.
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
- OfficeMax Incorporated (OMX, Chart, Download SEC Filings)
- Stewart Enterprises Inc. (STEI, Chart, Download SEC Filings)
- Sealy Corporation (ZZ, Chart, Download SEC Filings)
- CalAmp Corp. (CAMP, Chart, Download SEC Filings)
- National Penn Bancshares Inc. (NPBC, Chart, Download SEC Filings)
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Dollar bill origami by Won Park.