This screen is a bit of a departure from my normal stock
Usually I require my screens to have a minimum price of $10 per
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
And that's what we're looking at today.
Price less than or equal to $10
Average Dollar Volume greater than or equal to
(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
(Average Broker Rating of a Hold or Better.)
# of Analysts in Rating greater than or equal to
(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:
Builders FirstSource, Inc.
Entravision Communications Corp.
FelCor Lodging Trust Inc.
Giant Interactive Group, Inc.
ON Semiconductor Corp.
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.
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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:
BUILDERS FIRSTS (BLDR): Free Stock Analysis
ENTRAVISION COM (EVC): Free Stock Analysis
FELCOR LODGING (FCH): Free Stock Analysis
GIANT INTERACTV (GA): Free Stock Analysis
ON SEMICON CORP (ONNN): Free Stock Analysis
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