Investing 101: Rallying Stocks Under $5 Undervalued to Analyst Estimates

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(List compiled by Becca Lipman)

Penny stocks have a solid reputation for being risky investments. However, if the potential rewards excite you, then the list below may provide an interesting starting point for your search.

To create the following list of penny stocks (priced under $5) we chose the names with a market cap above $300M that also met the following bullish indicators:

•    Rallying above 20, 50 and 200 day market average (MA).
•    Undervalued to analyst target price by over 20%

Want clarification on the terms used above? You got it:  

Analyst target prices can be very useful guides for investors. The target price is a price level set by analysts that, based on their data and estimates, represents their predictions for that company in the upcoming year. Because analysts often have different opinions, we use the average analyst target price.
When a company's current market price is deeply lagging to the target price, it may signal that the company has more value to price in (meaning, the stock price may rise).

When a stock is rallying it means its price is performing above its market average price for a given time period. It is presented as a percentage of price relative to the average (ie, 10% above the average). When a stock is performing above its 20 day moving average (MA), also known as simple moving average (SMA), as well as its 50 and 200 day moving averages, it signals bullish momentum. 

Now that you’re armed with information, how do you feel about the following list of stocks? Do you think they have more value to cash in? Will their momentum push them towards their target prices? Use the list below as a starting point for your own analysis.  

Analyze These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

1. Abraxas Petroleum Corp. (AXAS): Independent Oil & Gas Industry. Market cap of $410.03M. The stock is currently trading 14.55% above its SAM20, 11.79% above its SMA50, and 1.72% above its SMA200. Current price at $4.33 vs. target price at $6.20. Implies a potential upside of 43.33%. The stock is a short squeeze candidate, with a short float at 21.2% (equivalent to 8.32 days of average volume). The stock has had a good month, gaining 37.96%.

2. BioSante Pharmaceuticals, Inc. (BPAX): Biotechnology Industry. Market cap of $340.70M. The stock is currently trading 14.46% above its SAM20, 22.88% above its SMA50, and 68.38% above its SMA200. Current price at $3.45 vs. target price at $5.8. Implies a potential upside of 68.12%. The stock is a short squeeze candidate, with a short float at 14.9% (equivalent to 5.08 days of average volume). The stock has had a good month, gaining 40.0%.

3. Charming Shoppes Inc. (CHRS): Apparel Stores Industry. Market cap of $512.66M. The stock is currently trading 2.91% above its SAM20, 4.63% above its SMA50, and 14.95% above its SMA200. Current price at $4.29 vs. target price at $6. Implies a potential upside of 39.86%. This is a risky stock that is significantly more volatile than the overall market (beta = 3.48). The stock is a short squeeze candidate, with a short float at 9.24% (equivalent to 8.53 days of average volume). The stock has had a good month, gaining 16.36%.

4. Curis Inc. (CRIS): Biotechnology Industry. Market cap of $304.64M. The stock is currently trading 5.06% above its SAM20, 6.35% above its SMA50, and 37.26% above its SMA200. Current price at $3.81 vs. target price at $5.4. Implies a potential upside of 41.73%. The stock is a short squeeze candidate, with a short float at 7.47% (equivalent to 9.4 days of average volume). The stock has had a good month, gaining 30.82%.

5. Denny's Corporation (DENN): Restaurants Industry. Market cap of $400.63M. The stock is currently trading 0.27% above its SAM20, -0.16% above its SMA50, and 3.44% above its SMA200. Current price at $3.95 vs. target price at $5. Implies a potential upside of 26.58%. The stock has gained 1% over the last quarter.

6. Dynavax Technologies Corporation (DVAX): Drug Manufacturers Industry. Market cap of $353.52M. The stock is currently trading 5.83% above its SAM20, 11.08% above its SMA50, and 13.53% above its SMA200. Current price at $2.95 vs. target price at $6. Implies a potential upside of 103.39%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.7). The stock is a short squeeze candidate, with a short float at 9.13% (equivalent to 9.68 days of average volume). The stock has had a good month, gaining 19.84%.

7. GenOn Energy, Inc. (GEN): Electric Utilities Industry. Market cap of $3.16B. The stock is currently trading 2.58% above its SAM20, 3.03% above its SMA50, and 3.53% above its SMA200. Current price at $3.97 vs. target price at $4.8889. Implies a potential upside of 23.15%. The stock has gained 11.41% over the last quarter.

8. Hyperdynamics Corporation (HDY): Oil & Gas Drilling & Exploration Industry. Market cap of $700.90M. The stock is currently trading 1.46% above its SAM20, 4.61% above its SMA50, and 1.61% above its SMA200. Current price at $4.36 vs. target price at $8. Implies a potential upside of 83.49%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.44). The stock is a short squeeze candidate, with a short float at 13.84% (equivalent to 6.66 days of average volume). The stock has gained 3.94% over the last quarter.

9. Immunomedics Inc. (IMMU): Diagnostic Substances Industry. Market cap of $311.48M. The stock is currently trading 2.21% above its SAM20, 2.11% above its SMA50, and 11.43% above its SMA200. Current price at $4.08 vs. target price at $6.25. Implies a potential upside of 53.19%. The stock is a short squeeze candidate, with a short float at 13.96% (equivalent to 16.67 days of average volume). The stock has had a good month, gaining 14.4%.

10. Lexicon Pharmaceuticals, Inc. (LXRX): Biotechnology Industry. Market cap of $590.91M. The stock is currently trading 2.8% above its SAM20, 6.67% above its SMA50, and 2.02% above its SMA200. Current price at $1.72 vs. target price at $2.75. Implies a potential upside of 59.88%. The stock has had a good month, gaining 15.13%.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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