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Stocks Under $10 With DavidPeltier

 Stocks Under $10

Stocks Under $10 Weekly Roundup

By David Peltier | 02/27/15 - 04:37 PM EST

U.S. stocks ticked higher this week to end February, which saw the best monthly performance for several broader market averages in over three years. We used a 21% advance in Cott (COT) this week to take profits on Thursday and sell 250 shares for the model portfolio. We also lowered our rating on the company from One to Two.

Cott has been the best performer in the model portfolio, gaining 41% year-to-date (YTD). The portfolio as a whole has gained nearly 8% in the first two months of year, as other winners include: Pacific Sunwear (PSUN, +28% YTD), ON Semiconductor (ONNN, +26% YTD), Standard Pacific (SPF, +20% YTD), Unilife (UNIS, +18% YTD) and TherapeuticsMD (TXMD, +15% YTD). On the other hand, Vantage Drilling (VTG) has lost 21% YTD.

As the calendar turns over to March next week, we still have three earnings reports in the model portfolio scheduled. In addition, it will be busy on the economic front, with several tertiary reports to be issued ahead of Friday's February jobs data. Economists are looking for the addition of 230,000 nonfarm payrolls in the month, in addition to a decline in the unemployment rate to 5.6%.

Here is a list of companies in the model portfolio that have already confirmed reporting dates:

March 2 -- McDermott (MDR)

March 5 -- Martha Stewart Living Omnimedia (MSO)

March 6 -- Vantage Drilling (VTG)

March 10 -- TherapeuticsMD (TXMD)

As a reminder:

-- A Game Breaker is going to change the landscape of an industry, as Intel (INTC), Microsoft (MSFT) and Wal-Mart (WMT) did in their respective sectors. Investors can make big money in these stocks by getting in before the crowd.

-- Inflection-Point stocks have a broken business model that's on the mend but have yet to be recognized by the market. Investors who recognize a turnaround early can pocket strong returns."

-- Stealth Stocks are often names unknown to the general public but can be hugely profitable investments -- especially when they have catalysts to boost their share prices.

Also, Ones are stocks that we would buy at their current quotes. Twos are stocks that we would buy on a pullback and Threes are names that we would sell into strength.

ONES

Active Power (ACPW; $1.95; 3,050 shares; 3.37% of the model portfolio; Game Breaker; $4.75 price target): Active Power's flywheel energy technology keeps its customers' mission-critical processes up and running. Its hardware uses half as much space as existing technologies do, but it generates twice as much power. The stock bounced back more than 6% this week, as management posted better-than-expected quarterly results on Tuesday. We believe management can continue to move the company back toward profitability in the coming quarters.

Atmel (ATML; $8.34; 1,000 shares; 4.73%, Inflection Point; $10 price target): The company makes microcontrollers used in electronics. The shares ticked lower this week, along with the broader market. We believe management can continue to expand margins in the coming quarters.

Ballantyne Strong (BTN; $4.41; 2,500 shares; 6.25%; Stealth Stock; $6.25 price target): Ballantyne distributes digital movie projectors and manufactures screens and lighting equipment for theaters. The stock rebounded 6% this week on little news. We continue to find value in the company, which we believe can trade up toward $6 by the end of the year.

Builders FirstSource (BLDR; $6.03; 1,400 shares; 4.78%; Inflection Point; $10.50 price target): The company distributes materials to homebuilders in the southern U.S. The shares pulled back 7% this week. That said, we'd consider adding to our position below $6, as we believe that Builders FirstSource can continue to gain market share in 2015.

Extreme Networks (EXTR; $3.56; 1,700 shares; 3.43%; Inflection Point; $8.75 price target): This maker of Ethernet switches recently doubled its size with the acquisition of Enterasys Networks. It was a quiet week for the stock, which moved nearly 3% higher. We maintain that management can improve productivity in the coming quarters.

McDermott (MDR; $2.50; 1,525 shares; 2.16%; Inflection Point; $11.50 price target): This engineering- and-construction firm focuses on building and designing offshore oil and natural gas facilities. The shares dropped 5% this week, ahead of the upcoming quarterly report on March 2. We will provide a full preview ahead of the results and believe that management can continue to turn the business around in the coming quarters.

Sonus Networks (SONS; $17.06; 310 shares; 3%; Inflection Point; $26.25 price target): The company makes communications equipment, including session border controllers and diameter signal controllers. The stock bounced back fractionally this week. We maintain new products can drive growth in the coming quarters.

Standard Pacific (SPF; $8.74; 750 shares; 3.71%; Inflection Point; $11 price target): This homebuilder generates the majority of its revenue in California. The shares added more than 2% to recent gains this week. The company has strong pricing power and we maintain the stock can trade up toward the double digits in the coming months.

Synovus Financial (SNV; $27.99; 264 shares; 4.19%; Inflection Point; $33.25 price target): This Georgia- based bank operates branches throughout the Southeast. The stock was hit with some profit-taking this week and fell fractionally. That said, we believe the company can continue to deliver above-average growth in 2015.

TherapeuticsMD (TXMD; $5.07; 2,225 shares; 6.39%; Game Breaker; $9.50 price target): The company develops hormone-replacement medicines for women. The shares ticked lower this week. TherapeuticsMD has an attractive clinical pipeline with multiple potential catalysts.

Yamana Gold (AUY; $4.27; 1,350 shares; 3.27%; Inflection Point; $12.50 price target): This gold-and- copper exploration company operates seven mines and several ongoing development projects in Brazil, Argentina and Chile. The stock bounced back nearly 9% this week. The underlying price of gold has stabilized and we believe management can improve margins in the coming quarters.

TWOS

Cott (COT; $9.68; 950 shares; 5.21%; Stealth Stock; $10 price target): Cott produces and distributes soft drinks, noncarbonated beverages and bottled water, primarily focusing on private-label items for major retailers. We sold 250 shares on Thursday, as the stock added 21% to recent gains this week. We also lowered our rating on the company from One to Two. Management delivered a surprise quarterly profit earlier in the week, but we didn't want to be greedy with our gains, as Cott has already moved 40% higher year-to-date.

Huntington Bancshares (HBAN; $10.94; 600 shares; 3.72%; Inflection Point; $11 price target): This Ohio- based bank operates more than 600 branches across six states. The stock added 2% to recent gains this week. The company acquired $900 million of commercial lease assets on Tuesday, for an undisclosed amount. Management expects the deal to be accretive to earnings in the first year.

Martha Stewart Living Omnimedia (MSO; $4.73; 1,350 shares; 3.62%; Inflection Point; $5.75 price target): The company operates in the home-goods segment, publishing magazines, producing broadcasts and licensing products to retailers. The shares moved fractionally lower this week, ahead of the quarterly report on March 5. We believe management can continue to unlock value from Martha Stewart's core brands in the coming quarters.

ON Semiconductor (ONNN; $12.75; 500 shares; 3.61%; Stealth Stock; $13.50 price target): The company makes analog, standard logic and discrete semiconductors for use in data and power management. The stock added 6% to recent gains this week, as management offered upbeat guidance at an analyst meeting on Thursday. Even so, ON Semiconductor is up a quick 27% year-to-date and we'd consider taking some profits off the table into the next market rally.

Pacific Sunwear (PSUN; $2.79; 3,000 shares; 4.74%; Inflection Point; $4 price target): This specialty retailer operates more than 500 stores in the U.S., selling surf- and skating-style apparel to teens and young adults. It was a quiet week for the shares, which moved fractionally lower. The company has a lot of sales momentum and we maintain the stock can move up toward $4 by the end of the year.

SandRidge Energy (SD; $1.77; 1,600 shares; 1.60%; Inflection Point; $8 price target): The company explores for natural gas and oil in the U.S., primarily onshore. The stock fell 23% this week, as oil prices continued to decline. That said, management posted quarterly results on Thursday that showed prudent expense management. SandRidge is projecting 6% production growth in 2015, while cutting capital spending by 56%. We maintain that shares can recover, along with underlying energy prices, in the coming months.

Unilife (UNIS; $3.95; 1,850 shares; 4.14%; Game Beaker; $6.50 price target): This manufacturer of retractable and prefilled syringes offers products with convenience, safety and comfort advantages. The shares ticked lower this week. We believe the company will ramp production and continue to sign new pharmaceutical partnerships in 2015.

Vantage Drilling (VTG; $0.37; 6,000 shares; 1.26%; Inflection Point; $2.25 price target): This offshore driller contracts its rigs for the exploration of oil and natural gas. The stock lost 6% this week, ahead of the quarterly report on March 6. The company's fleet is fully booked through 2015 and management is paying down debt.

Whiting Petroleum (WLL; $33.83; 123 shares; 2.36%; Inflection Point; $51 price target): Whiting explores for oil and gas in the Permian Basin, Williston Basin and Green River Basin. The shares fell 11% this week, as management announced quarterly results on Wednesday that fell short of expectations. That said, the company has stable finances and is guiding toward 6% production growth in 2015, while cutting capital spending by 50%.

Zix (ZIXI; $4.00; 2,250 shares; 5.10%; Stealth Stock; $5.75 price target): Zix is a leading producer of email-encryption software that enables doctors to automatically send information to pharmacies. The stock added 5% to recent gains this week, as management announced a contract renewal on Tuesday. The company is carrying a lot of sales momentum into 2015 and we believe shares can trade up toward the mid-single digits.

Regards,

David Peltier & the TheStreet Research Team

Whiting Petroleum's 4Q Disappoints
Stocks in Focus: WLL

Shares fall after missing top- and bottom-line estimates.

02/26/15 - 02:38 PM EST
Unloading Some Cott on Valuation
Stocks in Focus: COT

The stock has gained 38% year to date.

02/26/15 - 10:25 AM EST
Awaiting Whiting Results
Stocks in Focus: WLL

Sticking with oil company ahead of earnings.

02/25/15 - 01:30 PM EST
Stocks Under $10 Weekly Roundup

We cashed in on a top performer while the market had a strong month.

02/27/15 - 04:37 PM EST

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Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Stocks Under $10 Holdings

Stocks we would buy right now

Symbol % Portfolio
Weighting
Industry Trade Now
ACPW 3.37% Industrial
ATML 4.73% Electronics
AUY 3.27% Metals & Mining
BLDR 4.78% Retail
BTN 6.25% Consumer Durables
COT 5.21% Food & Beverage
EXTR 3.42% Computer Hardware
MDR 2.16% Energy
SNV 4.19% Banking
SPF 3.71% Materials & Construction
TXMD 6.39% Drugs

Stocks we would buy on a pullback

Symbol % Portfolio
Weighting
Industry Trade Now
HBAN 3.72% Banking
MSO 3.62% Media
ONNN 3.61% Electronics
PSUN 4.74% Retail
SD 1.60% Energy
UNIS 4.14% Health Services
VTG 1.26% Energy
WLL 2.36% Energy
ZIXI 5.10%

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