This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Five Bucks Stop Here: A Look in the Bargain Bin

A friend of mine has begged me for at least a year for a column on a particular topic. Not an expose of all the thieving chief executives whose comeuppance has punished the lousy stocks he owned over the past few years. And not a piece explaining Dow 30 underfunded pension liabilities.

No, the piece my friend and probably thousands of others still want to read would end up with a headline like this: "Ten $5 Stocks to Buy Now!"

It's hard to believe, after all we've been through, that the life-affirming human penchant for getting rich on an investment of pennies still thrives. But since we're all about service here at SuperModels, this week I finally ran my screen for Fantastic Fivers with high hopes of finding a few cheapos worth the pocket change.

Here are the results. But I can't give them my strongest recommendation, because this is still a bear market -- and in bear markets, it pays to be a net seller of stocks, not a buyer.


Fabulous Fivers?
Company Name SS Rating Sector Avg. vol. Sept. 30 close
Cray (CRAY) 9 Technology 263,900 $3.95
TriZetto Group (TZIX) 9 Technology 103,900 4.98
Cardinal Financial (CFNL) 9 Finance 23,600 4.16
ClearOne Communications (CLRO) 8 Technology 148,500 3.41
OrthoLogic (OLGC) 8 Health Care 96,800 3.87
Monterey Pasta (PSTA) 8 Consumer non-durables 51,200 4.65
Selectica (SLTC) 8 Technology 138,500 3.58
Trover Solutions (TROV) 8 Health Care 32,000 4.01
SM&A (WINS) 8 Consumer services 22,300 3.04

More Hedges on a Volatile Market

What I can recommend instead is a hedged portfolio made up of five to 10 top StockScouter long recommendations for October and five to 10 top StockScouter short recommendations. This strategy has worked extremely well over the past year and a half, yielding positive results in every month since its inception in July 2001. It's different from the hedge portfolio that I recommended in my Sept. 18 column , in that it is designed to be completely turned over every month, rather than once a year. And it's different from the long-only 10- and 50-stock StockScouter portfolios that I have proposed before, in that it is market-neutral.

I'll get to the new names in a moment, but first let's look at the results for the strategy in September. They were strong. Using the 10 high-volume StockScouter longs and 10 high-volume StockScouter shorts that were published in my Sept. 4 column , a hedged long/short portfolio of 20 stocks would have yielded a return of 9.8%, not including transaction costs. A 10-stock portfolio of the top five longs and top five shorts would have yielded an 8.3% return. In contrast, the S&P 500 fell 11% in the month.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs