BOSTON ( TheStreet) -- Many stocks trading under $5 have limited analyst coverage, so it's never a good sign for investors when a majority of researchers recommend dumping shares. Just as some under-$5 stocks react positively to favorable coverage, others can see their share prices negatively influenced by an analyst's bearish view. The following 10 U.S. stocks trade below $5 and have garnered the highest percentage of sell ratings from analysts (minimum three analysts covering the stock).
10. Level 3 Communications (LVLT) is an integrated communications services provider. The stock is down more than 20% over the last 12 months. On May 6, Level 3 reported an adjusted first-quarter loss of 11 cents a share, matching the Thomson Reuters average estimate. Core network services (CNS) revenue fell 1% from a year ago, although it increased 15% from the fourth quarter.
Closing Price: $1.19 (June 23)
Consensus: Level 3 has wide coverage from Wall Street with 15 researchers watching the stock. Of those, seven, or 46.7%, suggest to investors that they sell shares. Another seven recommend holding the stock, while one lone analyst recommends buying shares. The average of five price targets on the stock is $1.34, which represents 12.6% upside.Bearish Scenario: In a May 17 note to clients, Piper Jaffray analyst Christopher Larsen noted that Level 3 "has significant maturities through 2014. If the company is unable to refinance this debt it could apply pressure to the company and its share price." Bullish Case: Jefferies analyst Anupam Palit wrote in a May 14 research note that Level 3 CFO Sunit Patel presented at the Jefferies Global Media, Internet & Telecom Conference, at which Patel reiterated the company's outlook for sequential CNS revenue growth through the rest of 2010. Jefferies' Palit did note that "more meaningful growth may be difficult to achieve without a broader recovery in the enterprise environment."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
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.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV