BOSTON ( TheStreet) -- Stocks trading under $5 have limited analyst coverage, so it's especially risky for investors when researchers recommend dumping the shares.
The difference in returns for stocks trading under $5 that have the most "buy" ratings and those with the most "sell" ratings shows that diligent research pays. Citigroup (C), Sprint Nextel (S) and SatCon Technology (SATC) are among the top 10 stocks under $5 with the most "buy" recommendations from analysts. Those 10 shares have an average return of almost 24% this year. Compare that to a 49% decline for the 10 stocks with the most "sell" ratings.
The following U.S. stocks trade below $5 and have garnered the highest number of "sell" ratings from analysts.
5. Hercules Offshore (HERO - Get Report) Company Profile: Hercules Offshore is a provider of shallow-water drilling and marine services to the oil and natural gas exploration and production industry globally. Share Price: $3.50 (Dec. 28) 2010 Stock Performance: Hercules Offshore shares dropped 27% this year. Shares of Noble Energy (NBL), on the other hand, rose nearly 20%. Analyst Consensus: Six analysts have "sell" ratings on Hercules Offshore, according to Bloomberg. Another 11 analysts say investors should hold on to shares. Hercules Offshore is the only stock to make this list with "buy" recommendations from analysts. Four researchers say investors should accumulate shares. Bearish Case: RS Platou Markets analyst Anders Bergland wrote in an Oct. 28 research report that Hercules Offshore "continues to struggle with elevated debt and weak operational cash flow." Bergland has a "sell" rating and $1.70 price target on Hercules Offshore. "We continue to believe long-term structural change in the industry is likely make it tougher for HERO to achieve high fleet utilization," Bergland wrote in the report.