BOSTON (TheStreet) -- Stocks under $5, like SatCon Technologies (SATC) and A123 Systems (AONE), typically attract traders looking to book a quick profit, but many low-priced stocks can be solid long-term investments instead of a short-term risky trade.
The biggest hurdle is finding which stocks trading below $5 represent the best long-term investment. Stocks trading under $5 typically have no analysts' coverage -- never mind a "buy" rating -- leaving investors to do the homework for themselves. However, a select few boast of favorable coverage from analysts, which can direct share-price movements.
So far this year, many of the stocks under $5 that analysts are most bullish on are falling hard amid worry over the stability of the economic recovery. The following 10 U.S. stocks trade at less than $5 and have gotten the most "buy" ratings from analysts, with the bullish scenario for each laid out for investors.
10. Comverge (COMV) Company Profile: Comverge provides products and services to the electric power markets in North America, focusing on demand response and advanced metering systems. Share Price: $2.99 (June 27) Stock Performance This Year: -57% Analyst Consensus: Eight analysts have a "buy" rating on Comverge, including those at firms like R.W. Baird. However, 10 other firms recommend investors hold shares, including Stifel Nicolaus and Piper Jaffray. The average analyst price target of $6.45 represents potential upside of 115% from current levels. Bullish Case: ValuEngine issued a "buy" recommendation on Comverge earlier this month, highlighting the company's "attractive market valuation, price/sales ratio and expected [earnings per share] growth." ValuEngine noted that the stock should be trading at $9.84 based on the firm's fair value model. On the other hand, TheStreet Ratings has a "sell" rating on Comverge due to "disappointing return on equity and generally disappointing historical performance in the stock itself."
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