BOSTON ( TheStreet) -- Small-cap stocks are mired in a bear market, but select companies trading under $5, such as TeamStaff (TSTF) and Majesco Entertainment (COOL), have more than doubled this year, easily surpassing gains by their large-cap rivals.
After a two-year bull market that followed the 2008 financial crisis, small-caps have been brutalized. The Russell 2000 index, a measure of share performance for smaller companies, is down more than 20% since the end of April. Investors have become more risk-averse and have sought safety in dividend-paying, large-cap stocks and U.S. Treasury bonds.
The flight to safety has been fierce, especially as the debt crisis in Europe worsens. Among equities, the Russell 2000 index has dropped 14% this year, while the S&P 500, which holds the companies with the largest market values, is down half that. At the same time, the yield on the 10-year U.S. Treasury has dwindled from 3.3% to less than 2%. Gold has also been a hideout for investors; the precious metal has jumped from about $1,400 in price at the end of 2010 to above $1,900 an ounce earlier this month.Still, many inexpensive stocks have generated huge returns for lucky stock pickers. In September, as the S&P 500 has wilted 4% on worries Greece will default and the entire Eurozone will crumble, stocks like transportation logistics company Clark Holdings (GLA) and medical-device maker Mela Sciences (MELA) have more than doubled. Given the volatility in the equity market, investors must be careful in searching out small-cap stocks worth the risk, as fortunes can be lost with one bad trade. Trucking giant YRC Worldwide (YRCW) saw its shares plunge by 92% in September alone, while Virginia-based Commonwealth Bankshares (CWBS) dropped more than 60% this month. Some small-cap winners have doubled and, in some cases, quadrupled this year. The following pages detail the best-performing stocks under $5 this year on the New York Stock Exchange, Nasdaq and NYSE Amex, ranked by total return through the first three quarters of 2011.
10. Sify Technologies Ltd. (SIFY) Company Profile: Based in India, Sify Technologies is an Internet service provider. Sify also provides e-commerce services to companies in India. Shares of Sify Technologies spiked higher in April to a high of $8.54 as a high-growth play for investors looking for exposure to India. The company this year has announced partnerships and plans for expansion, and the stock has rallied like fellow India Internet company Rediff.com (REDF). Both Sify and Rediff.com have fallen steadily since the beginning of May along with the broader market. Current Share Price: $4.48 (Sept. 28) 2011 Total Return: 100.9% Analyst Ratings: No research analyst has coverage of Sify. TheStreet Ratings also does not have research on Sify.
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