BOSTON ( TheStreet) -- Small-cap stocks are set to close out 2011 with big losses, but some companies trading under $5, such as TeamStaff (TSTF) and Majesco Entertainment (COOL - Get Report), have more than tripled.
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 14% since the end of April. Investors have become more risk-averse and have sought safety in dividend-paying, large-cap stocks, U.S. Treasury bonds and even cash.
The flight to safety has been torrential, especially as the debt crisis in Europe worsens. Overall, the Russell 2000 index has dropped 6% this year, while the S&P 500, which holds the companies with the largest market values, is down a fraction of a percent. At the same time, the yield on the 10-year U.S. Treasury has dwindled from 3.3% to 2%. Gold has also been a hideout for investors. The precious metal has jumped from about $1,400 an ounce at the end of 2010 to above $1,700 an ounce.Still, many inexpensive stocks have generated huge returns for lucky stock pickers. In November, amid fears the entire eurozone region would crumble under the weight of its debt, stocks like Pacific Ethanol (PEIX) and Spanish Broadcasting System (SBSA) more than doubled. But 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. For example, American Airlines parent AMR Corp. (AMR) dropped more than 87% last month on its bankruptcy announcement, while FiberTower (FTWR) and Delta Petroleum (DPTR) each sank 70%. Some small-cap winners have doubled and, in some cases, tripled and 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 in 2011.
10. Crescent Financial (CRFN) Company Profile: Crescent Financial, the parent of Crescent State Bank, operates 15 full-service banking offices North Carolina with $916 million in total assets. Shares of Crescent Financial doubled in one day in late February after Piedmont Community Bank Holdings paid $75 million to acquire a 66% stake in Crescent. In November, after extending its tender offer for shares, Piedmont completed its investment in Crescent. Share Price: $4.45 (Dec. 2) 2011 Total Return: 98% Analyst Ratings: All three researchers following Crescent Financial recommend that investors hold onto shares, including research shop Raymond James. There are currently no price targets from analysts on Crescent shares. TheStreet Ratings has a "sell" rating on Crescent Financial, citing unimpressive growth in net income and poor profit margins.