This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Top 5 Small-Cap Stocks to Consider Buying

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By David Sterman

NEW YORK ( StreetAuthority) -- It's crucial to avoid the trap of focusing on the same types of investments for your portfolio.

Investors tend to focus exclusively on large-caps, small-caps or dividend-paying stocks, when they should own a basket of all of them.

A diversified portfolio still brings the best combination of risk and reward, as you're not beholden to a specific economic or financial trend.

For example, investors who own nothing but high-yield stocks may underperform the market if interest rates start to rise and government-sponsored yields become comparatively more appealing.

So even as I tend to focus mostly on large and stable companies, I also keep an eye on small-cap stocks and low-priced stocks. These kinds of stocks are either off the radar or out of favor, and they often appreciate smartly while few investors even notice.

Here are five stocks trading for less than $5 that hold appeal right now. Each carries more risk than a large and stable blue-chip, so it's wise to make smaller investments in them. By doing so, you can add some upside to an otherwise steady-as-she-goes portfolio.

1. Hecla Mining (HL)

This silver miner trades just above its 52-week low, thanks to a series of recent stumbles, including the late 2011 closure of its Lucky Friday mine.

It will be several quarters before this mine is back in operation, so analysts have had to sharply curtail their forecasts for 2012 output and profits.

But Hecla also has a range of other mines ramping up, so the stage is set for a much better 2013 and 2014.

Earnings per share, for example, are expected to rise from about 30 cents to 50 cents in 2013.

Equally important, the company's mines are quite valuable: Merrill Lynch says they're worth a collective $5.80 a share in terms of Net Asset Value (NAV). That's roughly 50% greater than the current share price. And this assumption is based on a long-term price assumption of $27 an ounce for silver. The current spot price is around $30.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $92.72 -0.56%
FB $119.49 1.43%
GOOG $711.12 1.38%
TSLA $214.93 1.61%
YHOO $37.23 0.79%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs