WINDERMERE, Fla. ( Stockpickr) -- Every day on Wall Street, certain stocks trading for $10 a share or less experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including Cardica (CRDC), which skyrocketed by 34.5%; BioFuel Energy (BIOF), which soared by 33.4%; Stereotaxis (STXS), which exploded higher by 28.2%; and Republic Airways (RJET), which surged by 19.5%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
One low-priced stock that recently exploded to the upside was Zipcar (ZIP), which I highlighted in Nov. 29's " 5 Stocks About to Burst" at around $8.30 a share. I mentioned in that piece shares of ZIP had been uptrending strongly since the start of November, with the stock soaring from $5.90 a share to $8.64 a share. That move was quickly pushing ZIP within range of triggering a near-term breakout trade that would have given the stock a chance to re-fill some of its previous gap down zone from August that started near $10 a share. I mentioned that traders could buy ZIP off weakness as long as it was trending within range of its 50-day moving average at $7.26 a share or they could buy once it triggered a high-volume breakout above $8.64 to $8.69 a share.Guess what happened? Shares of ZIP continued to uptrend, with the stock hitting a recent high of $8.95 a share and never breaking below its 50-day moving average. On Wednesday, the company announced that Avis had agreed to buy the car-sharing firm for $500 million, or $12.25 per share, which represents a 49% premium over the value of the stock on Monday. Anyone who took the breakout trade in ZIP would have cashed in on almost 50% of gains in about a month. That's a massive win in a market that has been struggling of late to produce big winners. >>5 Trades to Profit From a January Rally Low-priced stocks are something that I tweet about on a regular basis. I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames. I'm not as eager to recommend investing long-term in stocks that trade less than $10 a share because these names can be very speculative, and the odds for picking the long-term winners aren't great. But I definitely love to trade stocks that are priced below $10. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right. When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that's secondary to the chart and volume patterns. With that in mind, here's a look at several under-$10 stocks that look poised to potentially trade higher from current levels. >>5 Stocks Paying You Double-Digit Shareholder Yield
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.