WINDERMERE, Fla. ( Stockpickr) -- There isn't a day that goes by on Wall Street that certain stocks trading for $10 a share or less don't 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 Comstock (CHCI), which skyrocketed higher by 59.8%; Revolution Lighting Technologies (RVLT), which soared by 26.9%; Net 1 UEPS Technologies (UEPS), which surged by 26.8%; and LiveDeal (LIVE), which exploded higher by 26%. 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 biotechnology and drugs player Anacor Pharmaceuticals (ANAC), which I highlighted in March 13's " 5 Stocks Poised for Breakouts" at around $3.80 a share. I mentioned in that piece that shares of ANAC were uptrending strong in early March from $3 to $4.02 a share, which was bullish technical price action. That move was quickly pushing shares of ANAC within range of triggering a near-term breakout trade above its 50-day moving average of $4.10 a share and then above its gap down day high from January at $4.39 a share.Guess what happened? Shares of ANAC triggered that breakout trade on March 21 with above-average volume, and the stock closed at $4.96 a share. That close put the stock above both of those key breakout levels I had highlighted a week earlier. Shares of ANAC then gapped up huge the following trading session with massive upside volume. This stock tagged $7 a share on Mar. 22, which represents a gigantic return for anyone who played that breakout. This stock is the essence of why breakout trading is so powerful, because you can see that it only took two trading sessions to rack up massive gains. >>4 Reasons Not to Buy Stocks in 2013 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 With Major Insider Buying
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.