This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks Under $10 Hedge Funds Love

Stocks in this article: MTG KOG RAD BIOF SIRI

Rite Aid

One under-$10 name that Einhorn has initiated a massive new position in is Rite Aid ( RAD), which operates a retail drugstore chain in the U.S. This stock has been red hot so far in 2013, with shares up a whopping 150%.

>>3 Big Retail Stocks to Trade (or Not)

Rite Aid has a market cap of $3.09 billion and an enterprise value of $9.40 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 13.99 and a forward price-to-earnings of 13.08. Its estimated growth rate for this year 33.3%, and for next year it's pegged at 62.5%.

Einhorn's play here could be simply betting on Obamacare, since many analysts think the healthcare-retail sector will see a jump in sales once all the new consumers come online under the sweeping act. His position in RAD could also be a turnaround idea or even an acquisition target, since this company recently came out of tough cost cutting environment. Rite Aid is also turning itself wellness player, since its converting stores at a rapid pace into its next generation wellness store format.

During the second quarter, Einhorn bought 20.2 million shares of Rite Aid between $1.71 and $3.15 a share, with an estimated average price of $2.61 a share. Einhorn's position in RAD is worth somewhere near $70 million. Einhorn is already up solidly on this bet, but I would think he's planning on holding it much longer since the stock is uptrending strong.

From a technical perspective, RAD has been uptrending big for the last six months, with shares soaring higher from its low of $1.57 to its recent 52-week high at $3.62 a share. This stock has broken out multiple times during that uptrend and shares are currently not far from its 52-week high. That said, shares of RAD are bit overbought here and are due for a pullback. This one is probably worth a look near its 50-day moving average of $3.01 a share, or near $2.50 a share which its base low from this summer.

BioFuel Energy

Another under-$10 name that Einhorn is getting long here is BioFuel Energy ( BIOF), which is engaged in the production and sale of ethanol and its co-products. This stock has been hit hard by the sellers during the last six months, with shares off by 38%.

4 of 7

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs