This Day On The Street
Continue to site
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

Deal Or No Deal: Hedge Funds Like These 6 Small Cap Stocks Under 5 Dollars

James Dennin, Kapitall: We decided to look for small cap stocks under 5 dollars that may benefit from just the right amount of inflation. 

The S&P 500 has climbed 23% so far this year, and is poised to have its best year since 2003 assuming the current pace continues. But analysts are arguing that after a robust summer for the stock market, investors are starting to become wary as to how long the positive numbers will last. 

[Read more on Small Caps from Kapitall: Deal or No Deal: Stocks Under $5 With Buy Ratings]

One of the main causes behind volatility in the markets is a deeply-rooted skepticism among investors about the utility and virtues of quantitative easing (QE), a debate I will try to sum up right now.

What federal banks essentially do is print money and control interest rates, with a goal to keep inflation stable and relatively low. Now, inflation is usually thought of as a bad thing. In my distant youth an apple only cost a dollar, and now it costs two. I also went to school in a frozen, one room shack – and the walk there was uphill both ways.  

I might be exaggerating, but inflation is actually even more complicated than that. Because with some inflation, my debt can be easier to pay, and my liabilities go down, which means I can spend a greater portion of my assets on myself. This means that, theoretically, if you encourage just the right amount of inflation, consumers (and businesses) will be more likely to hire, expand, and spend – without people worrying that they won't be able to afford things like apples. 

Now, usually the Federal Reserve controls inflation levels by raising or lowering interest rates on the debt that it issues. By doing so, they're easing or expanding the amount of capital in the market.

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
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!
SYM TRADE IT LAST %CHG

Markets

DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs