NEW YORK (TheStreet) -- One of the better-kept secrets in investing is there are small pockets of the stock market that often appear to provide an enhanced risk/reward profile. One of these pockets is the small- to mid-cap segment of the market and for stocks with prices between $5 and $10.
Two such companies worth considering are Napco Security Technologies (NSSC) and Lionbridge Technologies (LIOX).
For a variety of reasons, it is often easier for a $300 million company with a $5 share price to double or triple than it is for a $3 billion company with a $50 share price. This can be seen again and again throughout recent decades.
Within those guidelines, the best-performing stocks over the past 18 months have been tech and health care stocks. Today I focus on two tech stocks in the $5 to $10 range with the potential for significant gains of at least 100% to 200% over the next six to 18 months.
Napco Security Technologies is already up 70% year to date, but it looks as if meaningful gains will continue. The stock closed Thursday just over $6. Napco is a manufacturer of mid-high tech security products including intrusion and fire alarms and access control systems. The New York-based company has distribution worldwide.
NSSC data by YCharts
The company has consistently reported at least $17 million per quarter in revenue. However, a surge in revenue and earnings during the June quarter also caused a surge in the company's share price. The company has always been cash flow positive and has minimal debt at just $1.9 million.
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