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.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
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
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV