When a company announces or is the subject of good news, its stock generally shoots higher. And generally, the lower-priced shares move upward much further on a percentage basis than higher-priced stocks.
Stockpickr has taken a look at stocks selling below $10 a share and pulled out the
Besides trading for less than $10 each, these stocks have a few other things in common. They have short ratios greater than 10, a price/earnings-to-growth (PEG) ratio less than 2.75 and market caps greater than $300 million.
Remember, the short ratio, also known as the days-to-cover ratio, is the number of days it would take a stock's
short-sellers to cover their positions based on recent daily trading volume. When the good news comes out, the short-sellers scramble to cover their bearish bets.
One of the stocks on the list is
, a telecommunications company that dates back to 1873 and serves the Cincinnati and Dayton, Ohio, markets. It has a market cap of more than $1 billion, and it sells for about $5 a share.
The stock has a short ratio of 14, which means it would take the short-sellers almost 14 days to cover their positions. The stock has a
P/E ratio of 14 and a PEG ratio of 1.8.
Cincinnati Bell is part of the
portfolio, which includes stocks in the Value Line group that are trading below $10. Other stocks in the Value Line list include
, which has a short ratio of 3.9, and
, which has a short ratio of 8.9.
Another stock on the 10 Below $10 list is
Sally Beauty Holdings
, a worldwide distributor of professional beauty supplies that sells for roughly $8.50 a share. The company has a market cap of some $1.5 billion and a short ratio of 15. The stock has a P/E of 25 and a PEG of 1.4.
Sally Beauty appears in the
portfolio, which lists the stocks that the managing partner of O.S.S. Capital Management considered undervalued back in the Jan. 29 issue of
. Other stocks that he considered undervalued were
Avis Budget Group
, with a short ratio of 3.4, and
Complete Production Services
, with a short ratio of 5.
Yet another stock below $10 on the list is
, an Internet protocol testing service provider that allows testing and measurement of the performance of IP equipment and networks. The company recently hired Atul Bhatnagar, formerly vice president of
enterprise data networks division, to serve as president and chief operating officer. The stock sells for less than $9.50 and carries a short ratio of 10.
To see the rest of the stocks on the list, check out the
that trade under $10, have PEG ratios less than 2.75 and market caps greater than $300 million at Stockpickr.com.
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is president of Stockpickr LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for
The Financial Times
and the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
to send him an email.
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