BOSTON (TheStreet) -- Stocks trading under $5 have limited analyst coverage, so it's especially risky for investors when researchers recommend dumping the shares.

The difference in returns for stocks trading under $5 that have the most "buy" ratings and those with the most "sell" ratings shows that diligent research pays.


(C) - Get Citigroup Inc. Report


Sprint Nextel

(S) - Get SENTINELONE, INC. Report


SatCon Technology

( SATC) are among the

top 10 stocks under $5

with the most "buy" recommendations from analysts. Those 10 shares have an average return of almost 24% this year. Compare that to a 49% decline for the 10 stocks with the most "sell" ratings.

The following U.S. stocks trade below $5 and have garnered the highest number of "sell" ratings from analysts.


Hercules Offshore


Company Profile

: Hercules Offshore is a provider of shallow-water drilling and marine services to the oil and natural gas exploration and production industry globally.

Share Price

: $3.50 (Dec. 28)

2010 Stock Performance

: Hercules Offshore shares dropped 27% this year. Shares of

Noble Energy

(NBL) - Get Noble Energy, Inc. (NBL) Report

, on the other hand, rose nearly 20%.

Analyst Consensus

: Six analysts have "sell" ratings on Hercules Offshore, according to Bloomberg. Another 11 analysts say investors should hold on to shares. Hercules Offshore is the only stock to make this list with "buy" recommendations from analysts. Four researchers say investors should accumulate shares.

Bearish Case

: RS Platou Markets analyst Anders Bergland wrote in an Oct. 28 research report that Hercules Offshore "continues to struggle with elevated debt and weak operational cash flow." Bergland has a "sell" rating and $1.70 price target on Hercules Offshore.

"We continue to believe long-term structural change in the industry is likely make it tougher for HERO to achieve high fleet utilization," Bergland wrote in the report.


Energy Conversion Devices


Company Profile

: Energy Conversion Devices produces photovoltaic (PV) products that generate renewable energy by converting sunlight into electricity.

Share Price

: $4.70 (Dec. 28)

2010 Stock Performance

: Shares of Energy Conversion Devices plunged 55% this year while

First Solar

(FSLR) - Get First Solar, Inc. Report

dipped only 4.5%.

Analyst Consensus

: Of the 20 analysts following Energy Conversion Devices, six have a "sell" rating on the stock while the other 14 are neutral. No research firms have a "buy" rating on Energy Conversion Devices.

Bearish Case

: In a Nov. 9 research note, Wedbush analyst Christine Hersey notes that while Energy Conversion Devices is making progress, the company "will likely continue to struggle as oversupply conditions resume in 2011." Hersey has an "underperform" rating and $4 price target on Energy Conversion Devices.

"While the company is making progress on its turnaround efforts, we remain concerned about the cash requirements for operations, capacity expansion and debt service," Hersey wrote. "Significant execution risk remains as the company works to increase factory utilization and revamp lines with higher efficiency technology."


Evergreen Solar


Company Profile

: Evergreen Solar makes solar-power products, including solar cells, panels and systems.

Share Price

: 61 cents (Dec. 28)

2010 Stock Performance

: Evergreen Solar has dropped 58% this year while

TheStreet Recommends

Trina Solar Ltd.


is down 15%.

Analyst Consensus

: Seven researchers say investors should cut their holding in Evergreen Solar, while another 10 recommend the stock as a "hold." There are no "buy" recommendations on the stock.

Bearish Case

: In a Nov. 2 research report, UBS analyst Stephen Chin wrote that Evergreen Solar faces more difficulties in the near term after the company reported third-quarter earnings. Revenue of $87.5 million and a loss of 13 cents a share for the quarter were both below analysts' estimates. Chin notes duties imposed on Chinese aluminum, which pose a near-term hurdle in lowering costs, and he adds that Evergreen could have financing difficulties.

"Based on Evergreen's comments, we estimate that two consecutive profitable quarters is the minimum hurdle Evergreen would need to cross to obtain low-rate financing from Chinese banks," Chin wrote. He maintained a "sell" rating on Evergreen Solar with a price target of 60 cents.


YRC Worldwide

(YRCW) - Get YRC Worldwide Inc. Report

Company Profile

: YRC Worldwide offers a range of services for the transportation of industrial, commercial and retail goods. The company's portfolio of brands includes YRC, YRC Reimer, YRC Glen Moore, New Penn, Holland and Reddaway.

Share Price

: $3.60 (Dec. 28)

2010 Stock Performance

: YRC Worldwide saw a huge 1-for-25 reverse split in October, but shares are still down a whopping 83% this year on a split-adjusted basis. Compare that to rival



, which has seen shares climb 5% since last December.

Analyst Consensus

: Seven analysts rate YRC Worldwide shares a "sell" and another six say investors should hold onto the stock. No research firm has a "buy" rating on the trucking giant.

Bearish Case

: In a Dec. 22 research note, Credit Suisse analyst Christopher Ceraso reiterated an "underperform" rating and $3 price target on YRC Worldwide after the trucking company completed amendments to its credit agreement and asset-backed security facility. Ceraso notes it was the 19th new credit agreement for YRC Worldwide, adding that no value was added to the common equity.

"Given yet another extension to meet its financial obligations, it is even clearer in our minds that any future cash flows generated by YRCW will not fall in the hands of common equity shareholders; rather, the banks and the Teamsters will capture the economic value," Ceraso wrote.



(HOV) - Get Hovnanian Enterprises, Inc. Class A Report

Company Profile

: Hovnanian builds and sells single-family homes, townhomes and condominiums, mid-rise and high-rise condominiums, urban infill and active-adult homes in residential developments.

Share Price

: $3.97 (Dec. 28)

2010 Stock Performance

: Despite the number of "sell" ratings, Hovnanian shares have climbed 4% this year. Still, that lags behind

Standard Pacific


, as shares of the homebuilder are up 16% this year.

Analyst Consensus

: Seven analysts rate Hovnanian shares "sell." The other six researchers following the company say investors should hold on to the stock. No research firm has a "buy" rating on Hovnanian.

Bearish Case

: In a Dec. 23 research note, Barclays Capital analyst Megan McGrath highlights several concerns for Hovnanian investors heading into 2011. "Despite an increasing proportion of closings coming from recently acquired communities in FY11, profitability in the coming year remains very unlikely, in our view," McGrath wrote.

In reiterating her "underweight" rating on Hovnanian, McGrath also highlights "management's commitment to aggressive land acquisition despite the leveraged nature of the company's balance sheet," as well as Hovnanian CEO Ara Hovnanian's indication that given the right opportunity, the company would consider issuing equity. McGrath has a $2 price target on Hovnanian, which represents potential downside of 54%. This view stands out as McGrath is optimistic on the homebuilding industry.

-- Written by Robert Holmes in Boston


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