Earnings Watch: Stocks Under $5

BOSTON ( TheStreet) -- Earnings season for S&P 500 companies is winding down. But for stocks under $5, the parade has just started.

For investors searching for inexpensive stocks ahead of earnings reports this week, sifting through the calendar is a daunting task. According to Bloomberg, more than 400 companies listed on the Nasdaq and New York Stock Exchange whose shares trade at less than $5 will report financial numbers today through Friday.

TheStreet narrowed the list of companies investors should watch to five, ranked by the average trading volume over the past 30 days.

5. GLG Partners ( GLG) won't be a public company for much longer after Man Group in May said it will acquire the asset-management company with cash and shares. Man will acquire the outstanding common stock of GLG not subject to the share exchange for $4.50 per share.

Share Price: $4.41 (Aug. 6 close)

Earnings Reporting Date: Aug. 9 (confirmed)

2010 Performance: 37%

Market Value: $1.11 billion

Analysts' View: GLG Partners may report a profit of 5 cents a share and revenue of $112.4 million, according to a poll of analysts by Thomson Reuters. However, those estimates have been revised sharply lower over the past month, with the earnings-per-share figure sliding by more than 40%. Since the merger with Man Group was announced on May 17, two firms (Barclays Capital and Keefe, Bruyette & Woods) have maintained a "hold" rating and a price target of $4.50.

4. Delta Petroleum ( DPTR) in late July said it will sell various non-core assets to Wapiti Oil & Gas for $130 million. Delta Petroleum also announced it signed an amendment to an agreement of its senior credit facility, reducing its borrowing base to $35 million. Additionally, the amendment permits Delta Petroleum to spend up to $28 million in capital expenditures for the third and fourth quarters.

Share Price: 82.2 cents (Aug. 6 close)

Earnings Reporting Date: Aug. 10 (confirmed)

2010 Performance: -21%

Market Value: $232.4 million

Analysts' View: The consensus target of six analysts stands at a loss of 9 cents a share, according to Thomson Reuters. Analysts, on average, expect Delta Petroleum to report second-quarter revenue of $34.2 million. Since announcing the sale of non-core assets, three research firms have reiterated "hold" ratings on the stock and one firm (Raymond James) said the stock should underperform.

3. Xoma Limited ( XOMA) shares jumped last week after the biopharmaceutical company said the Food and Drug Administration designated XOMA 052, an antibody to interleukin-1 beta, as an orphan drug for the treatment of Behcet's disease. The stock has yet to regain compliance with the Nasdaq's minimum bid price requirement. Xoma has until Sept. 15 to get its share price above $1. At the company's annual meeting on July 21, Xoma shareholders approved a reverse stock split at a ratio within a range of 1-for-2 to 1-for-15.

Share Price: 29 cents (Aug. 6 close)

Earnings Reporting Date: Aug. 9 (confirmed)

2010 Performance: -58.5%

Market Value: $75.7 million

Analysts' View: A Thomson Reuters poll of five analysts shows they expect a second-quarter loss of 7 cents a share. While the stock trades for less than $1, the average of the four most recent price targets shows that analysts expect Xoma's stock to surge to nearly $2. Xoma is rated a "buy" by four research firms, including Canaccord Genuity and Wedbush Securities. Only two analysts rate the stock a "hold," and no firm recommends that investors dump the shares.

2. Wendy's/Arby's Group ( WEN) has been the subject of speculation, ranging from acquisition chatter to a leveraged buyout. On June 10, Trian Funds said it had received an oral inquiry from a third party expressing interest on a preliminary basis in a potential acquisition. Deutsche Bank argues that Wendy's brand is worth $5 per share, which implies that Arby's has negative equity value. Wendy's/Arby's said in May that it expects to see full-year positive same-store sales growth at Wendy's restaurants but negative same-store sales at Arby's.

Share Price: $4.35 (Aug. 6 close)

Earnings Reporting Date: Aug. 12 (confirmed)

2010 Performance: -7.3%

Market Value: $1.87 billion

Analysts' View: Wendy's/Arby's may report a second-quarter profit of 5 cents a share and revenue of $887 million, according to a Thomson Reuters poll of analysts. The shares still trade 20% below the average analyst price target of $5.48, with seven analysts recommending investors buy the stock and nine who suggest holding it. Only one research firm has a "sell" rating on Wendy's/Arby's.

1. Ambac Financial ( ABK) in July received a delisting warning from the New York Stock Exchange. This came after the bond insurer said in a June regulatory filing that it may seek a negotiated restructuring through a prepackaged bankruptcy as liquidity may run out before the second quarter of 2011.

Share Price: 88 cents (Aug. 6 close)

Earnings Reporting Date: Aug. 9 (confirmed)

2010 Performance: 6%

Market Value: $253.8 million

Analysts' View: There are no earnings or revenue estimates by analysts on Ambac Financial. JPMorgan is the only research firm with recent comments on Ambac, saying it is maintaining its "underperform" rating on the stock. In the year-earlier quarter, Ambac reported a loss of $8.33 a share, much wider than the expected loss of $1.09 a share.

-- Written by Robert Holmes in Boston.

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