Citigroup recently announced plans for a 10-for-1 reverse stock split, which will propel the share price to nearly $50 by reducing the number of outstanding shares from 29 billion to 2.9 billion.
Citigroup investors may like the move as the bank's stock now will look more attractive to fund managers, who typically can't invest in stocks trading under $5 due to restrictions in their fund's charter. However, they will lose one key benefit of stocks under $5, and that is trading volume. An average of more than 450 million shares of Citigroup change hands each day, creating plenty of liquidity in the stock. Citigroup has been the top under $5 stock pick of analysts, garnering 15 "buy" ratings from Wall Street firms. Investors searching for high-volume stocks under $5 now must look elsewhere for big gains in the wake of Citigroup's reverse-split announcement. Many of these low-priced stocks have proven to be winners, including, Evergreen Energy ( EEE) and Majesco Entertainment ( COOL), which have more than tripled this year. Stocks trading under $5 typically have no analysts' coverage -- never mind a "buy" rating -- leaving investors to do the homework for themselves. However, a select few boast favorable coverage from analysts, which can direct share-price movements. Excluding Citigroup, the following 10 U.S. stocks trade at less than $5 and have gotten the most "buy" ratings from analysts.