BOSTON ( TheStreet) -- Stocks under $5, such as Evergreen Energy ( EEE) and Majesco Entertainment ( COOL), may not garner much attention from investors, but many have doubled and even tripled already this year in a period of weakening global economic growth.Small-cap stocks have been the big winners during the two-year bull market that followed one of the worst global recessions. Even though money managers argue that now is a time for investors to get defensive and move into less-risky asset classes like large-cap equities, small-cap stocks continue to show strength.
10. USA Technologies ( USAT) Company Profile: USA Technologies is a supplier of cashless, remote-management, reporting and energy-management services. Shares of USA Technologies ramped higher in January after the company said revenue in its fiscal second quarter jumped 60% from a year earlier to $6 million, while its net loss narrowed to a penny a share from a loss of 19 cents. Shares pulled back slightly in March after USA Technologies announced it raised nearly $11 million in a private placement of common stock. In April, USA Technologies announced a collaboration with Verizon Wireless for connectivity that enables wireless point-of-sale payments at vending machines via credit and debit cards. Earlier this month, the stock was added to the Russell Microcap Index as part of its annual reconstitution. Current Share Price: $2.35 (June 27) 2011 Total Return: 128% Analyst Ratings: Northland Securities has an "outperform" rating and $3 price target on USA Technologies. The only other research firm covering the company, Janney Montgomery Scott, rates the stock "neutral" with a price target of $1.25. TheStreet Ratings has a "sell" recommendation on USA Technologies, citing "unimpressive growth in net income and poor profit margins."
8. Level 3 Communications ( LVLT) Company Profile: Level 3 Communications is an integrated Internet networking services provider. In April, the company said it would acquire fellow communications services company Global Crossing ( GLBC) for $2 billion. Shares of Level 3 have steadily increased this year, with a big rise last week on news the company was able to lower its borrowing costs through a $600 million bond sale. In May, Level 3 reported an adjusted first-quarter loss that beat analysts' forecasts. Current Share Price: $2.27 (June 27) 2011 Total Return: 131% Analyst Ratings: Level 3 is one of the most widely followed stocks on this list, garnering 12 overall ratings from analysts. D.A. Davidson is one of only two firms with "buy" ratings on the stock. Another seven firms, including Oppenheimer, suggest investors hold on to shares, while three firms rate the stock a "sell." TheStreet Ratings has a "sell" rating on the stock, which it has maintained for two years. The latest report says Level 3's "primary weakness has been its feeble growth in its earnings per share."
6. Dynatronics ( DYNT) Company Profile: Dynatronics makes medicine and aesthetic products used by physical therapists, chiropractors, sports-medicine practitioners, podiatrists and physicians. In March, Dynatronics announced that it signed a contract with FirstChoice Cooperative, the third group-purchasing-organization contract the company signed in two months. In April, the company regained compliance with the Nasdaq's listing requirements, as the stock climbed above $1 a share to satisfy the minimum bid price requirement. Current Share Price: $1.48 (June 27) 2011 Total Return: 135% Analyst Ratings: No research firm currently follows Dynatronics. TheStreet Ratings has a "hold" rating on the stock after upgrading from "sell" on Sept. 30, 2009. The latest report notes the company's "revenue growth, solid stock price performance and largely solid financial position with reasonable debt levels by most measures." However, those strengths are countered by disappointing return on equity.
4. Star Scientific ( CIGX) Company Profile: Star Scientific develops dissolvable smokeless tobacco products, which are billed as delivering fewer carcinogenic toxins. Shares of Star Scientific began surging in March on reports that compound RCP-006, which the company says is a "nutritional supplement," has potential in treating Alzheimer's. TheStreet's Adam Feuerstein notes that RCP-006, also known as anatabine, "might one day be a cure for Alzheimer's, but it's very premature to make such a claim since this nutritional supplement (not even a drug) has not yet been tested in humans, let alone humans with Alzheimer's." That skepticism hasn't kept the shares from rising. The stock did take a hit in April before the Food and Drug Administration said it will regulate smokeless electronic cigarettes as it does with traditional tobacco products. Shares are now near their all-time high. Current Share Price: $4.96 (June 27) 2011 Total Return: 154% Analyst Ratings: No research analyst follows Star Scientific. TheStreet Ratings does not have a rating on the stock.
2. Evergreen Energy ( EEE) Company Profile: Evergreen Energy is a so-called cleaner-coal company. On Jan. 5, Evergreen was granted an extension by the NYSE Arca to regain compliance with listing rules regarding minimum bid price and market value of publicly traded shares. By March 3, Evergreen regained compliance with the listing standards. The stock hit a 52-week high in February shortly after the company completed a $16 million private placement of common stock. Shares pulled back, though, after Evergreen posted financial results for 2010. Revenue for the year fell to $403,000 from $423,000 in 2009. In June, Evergreen Energy was added to the Russell Microcap Index as part of its annual reconstitution. Current Share Price: $1.80 (June 27) 2011 Total Return: 177% Analyst Ratings: No research firm has coverage of Evergreen Energy. TheStreet Ratings doesn't follow the stock.