BOSTON (TheStreet) -- Stocks under $5, like SatCon Technologies (SATC) and A123 Systems (AONE), typically attract traders looking to book a quick profit, but many low-priced stocks can be solid long-term investments instead of a short-term risky trade.The biggest hurdle is finding which stocks trading below $5 represent the best long-term investment. 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 of favorable coverage from analysts, which can direct share-price movements.
10. Comverge ( COMV) Company Profile: Comverge provides products and services to the electric power markets in North America, focusing on demand response and advanced metering systems. Share Price: $2.99 (June 27) Stock Performance This Year: -57% Analyst Consensus: Eight analysts have a "buy" rating on Comverge, including those at firms like R.W. Baird. However, 10 other firms recommend investors hold shares, including Stifel Nicolaus and Piper Jaffray. The average analyst price target of $6.45 represents potential upside of 115% from current levels. Bullish Case: ValuEngine issued a "buy" recommendation on Comverge earlier this month, highlighting the company's "attractive market valuation, price/sales ratio and expected
8. Gastar Exploration ( GST) Company Profile: Gastar Exploration is an independent energy company that engages in the exploration and production of natural gas and oil primarily in the U.S. Share Price: $3.39 (June 27) Stock Performance This Year: -21% Analyst Consensus: Eight researchers have a "buy" rating on Gastar shares, including analysts at KeyBanc Capital and SunTrust Robinson. The other two analysts covering the stock say investors should hold shares. The average analyst price target of $5.97 implies potential upside of 76%. Bullish Case: In a June 2 research note, KeyBanc Capital analyst Jack Aydin reaffirmed his "buy" rating on Gastar along with a price target of $5.75. Aydin points out the size and leverage of its Marcellus shale position of approximately 73,000 net acres, along with the expected ramp up in activity in the second half of 2011 and production growth momentum into 2012. "With the recent market correction, shares have underperformed significantly...and we believe any weakness today could provide an entry point for investors interested in a micro-cap growth name leveraged to the Marcellus shale play of West Virginia," Aydin wrote in his report. TheStreet Ratings has a "sell" rating on Gastar's stock because of "feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
6. Keryx Biopharmaceuticals ( KERX) Company Profile: Keryx is a biopharmaceutical company with a focus on products for the treatment of life-threatening diseases, including renal disease & cancer. Share Price: $4.62 (June 27) Stock Performance This Year: 1% Analyst Consensus: Eight analysts have a "buy" rating on Keryx, including those at firms like Oppenheimer and Ladenburg Thalmann. The only other research shop following the company rates the stock a "hold." The average analyst price target of $10 represents potential upside of 103% from current levels. Bullish Case: Oppenheimer analyst Boris Peaker wrote in a June 7 research note that he is "cautiously optimistic about the ongoing Phase III trial of perifosine in late-stage colorectal cancer," and that his model suggests a price target for Keryx of $8. He bases this target on the assumption that the patent expiration set for July 2013 will be extended by five years to July 2018. TheStreet Ratings does not cover Keryx Biopharmaceuticals.
4. SatCon Technology ( SATC) Company Profile: SatCon Technology provides utility-grade power-conversion services for commercial and renewable-energy installations and distributed energy markets. Share Price: $2.15 (June 27) Stock Performance This Year: -52% Analyst Consensus: Nine of 12 analysts covering SatCon Technology rate the stock a "buy," including those at Stifel Nicolaus, Cantor Fitzgerald and Piper Jaffray. The other three analysts rate the stock as a "hold." The average price target of $4.64 represents potential upside of 116% from current levels. Bullish Case: ValuEngine issued a "buy" recommendation on SatCon on June 20, highlighting the company's "attractive market valuation, expected
2. DryShips ( DRYS) Company Profile: DryShips, based in Greece, is a dry-bulk transportation company. DryShips also owns ultra-deep-water drillships and oil-tanker vessels. Share Price: $3.96 (June 27) Stock Performance This Year: -28% Analyst Consensus: DryShips garners a whopping 10 "buy" ratings from Wall Street analysts, including those at Sterne Agee, Wells Fargo Securities and Cantor Fitzgerald. Five other analysts say investors are better off holding on to shares, and two more have a "sell" rating on DryShips. The average price target of $5.93 implies nearly 50% upside from where the stock currently trades. Bullish Case: In a June 27 research note, Sterne Agee analyst Salvatore Vitale wrote that DryShips' plan to list drilling contractor Ocean Rig on the Nasdaq this summer "will be acatalyst to unlock the value of the Ocean Rig business. Our valuation for DRYS is based on our sum-of-the-parts analysis, which yields a $6 price target." On the other hand, TheStreet Ratings has a "sell" rating on DryShips, due to "disappointing historical performance in the stock itself and generally weak debt management."