by Ian Harvey
July 20, 2014
Trading stocks under $10.00 can be very profitable for short-term trading, as many of these stocks are making big moves – on massive volatility – which can lead to acceptable profitability.
When a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits.
Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.
Also, looking at stocks under $5.00 tend to be ignored by fund managers, due to arbitrary rules established by boards of directors at funds... but one that the rest of us can profit from.
Once a stock reaches $5.00, a lot of these same fund managers start to consider such stocks -- and if they like what they see, they'll push shares yet higher as they take a stake.
Here are five stocks that may fit the above profile…..
Aviat Networks Inc (NASDAQ:AVNW)
Aviat Networks Inc (NASDAQ: AVNW), which designs, manufactures and sells a range of wireless networking products, solutions, and services in North America and Internationally, is starting to trend within range of triggering a major breakout. This stock has been hit hard by the sellers so far in 2014, with shares off sharply by 45%.
The stock has been uptrending over the last two months or so, with shares moving higher from its low of 99 cents per share to its recent high of $1.35 a share. During that uptrend, shares of PRKR have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AVNW within range of triggering a major breakout trade.
If AVNW manages to break out above some near-term overhead resistance levels at $1.28 to $1.30 a share, and then once it clears $1.35 a share with high volume, further growth should continue. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 861,975 shares. If that breakout triggers soon, then AVNW will set up to re-fill some of its previous gap-down-day zone from May that started near $1.60 a share.
Buy AVNW and simply use a stop to control the trade.
STOCK TRADE: Buy AVNW at market price (approx. $1.22), good for the day. Place a protective stop-loss at $0.80 and a pre-determined sell at $2.00.
Ceragon Networks (NASDAQ:CRNT)
Ceragon Networks (NASDAQ: CRNT), the #1 wireless hauling specialist providing high-speed wireless network equipment to emerging-market countries, was a popular choice among fund managers a few years ago – seeing its sales surge from $184 million in 2009 to $445 million by 2011.
However, the past few years have seen a pullback in capital spending by wireless service providers, and Ceragon's annual sales have slipped to around $350 million these days. Fund managers have decided they can find better growth opportunities elsewhere, and this stock has completely collapsed. The fact that sales and profits have missed the consensus forecasts for three straight quarters has just added to this stock's pain.
Yet behind the scenes, Cergaon's business appears to be turning the corner. Management has been meeting with investors and analysts, and is speaking of a turnaround. In fact, the company saw a 25% sequential gain in new orders in the first quarter of 2014.
"This is particularly significant since (the first quarter) is usually relatively weak quarter for bookings," said CEO Ira Palti in the company's most recent conference call. Equally important, almost half of the new orders came from a recently released product line, known as IP-20, and new products tend to carry higher profit margins than legacy products. Surging demand for IP-20 caught management off guard, and production was slow to build fast enough.
"We will continue to ramp up as quickly as possible to accommodate the expected demand for IP-20," Palti added on that conference call.
This is a company sitting in the middle of a key global trend. Many emerging markets are skipping past the wireline telecom market and going straight to advanced high-speed wireless networks. That's why analysts expect sales to rebound 15% next year, to more than $400 million, while several years of operating losses should rebound to a profit of $0.25 to $0.30 a share next year. Ceragon reports second-quarter results July 28.
STOCK TRADE: Buy CRNT at market price (approx. $2.48), good for the day. Place a protective stop-loss at $3.50 and a pre-determined sell at $5.00.
Liquid Holdings (NASDAQ:LIQD)
Liquid Holdings (NASDAQ: LIQD), a provider of a single platform that integrates order and execution management with real-time risk, reporting, shadow NAV, and managed services in the cloud for the financial services community, has joined the Russell Microcap(R) Index.
Membership in the Russell Microcap Index, which remains in place for one year, means automatic inclusion in the appropriate growth and value style indexes. Russell determines membership for its equity indexes primarily by objective, market-capitalization rankings and style attributes.
This company is counting on a rebound as a public company as it went public last July at $9 a share -- and now trades below $2.
Blame goes to a lack of sales traction for its suite of cloud-based management tools for hedge funds. Sales of just $5 million in 2013 were far short of what investors had been anticipating during the IPO period. It also soon became apparent that the company didn't raise enough money during the IPO and a further capital raise would eventually be needed.
Few investors have an interest in a stock in advance of dilutive capital-raising. The fact that such a deal was done at just $1.25 a share in May 2014 shows how unloved this stock had become.
Yet this struggling financial software firm may be getting a second wind.
By the end of this March, it had built up a base of 119 clients, up sharply from 77 clients a quarter earlier. Around that time, HedgeWeek magazine cited Liquid as the "Best Risk Management Software Provider" for 2014. That likely has opened more doors for the sales force, and sets the stage for a higher client count at the end of the second quarter.
Analysts expect sales momentum to continue to build in coming quarters and predict that sales will exceed $15 million next year. That won't be enough to generate net income, but should be sufficient to attain positive operating cash flow. And investors think that should set the stage for self-financing, and no more of those unwanted capital raises like the kind that decimated this stock in May.
STOCK TRADE: Buy LIQD at market price (approx. $1.78), good for the day. Place a protective stop-loss at $1.20 and a pre-determined sell at $2.80.
Ascent Solar Technologies (NASDAQ:ASTI)
Ascent Solar Technologies (NASDAQ: ASTI), which designs and manufactures photovoltaic integrated consumer electronics as well as portable power applications for commercial and military users, is starting to trend within range of triggering a major breakout. This stock has been hammered lower by the bears so far in 2014, with shares down sharply by 40%.
This stock recently formed a double bottom chart pattern at 38 cents to 39 cents per share. Shares of ASTI are now starting to spike sharply higher off those support levels and back above its 50-day moving average of 41 cents per share. Volume has increased, which is now well above three-three month average action of 747,366 a share. That move is quickly pushing shares of ASTI within range of triggering a major breakout trade above some key near-term overhead resistance levels.
ASTI should manage to break out above some near-term overhead resistance levels at 45 to 48 cents per share, and then once it clears 50 cents per share with high volume, it will continue to grow. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 747,366 shares. If that breakout materializes soon, then ASTI will set up to re-test or possibly take out its next major overhead resistance levels at 55 to 60 cents per share, or even its 200-day moving average of 65 cents per share.
Buy ASTI to anticipate that breakout and simply use a stop to control the trade.
STOCK TRADE: Buy ASTI at market price (approx. $0.42), good for the day. Place a protective stop-loss at $0.30 and a pre-determined sell at $0.80.
Highpower International Inc (NASDAQ:HPJ)
Highpower International Inc (NASDAQ: HPJ), a developer, manufacturer, and marketer of lithium and nickel-metal hydride (Ni-MH) rechargeable batteries, and a battery management systems and battery recycling provider, looks ready to trigger a near-term breakout trade. This stock is off to a blazing hot start in 2014, with shares up substantially by 80%.
The stock has recently formed a major bottoming chart pattern over the last month or so, with shares finding buying support at $4.13, $4.40 and $4.20 a share. Shares of HPJ is counter-trending higher versus the overall market weakness as the stock bounces notably higher right off its 50-day moving average of $4.37 a share. That spike is starting to push shares of HPJ within range of triggering a near-term breakout trade above some key overhead resistance levels.
HPJ should manage to break out above some near-term overhead resistance levels at $4.78 to $5 a share, and then once it takes out more key overhead resistance levels at $5.28 to $5.33 a share, with high volume, it will continue ascending. Look for a sustained move or close above those levels with volume that registers near or above its three-month average volume of 260,744 shares. If that breakout kicks off soon, then HPJ will set up re-test or possibly take out its next major overhead resistance levels at $5.68 to $6.50, or even around $7 to $7.50 a share.
Buy HPJ to anticipate that breakout and simply use a stop to contain the trade.
STOCK TRADE: Buy HPJ at market price (approx. $4.62), good for the day. Place a protective stop-loss at $3.00 and a pre-determined sell at $7.50.