GO
Loading...

5 Stocks Under $10 Set to Spike Higher

Roberto Pedone |Contributor
Friday, 20 Apr 2012 | 1:49 PM ET
NYSE
Getty Images
NYSE

There isn’t a day that goes by on Wall Street where stocks trading near or under $10 a share don’t experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis.

Just take a look at some of the hot movers in the under-$10 complex Thursday, including Good Times Restaurants, which ripped higher by 29 percent ; BluePhoenix Solutions, which spiked big by 25 percent; LightPath Technologies, which soared 23 percent; and Fonar, which finished up 19 percent. You don’t even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.

  Price   Change %Change
NSAV
---
FONR
---
GTIM
---
LPTH
---

I’m not as eager to recommend investing long-term in stocks that trade less than $10 a share, because these names can be very speculative and the odds for picking the long-term winners aren’t great. But I definitely love to trade stocks that are priced below $10. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right.

When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that’s secondary to the chart and volume patterns.

With that in mind, here’s a look at several under-$10 stocks that look poised to trade higher from current levels.

5. StealthGas

One under-$10 name that’s moving within range of triggering a major breakout trade is StealthGas, a ship-owning company, through its subsidiaries, provides international seaborne transportation services worldwide. This stock is off to a red-hot start in 2012, with shares up over 60 percent so far.

If you take a look at the chart for StealthGas, you’ll notice that this stock has been uptrending strong since it broke out above $4.20 a share earlier this year. After breaking out, this stock has soared from $4.20 to its current price of $6.31 a share. During that monster uptrend, its shares have mostly made higher lows and higher highs, which is bullish technical price action. That move has now pushed the stock within range of triggering a major breakout trade.

Market players should now look for long-biased trades in StealthGas if it can manage to trigger a break out above some near-term overhead resistance at $6.33 to $6.45 (Thursday’s high) with high volume. Look for volume on that move that’s near or well above its three-month average action of 60,129 shares. Volume on Thursday registered 160,000 shares and the stock closed up 3.45 percent to $6.29. If we get that breakout soon, look for the stock to make a run at its next significant overhead resistance levels at $7.25 to $8.80 a share. That $7.25 level is also stiff overhead resistance, so if that level gets taken out with volume target a run to $8.80.

As long as StealthGas is trending above $6.33 to $6.45 with strong upside volume flows, then I would stay bullish on this stock.

4. GSE Systems

An under-$10 stock in the software and programming complex that’s trading within range of a major breakout is GSE Systems, which provides simulation, educational, and engineering solutions and services to the nuclear and fossil electric utility and chemical and petrochemical industries in the U.S., Europe, and Asia. This stock is off to a decent start in 2012, with shares up over 25 percent.

If you take a look at the chart for GSE Systems, you’ll notice that this stock has been trading in sideways pattern for the last month, between $2 on the downside and $2.67 a share on the upside. Shares of GSE Systems just found some buying interest right above its 50-day moving average of $2.14 a share, and now it’s approaching a major near-term breakout trade. That trade will hit once GSE Systems takes out some near-term overhead resistance levels.

Market players should now look for long-biased trades if the shares can manage to move above some near-term overhead resistance at $2.56 to $2.67 a share with high-volume. On Thursday, this stock closed up 6.3 percent to $2.50 on above average volume of 347,114 shares traded. Traders should now look for a sustained move or close over $2.56 to $2.67, with volume that’s near or well above its three-month average action of 94,027 shares. If we get that action soon, then this stock has an excellent chance to continue its momentum up towards its next significant overhead resistance levels at $3 to $3.75 a share.

If you’re bullish on GSE, and you get a chance to buy this stock off of weakness, then I would use $2.20 as my mental stop. Any high-volume move below $2.20 would take this stock off my long radar, since chances are high that it will move back towards $2 a share at the minimum.

3. iPass

An under-$10 name in the computer services complex that’s trading within range of a major breakout is iPass, which offers enterprise mobility services on a global basis that assist the productivity of workers as they move between and among office sites, home, and remote locations. This stock is off to a monster start in 2012, with shares up over 80 percent.

If you take a look at the chart for iPass, you’ll notice that this stock has been uptrending strong since the start of the year, with shares soaring from around $1.30 to its current price of $2.61 a share. During that uptrend, this stock has consistently made higher lows and higher highs which is bullish technical price action. That move has now pushed iPass within range of triggering a major breakout trade if it can manage to clear some overhead resistance levels.

Market players should now look for long-biased trades in iPass shares if it can manage to break out above some near-term overhead resistance levels at $2.66 to $2.80 a share with high-volume. Look for a sustained move or close above those levels on volume that’s near or well above its three-month average action of 253,689 shares. If we get that action soon, then its shares will enter new 52-week high territory, and it will have a great chance of hitting $4 a share or higher in the near future.

If you’re bullish on iPass and you get long off weakness, then I would simply use the 50-day moving average of $2.30 as a reference point for a mental stop. If you buy off strength once this stock breaks out, then I would look for bullish trades as long as the stock is trending above $2.80, with strong upside volume flows. Keep in mind that it’s important for iPass to close over $2.80 with strong volume to sustain a much larger trend higher.

2. Capstone Turbine

Another under-$10 stock that looks poised for some decent upside from current levels is Capstone Turbine, which develops, manufactures, markets, and services turbine generator sets and related parts for use in stationary distributed power generation applications. This stock hasn’t done much so far in 2012, with shares off by around 4.3 percent.

If you take a look at the chart for Capstone Turbine, you’ll notice that this stock has been stuck in a nasty downtrend since it hit a high of $1.53 in early February. After tagging that high, shares of Capstone Turbine have plunged to a recent low of 93 cents per share. During that downtrend, this stock has consistently made lower highs and lower lows, which is bearish technical price action. That said, judging by the stock’s price action on Thursday, a trend change could be underway that would now be bullish for the stock.

On Thursday, its stock closed up 8.8 percent to $1.11 on monster volume. Volume registered 13 million shares, which are well above its three-month average action of 3.76 million shares. This big volume up-move also pushed its shares back above its 50-day moving average of $1.09, and within range of its 200-day moving average of $1.16 a share.

Market players should now consider long-biased trades in Capstone if it can manage to trade above some near-term overhead resistance at $1.13, and if it can move above its 200-day moving average of $1.16 a share with high-volume. Look for a sustained move or close above those levels on volume that’s near or well above its three-month average action of 3,768,220 shares. If we get that action soon, then its stock should easily take out some more overhead resistance at $1.25, and then start a run back towards its next overhead resistance levels at $1.53 to $1.69 a share.

It’s very possible that Capstone could hit $2 a share or even higher since the volume on Thursday was one of the highest upside volume days in over a year. Another reason why this stock could explode in the near-term is due to the large amount of bears betting against this stock. The current short interest as a percentage of the float for Capstone is very high at 14.7 percent.

I would avoid any long-biased trades in Capstone if this stock fails to get back above its 200-day moving average, and then drops back below its 50-day moving average with heavy volume. I would stay bullish on this stock as long as it’s trending above $1.16 and then above $1.25 a share with strong upside volume flows.

1. Geron

One more under-$10 name that could be gearing up to explode higher is stem cell player Geron, which develops biopharmaceuticals for the treatment of cancer and chronic degenerative diseases. This stock hasn’t done much so far in 2012, with shares up just 7.4 percent.

If you take a look at the chart for Geron, you’ll notice that this stock has been downtrending for the past month and change, from a recent high of $2.22 to a low of $1.50 a share. During that march lower, this stock has consistently made lower highs and lower lows, which is bearish technical price action. That said, after hitting the $1.50 low, the stock has stabilized and started to trade in a tight sideways pattern. This is now moving the stock within range of triggering a near-term breakout trade, and a break out move above a key descending trendline.

Traders should now look for long-biased trades in Geron if it can manage to clear some near-term overhead resistance at $1.62 with high-volume. A sustained high-volume move or close above that level will also push the stock above its key descending trendline. Look for volume on that move that’s near or well above its three-month average action of 940,252 shares. If we get that action soon, look for Geron to tag its 50-day moving average of $1.82 a share, and then potentially move above some more near-term overhead resistance at $1.89 a share. A high-volume move over $1.89 will put the stock’s 200-day moving average of $2.21 into play.

Keep in mind that GERN has a decent amount of bears involved in the stock. The current short interest as a percentage of the float for Geron is notable at 6.1 percent. A monster short-squeeze could easily get sparked if the stock can clear $1.62, and then get back above $1.89 with strong upside volume flows. I would simply avoid any long-biased traders in Geron if it drops back below some near-term support at $1.50 a share with heavy volume.

Additional News: 5 Stocks Under $5 Making Big Moves

Additional Views: Jim Cramer’s Ultimate Growth Stocks

_____________________________

CNBC Data Pages:

______________________________
Disclosures:

TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks.

Disclaimer

  Price   Change %Change
BPHX
---
CPST
---
FONR
---
GASS
---
GERN
---
GTIM
---
GVP
---
IPAS
---
LPTH
---

Featured