“No company’s stock ever traded down to single digits because management wanted it to be there,” Cramer said Monday.
If the share price is under $5, there’s probably a good reason. And that’s why the five-buck level is where money managers draw a line – they won’t buy any stock that sells for less. Not to mention, even if they took a chance on one of these extra speculative names, they often take a long time to show improvement. Their fundamentals turn like an aircraft carrier and any potential payoff can be far off into the future.
Given that, why did Goldman Sachs today upgrade both Citigroup and Sprint Nextel , trading at $3.78 and $4, respectively? No analyst would put his credibility on the line for under-$5 companies that are merely doing better. They’d have to be doing much better.
“And I think that’s exactly what’s happening ” at Citi and Sprint, Cramer said.
So how much higher will these stocks go now? Goldman had its idea, but Cramer had another. Watch the video for his full report.
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